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General Motors (GM) is one of the big three auto makers of the world (GM, Ford, and Chrysler) and has historically been the largest and most successful. They have built some of the most famous and classic vehicles on the road which have portrayed messages of both modesty and display of class for a market of consumers who range from working class to music superstar; as Alfred P. Sloan, CEO of the 1920s put it, GM makes “a car for every purse and purpose.” In recent years however, GM has taken an unexpected turn for the worse due to the changing economic climate that is affecting the world. Many economists argue that the US has been pushed into a recession that had started with the housing crisis of 2008. From this crisis stemmed a major banking crisis that has lead to financial institutions implementing tighter lending guidelines for business and personal consumers. This has greatly affected GM since the company, along with many other auto making companies, rely so heavily on short term returns to fund such a complicated value chain and large portfolio of brands. Of the auto making companies facing the turmoil of falling sales and crashing returns, GM has no doubt been hit the hardest and is facing complete bankruptcy. The fact that GM has such a large portfolio is working directly against their success because of the fact that they are spread completely too thin; by being unable to focus on the core products vital to the company’s success, GM is forced to spread money it does not have around to failing brands which are only driving the company further into debt. Even with initial governmental funding, GM is still unable to find a remedy for its failing success. GM has historically built brands around the assumption that they will be consumed whether or not they are built around consumer tastes. This lack of versatility and inability to explore long term consumer consumption has created a number of threats with which the company is now faced. Rising gas prices has shifted the majority of consumer tastes to energy and fuel efficient options which GM has not sufficiently adopted, rather just the opposite since they focus more on their pick up and SUV products which are extremely wasteful and fuel inefficient. In light of this, GM is losing business to competitors who have extensively explored and who have begun to master the production of fuel efficient vehicles. President Obama is unwilling to serve the option of governmental aid to GM without a serious and foreseeable restructuring; lending money without this strict restructuring plan is seen as undeserved and wasteful. GM is faced with mass downsizing to more efficiently designate funds which will help bring the company up from what is now a major failure. Although many options and tactical decisions have been discussed, GM has until June 1st to present a clearly defined and finite decision for restructuring.
General Motors was founded in 1908 originally as a holding company for Buick. The firm slowly began to take over Buick and bought out other model lines such as Pontiac, Cadillac, and Oldsmobile. With help from these many different car lines, GM managed to dominate the US auto market throughout the 20th century and was unrivaled in market share by any other company (“GM Corporate Information”). GM’s market share peaked in the 1960s where they held 48.3% of the overall US market share. This total began to decline in the 1970s and continued to present day, due to greater international competition, mainly coming from the Japanese companies of Toyota and Honda. These companies provided a new style and design of a car. They strayed from the traditional American muscle cars, which were bulky and had poor gas mileage, to sleeker designs with better quality and efficiency (“General Motors Corporation” NYT). A Snapshot of General Motors...
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