Operating Strategies Case Study

Case Title:

General Motors North America in 2005

Abstract:
In 2005, General Motors, the world’s largest automaker, had manufacturing operations in 32 countries and sold its vehicles across 200 countries. For the fiscal year ended December 2004, GM generated revenues of $193,517 million and net income of $2,805 million. The company lost $2.5 billion in the first half of 2005 and lost an average of $1,227 on every vehicle sold. Health benefits provided to retirees and their dependents, lack of effective brand advertising, deteriorating supplier relations and increasing investor pressure were some of the problems faced by GM in North America. In its recovery plan, GM announced job cuts. But GM had a large number of factory employees nearing retirement age, so the cutbacks would have a major impact on workers. Shutting down several plants meant workers would be laid off or transferred. After gaining a 9.9% stake in GM, the third largest shareholder, Kerkorian demanded a seat on the board of GM.

Pedagogical Objectives:

• To discuss the recovery plan of a market leader which is facing fundamental problems like unimpressive revenue growth, damaged brands, mounting losses in home market, and substantial retiree obligations
• To discuss the operating strategies followed by GM
• To debate how a large individual investor can pose a threat to the company’s management.

Keywords :  General Motors; Automobile Industry; North America; Market Leader; Rick Wagoner; Mark LaNeve; US; United Auto Workers (UAW); Employee pricing for everyone; Delphi; Health Care; Retiree Benefits; Special Utility Vehicle (SUV); Big Three; Ford; Honda; DaimlerChrysler; Supplier Relations; Investor Relations; Operating Strategies Case Study; Strategy; General Motors Acceptance Corporation (GMAC); Restructure; Product Design; Marketing; Brand; Management