General Motors Competitive Advantage

1. The competitive advantage and basis of General Motors till 1975.

Ans: In 1908 General Motors faced a fierce completion from the Ford Motor company when he bought T model in the market and created a mass market for them. T model mainly focused on the middle class segment as a result of which the sell premium car, mainly targeted at wealthy sections of society, produced by GM motors was at stake.

In order to overcome this challenge, Alfred P. Sloan CEO of general Motors devised a new strategy to compete with Ford. He focused on reducing the cost to increase the efficiency of the cars produced by them. In addition to this he realized the need of a particular category of car that would bridge the gap between the inexpensive T Model and expensive

Attempts were made to create automated factories as a means of increasing quality and productivity, however it costs them twice.

A new division called Saturn was created to imitate Japanese manufacturing technologies and to produce small cars at the same cost and was kept isolated from other manufacturing units of GM. However the cars produced by Saturn was able to compete with the market and could acquire top ten positions but still it faced a loss of almost $700 million dollar. The reason behind this was tht may they did not have a low cost supply chain or because of the labour costs as they had a tie up with UAW.

They even had joint ventures with Toyota called as New United Motor manufacturing Inc.( NUMMI) but this plant was also closed down but again reopened under the control of Japanese management and was able to increase its productivity. The main reason behind this was having a flexible working team. They were given training and taught to handle different kind of works of others. Job rotation was done at intervals. They are even responsible for monitoring and supervising the activities. In the process GM gained the knowledge of lean manufacturing process followed in Toyota and started implementing it in their other Manufacturing

The crisis in 2008 and post crisis strategic orientation.

Ans: In 2008 situation started worsening tremendously and they could meet the customers growing demand for small, fuel efficient cars. Even though decisions were taken to reduce the number of models to reduce cost it did not happened. In fact cannibalization destroyed their market. GM’s strategy of offering low cost vehicles was totally unsuccessful. Too many investments were made by the company.

General Motors decided to temporarily withdraw manufacturing in almost 30% of its assembly units and also reduced vehicle production by 250,000 units. Also it was decided to reduce the salaried workforce and in addition cutting 37,000 hourly jobs worldwide. CEO Rick Waggoner was replaced by new CEO Fritz Henderson who further reduced the production to by 250,000 units in order to prevent bankruptcy. As result the production of cars reduced to 1 million in 2009 from 2008. Additional six production plants were closed and its Pontiac brand was removed. Moreover in order to reduce labour costs GM and UAW started negotiating for a new labour agreement. Even the health benefits provided to retired employees were