Case_34_General_Motors_TN - Teaching Note Case 34 General...

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Teaching Note: Case 34 – General Motors Case Objectives 1. To examine how external and internal forces affect competitive strategy. See the table below to determine where to use this case: Chapter Use Key Concepts Additional Reading and/or Exercises 2: External Environment Industry competition five forces; general environmental factors NOTE financial info, web links and embedded video 3: Internal Analysis Value-chain analysis; resource- based view of the firm; VRIN Case Synopsis Ever since taking over General Motors in 2000, CEO Rick Wagoner had been trying to fix the firm’s problems. The most serious efforts were undertaken after GM’s $10.6 billion loss in 2005, the first in 12 years. Wagoner cut production capacity, offered buyouts to hourly workers, made agreements with the union to reduce health care costs for active and retired workers, and pushed GM product designers to create more attractive cars that would generate better reviews and improve profit margins. Wagoner took steps to shrink the GM brands down to four: Chevrolet, Cadillac, Buick, and GMC. Hummer, Saab, Saturn, and Pontiac would be sold, spun off, or shut down. Layoffs and plant closings were also necessary in 2009 as Wagoner tried to strike a deal with GM’s bondholders and workers to reduce GM’s debt and generate operating capital to keep the firm afloat. A series of government loans gave GM some breathing room, but it would have to successfully complete its restructuring plan and show considerable progress toward regaining its leadership of the U.S. automobile market before claiming any success. General Motors was undertaking the biggest reorganization in its history. Analysts acknowledged that the firm seemed finally willing to accept the seriousness of its situation, and that a change in the status quo was needed. However, there was considerable doubt among industry observers that GM would be able to move fast enough to become competitive again. The opinion was that GM would fail unless everything was totally restructured, “from top to bottom.” Would GM survive? CASE UPDATE The U.S. government became the largest “shareholder/owner” of the company in 2009, and replaced CEO Rick Wagoner with long-time employee Fritz Henderson. Henderson immediately took steps to increase communication with all stakeholders. For instance, to keep up with current news on GM’s “Re:invention”, see the corporate-sponsored website
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_2009_GM_Project_Blue_Branding_|_Project_Blue_|_GM_General_|_gm In the news from 2009, General Motors had benefited from the “cash for clunkers” program, and would add 60,000 cars and trucks to its North American production schedule, reinstating 1,350 jobs by the end of 2009. In August 2009, the University of Michigan’s yearly customer satisfaction survey found that the GM’s Cadillac tied for first place with Lexus, while the GM Buick placed third. The Buick also tied for first place in
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This note was uploaded on 10/11/2011 for the course BUSINESS A 474 taught by Professor Thompson during the Spring '11 term at Ill. Chicago.

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Case_34_General_Motors_TN - Teaching Note Case 34 General...

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