General Motors Essay
I first want to start out with the bailout in 2009 where the government gave General Motors money ($40 million) to help get them out the situation with their creditors and took over most of the company. According to reports all of the outstanding stock has been sold and now the company is out of the government’s hands. The total amount given to them was not paid in full and they do not feel like they need to repay anymore because they said that there was a risk with taking the stock and that the government would just get back what the stock sold for. I know that this is true in the stock market, as I have stocks myself and know the risks that I am taking. I still have a problem with giving them money when one of the other larger automobile companies (Ford Motor Company) took it upon themselves to restructure and is paying off their own debts little by little and is still moving along today. Along with the sale of all of the stock came a lift on the freeze of upper management wages and incentives. This is just not right. I would like to live on what some of them make, and I am sure that I could live very comfortably. Let them come and live on my income and see what they can do. I really have a problem with going overseas for production and I always will. It is probably my age and all of the trials and tribulations that I have lived through as well as what I have seen others live through. Many people were told that their jobs would be secure and since then General Motors has cut back on jobs here in the United States.
I wonder just how many people outside of this country have been given jobs that could have been here at home. I know that many companies take production overseas because they say that the costs for labor are a lot lower. Well, that may be true but has anyone seen the living conditions of those people overseas. Are we really paying them what they should be getting? Let’s take into consideration all of the recalls that General Motors has made in the last few years. Way too many in my book. Why is there faulty material being used to manufacture a product that could easily take the lives of many people. These products were made mostly overseas, I believe, and could lower wages be part of the problem of not noticing the faulty parts in the first place? By taking away incentives for prospective buyers, I believe, really hurt their business, but then I say, “Why give an incentive and not just reduce the price of the car in the first place?” I know that consumers look for incentives but I think that they would look just as hard if the price of the cars were lower too. Let us look at the strategy that General Motors is wanting to take. The strategy that I believe that they are using is a combination of three strategies.
They are as follows: Defensive Strategy in that General Motors decided to cut back the number of makes of automobiles; Cost-Leadership Strategy in that expenses needed to manufacture the cars are kept at a lower cost and maintained at that lower cost; and Differentiation Strategy in that they need to make a superior product for a vast number of people at a low cost. According to the plan General Motors is going to start making their automobiles using the same parts in the same laid out plants and using the same kind of tools throughout. They are also cutting back on the number of models from 86 to 49. When it came to the cost-leadership strategy, I put the loss of incentives to customers in this category. I still do not understand why there are incentives when they could just reduce the price of the automobile or truck. I think that people would look more if the price were lower. The differentiation strategy they have cut back on the workforce but are still making the superior product for a vast audience. I realize that they need to watch their competitors closely, especially those overseas but they also need to take care of the people right here in the United States. General Motors has a vision to reduce costs and increase revenue through global sales growth to a net profit of 10%. I think that they are asking for a lot out of the economy, as it is today As the plan states, Ford is farther ahead of General Motors and they made more of a profit per vehicle sold than General Motors.
This was all done because of going globally. The culture needs to change too and get away from focusing on selling the most cars and take care of the customers that they currently have and possibly will have in the future. Yes, sales are important, but they will come if their customer focus is there first. I think that the 10% increase in profits is a little out the park when you are just restructuring and trying to maintain your status. You will need to take smaller increases in profit for a few years and then the profits will increase as the years go by. When looking at SMART goals I find that General Motors set their goal of making more than $10 billion per year. This is a very challenging goal for a company that is just coming back from restructuring. This goal is very specific but I do not believe that it is attainable with the economy that we have today. I know that they look at achieving this goal globally but they really need to concentrate right here in the United States. To be results-oriented they needed to decrease the number of types of cars they produce, reduce the number in their global workforce, (which they did), reduce the number of union workers here in the United States (which they did) and close down plants that were not up to par (which they did).
Was this the right decision to make? Who knows for sure? The only thing that I can see is that they put a lot of people out of work. In looking at the Planning/Control Cycle, I see that General Motors followed it by making the plan, carrying out the plan, they looked at the results of the plan and they controlled the direction of the plan by making any corrections as they went along with the plan. Planning is very important in everything that you do. You must always follow through too and watch as the plan is being carried out and always have control of what is going on and make sure that you make any corrections as the plan goes on. If need be, go back to the beginning and start all over again if the plan goes off track too far or if you have to make too many corrections. According to Mr. Akerson when asked about being back on top and the world’s largest auto maker his response was: “General Motors needs to focus on profits and margins and not necessarily try to post numbers on the board.” Maybe they need to go back and re-think their plan again and make sure they are staying on track as they proceed. In conclusion, I just want to add that I read two reports that just came out on CNN today. “One concerned a former manager for General Motors, Bill McAleer, who was in charge of the Global delivery system from 1988 to 1998 which was used to access the quality of cars before they were sent to various dealers.
He said that the culture of General Motors was the main problem of the company where if there was a problem and you said anything that you could be fired and then on the other hand if you did not say anything, you still could be fired.” What kind of culture is that? It is kind of twisted, if I must say. He said that he had sent a letter to the upper management about all of the defects that he had found and that they just ignored it. He also said that he never received a response in any way about the letter. He mentioned that in 1997 the focus for the company really changed and internally and that there were to be NO problems admitted to. How ridiculous is that. There is never a time during the day that a company does not have some kind of problem. He went on to say; “That’s what happened with the ignition switch, people knew that there was a problem but problems were not acceptable. They just ignored it.” Mr. McAleer was laid off in 2004 and filed suit against the company under the Whistleblower Law but he lost his suit. And what happened yesterday, June 27, 2014? General Motors recalled another 430,000 2013 and 2014 vehicles for various defects from windshield wiper assemblies on Caprice Police Cars, to transmission software, to rear shock absorbers, and to air bag problems.
What is with this company? The article stated that since January, General Motors has recalled more than 20 million vehicles worldwide. If they knew about the ignition switch more than a decade ago and did nothing until this year, why are they still in business? Where are most of these defective parts coming from? I would imagine that you can see why I cannot be happy about this company. I have lived many years and have worked in various occupations and have seen the defective merchandise come from out of the country and would just sit there and shake my head. Working in retail for over 20 years, I just would not put merchandise on the floor for customers to purchase if I found it to be defective. Did I get into trouble for it? Absolutely not! We cared about our customers, why doesn’t General Motors. Seems like all they are interested in is the almighty dollar.
Article by Patrick Sheridan, June 28, 2014 @ 12:24 pm ET Article by Patrick Sheridan, June 27, 2014 @ 6:564 pm ET