General Motors

Strengths
Strong position in the US and China
Market leading positions in the US and China which is the worlds two largest automotive
markets are the major strengths of General Motors. The companys business is diversified across
products and geographic markets. With one of the strong product line-up in the industry, GM, its
subsidiaries and joint venture entities sell vehicles under the Chevrolet, Cadillac, Baojun, Buick,
GMC, Holden, Isuzu, Jiefang, Opel, Vauxhall and Wuling brands.
In North America, GM manufacturers and markets the following brands: Buick, Cadillac,
Chevrolet and GMC. In the US, the company sold 2.6 million vehicles, with market share of
around 17.5%. In recent years, riding on the strong performance in North America, GM
increased its capital expenditures from $6.2 billion in 2011 to 8.1 billion in 2012, mainly due to
its low break-even point in North American market as well as its global geographic diversity of
its earnings.
In the growing and emerging Chinese arket, GM is the largest foreign auto maker by sales. The
company and its joint venture partners sold a record 2.8 million vehicles in 2012 in China. GM
and its joint ventures offer one the broadest lineup of vehicles and brands among the automakers
I the region. Gm operates through 12 joint ventures and two wholly-owned foreign enterprises in
Chinese territory.

More than 4200 dealerships in China and is rapidly expanding in the countrys growing
central and western cities.
Significant competitive advantage by having a strong position in two of the worlds
largest auto market the US and China which provides them sustainable growth will lead
them to get global market leadership further.
Robust Technological Capabilities: GM has strong product designing and development
capabilities. The company spend approximately $7.5 billion on the research and
development (R&D) activities in 2012.
Company is more focused on developing new products and services, including activities
related to vehicle emissions control, improved fuel economy and the safety of driving and
passengers.
GMs Buick is the only brand in the industry to offer forward collision alert, lane
departure warning, rear cross traffic alert, side blind zone warning, and a rear vision
camera on every vehicle.
GM received more US patents in 2012 than any other automaker. These patents were part
of its focus on the advances in performance, efficiency, sustainability and in-vehicle
infotainment.

The companys Onstar delivers range of capabilities from stolen vehicle assistance to
voice navigation and live advisor support.
GMs R&D invented and industry-first aluminum welding technology which is expected
to enable more use of the light weight metal on future vehicles, which can help improve
fuel economy during performance.
Development in the prototype battery cells and complete system at its Advanced
Technical center by Shanghai China, enabling to gain critical knowledge in the
development of next-generation vehicle battery systems.
GM strong technological capabilities lead to product durability which in turn enhances
its customer retention rates, and drives profitability
Global presence. GM was the leading auto manufacturer in terms of sales for 77 years
until 2007. The business has grown its presence in the world and is now operating in 157
countries, while its Chevrolet brand reached world record sales (4.95 million units).
New vision and strategy. After 2008 bailout, GM has experienced major changes and
reorganized the way it does business. New members were appointed to the firms
management team with Daniel Akerson as the CEO. He shook GMs bureaucratic
organizational culture and introduced new strategy and visions to the business. GM
became smaller but leaner and is becoming more cost competitive.
Strong brand portfolio. GM currently sells 18 automobile brands to satisfy as many
customer needs as possible. The most popular brands are Cadillac, Buick, GMC and
Chevrolet that sell very well in USA and China. Chevrolet reached a global sales record
and sold 4.95 million units in 2012.
Strong presence in China. China is the largest automotive market and is an emerging
economy that grows steadily. It is also the second largest market for GM in terms of
vehicle units sold. An early entrance into China, well performing partnerships and local
Buick brand are the main reasons why GM has a strong position in Chinas automotive
market.
Knowledge of home market. GM is the largest car manufacturer in US and currently
holds more than 18% market share. This is mainly due to extensive knowledge of US
market and its consumers.
4 well performing brands. GMs Cadillac, GMC, Chevrolet and Buick are among the
best-selling brands in US and China and brings in more than 80% of all General Motors
sales.

WEAKNESSES:
Low profitability

Its bottom-line results have been uncertain and consistently under pressure even though
they are witnessing improved top-line performance every year since the Great Recession.
In terms of the overall business performance, GM operates through very thin profit
margins.

In the Fortune 500 list, GM was ranked at fifth position in terms of its revenue but was
ranked 20th at profitability.
The operating loss of the company was $30, 363 million during FY2012 as compared to
an operating profit of $5,656 million in FY2011. Furthermore, in the first quarter of 2013,
the company reported at a 4% fall in net profits.
GMs main rival Ford scores above GM in the profitability metric. In the first quarter of
2013, Ford earned an average of $3,200 in pretax profit on each of the 761,000 vehicles it
sold in North America, while GM earned about $1700 on the 829,000 cars and trucks it
sold in the region.
Underfunded pension obligations
The company provides benefit pension plans for most of its employees. GMs
pension plans in the US were underfunded by $14.0 billion and $14.2 billion in
FY2012 and FY2011, respectively. The companys non-US pension plans were
underfunded by $13.8 billion and $11.2 billion in FT2012 and FY2011, respectively.
The funded status was declined due to adverse equity and credit markets, which
reduced the market value of planned assets.
The pension funding obligations could increase could increase significantly due to a
reduction in funded status as a result of variety of factors, including weak
performance of financial markets, declining interest rates, investment decisions that
do not achieve adequate returns, and investment risk inherent in the companys
investment portfolio.

High cost structure. GM has one of the highest cost structures compared to all
automobiles manufacturers. GMs costs are driven by its generous employee
compensation and pension plans. Although GM has reduced its cost after 2008 it still
has a lot to do to become cost competitive.
Brand dilution. GM controls 18 automobile brands that vary in quality and are sold
in separate markets. With so many brands in sales, customers find it hard to identify
which brand belongs to GM family, as only one of 18 brands carry GM letters. The
result is lower GM brand awareness.
Bureaucratic culture. Before reorganization in 2008, GM was infamous for its rigid
culture and structure. Since then, the company has made some cultural and structural
changes but should continue improving as it isnt as quick as its competitors in
reacting to constantly changing environment.
Car recalls. Last year, General Motors recalled 119,000 pickups due to missing
hood latch. The same year it had to recall it Chevrolet Volt and fix battery problems.
Recalls are expensive and damages brand reputation, especially when the company
announces them so often.

OPPORTUNITIES

GM is higly focused on its broad global strategy to deliver a new generation of connected
cars and trucks with embedded 4G LTE (long-term evolution) mobile broadband, which
is also one of the largest deployments in the automotive industry.
GM aims to attract younger, tech-savvy buyers through innovative in-car technologies.
The average US consumer is spending more than 2-1/2 hours a day on their smartphones
and tablets. To capitalize on the emerging trend, GM teamed up with AT&T to sell
vehicles embedded with 4G LTE mobile broadband, a wireless connection that allows for
faster flow of data that would allow passengers in the backseat to watch streaming video.
4G LTE enhance safety, efficiency and convenience for drivers and passengers.
Hence, and increased focus on in-car technology could enable GM to generate new
source of revenue and enhance profit margins as well as competitive advantage.
Growing Chines automotive market
The Chinese automotive industry, the fastest growing global industry by volume of
vehicles sold, is important to GMs global growth strategy. Currently, the company
employs a multi-brand strategy led by its Buick and Chevrolet brands for Chinese market.
According to Industry estimates, by 2020, the market in china could reach 30 million
units annually, up from about 19 million in 2011.
The company aims to quadruple its share of Chinas luxury auto market to 10% by 2020
as its plans to launch new Cadillac models and expand its distribution network in the
worlds largest car market.

Threats
1. Fluctuating fuel prices. Due to increasing extraction of shale gas, future fuel prices should drop
and make electric and hybrid cars less attractive. GM would treat the projects of hybrid and
electric cars as losses, rather than perspective future cars. On the other hand, steeping fuel prices
would make current GM models less attractive to cost conscious consumers, as they demand
smaller cars that consume lower amounts of fuel.
2. New emission standards. A new wave for stricter regulations on vehicle emission standards
may negatively affect GMs finances. The corporate would have to invest large amount of
money to comply with these new standards.
3. Rising raw material prices. Rising prices for raw metals will lift the costs for auto
manufacturers and result in squeezed profits for the companies.
4. Intense competition. For 77 years from 1931 to 2007, GM led global sales of vehicles, but lost
its position in 2008 due to increased competition of cheaper and better quality cars, especially
from Japan and South Korea.
5. Exchange rates. China is GMs second largest market and the business earns huge profits there.
Exchange rate fluctuations threaten GMs profits if the dollar would appreciate against Chinese
renminbi.

Intense competition and declining market share the global automotive industry is highly
competitive which has affected GM in the recent past. The company s global market share fell
to 11.5% at the end of 2012, down from 11.9% in 2011.Theweak vehicle sales volumes in
FY2012 was a reflection of an intensified competitive environment in the US, including
aggressive competitor pricing and media spending, as well as key competitors new product
launches. Furthermore, the company's US market share also fell to 17.5% at the end of 2012
which is its lowest level in decades and down from 19.2% a year earlier. The principal
competitive factors include price, quality, available options, style, safety, reliability, fuel
economy and functionality. GM faces strong completion from companies such as Volvo,
Bayerische Motormen Werke (BMW), Daimler, Fiat Group Automobiles, Ford Motor, Honda
Motor, Hyundai Motor, Mazda Motor, Nissan Motor, Renault, Toyota Motor and Volkswagen.
Furthermore, due to the current economic conditions, demand for automobiles has fallen sharply,
both in North America and in other parts of the world. To offset these high fixed costs, some of
the company's competitors have responded to recent deteriorations in economic conditions and
vehicle sales by attempting to sell more vehicles by adding vehicle enhancements, providing
subsidized financing or leasing programs. Hence, intense competition in the marketplace could
result in lower sales volume as well as margins for GM and may result in declining market share.
Stringent government laws and regulations is subject to laws and regulations that requires control
automotive emissions, including vehicle exhaust emission standards, vehicle evaporative
emission standards and onboard diagnostic system (OBD) requirements. Advanced OBD
systems are used to identify and diagnose problems with emission control systems. Problems
detected by the OBD system may increase warranty costs and the chance for recall. Emission and
OBD requirements become more challenging each year as vehicles must meet lower emission
standards and new diagnostics are required and will continue to become even more stringent
throughout the world. The US government and various state governments imposes stringent
emission control requirements including preproduction testing of vehicles, testing of vehicles
after assembly, the imposition of emission defect and performance warranties and the obligation
to recall and repair vehicles that do not comply with emissions requirements. The company must
obtain certification that the vehicles will meet emission requirements from the United States
Environmental Protection Agency (EPA) before selling vehicles in the US and Canada and from

the California Air Resources Board (CARB) before selling vehicles in California and other
states. CARB has proposed more stringent exhaust emission and evaporative emission standards,
which is expected to phase in with the 2015.TheEPA is also developing similar requirements
which are expected to phase in with the 2017.In Europe, emissions are regulated by two different
entities: the European Commission (EC) and the United Nations Economic Commission for
Europe (UN ECE).The regulatory requirements include random testing of newly assembled
vehicles and a manufacturer infuse surveillance program. A new

level of exhaust emission standards for cars and light duty trucks, Euro 5 standards, was applied
in2009, while stricter Euro 6 standards will apply beginning in 2014.The new European emission
standards focus particularly on reducing emissions from diesel vehicles. The new requirements
will require additional technologies and further increase the cost of diesel engines, which
currently cost more than gasoline engines. Thus, if the company is found violating the applicable
laws or regulations, it will be subject to substantial fines or penalties including civil and criminal
liability. Any such unforeseen incidents may adversely distress the financials of the company.
Weak European economic situation the current situation relating to the weak economic recovery
in Europe could moderately impact GMs businesses. The demand for the companys products
and services tends to be cyclical and can be significantly reduced in an economic environment
characterized by lower consumer spending, lower corporate earnings and lower levels of
government and business investment. The Euro regions six-quarter recession, the longest since
the common currency was introduced in1999, deepened in the first three months of 2013 as
investment and exports plunged. According to The International Monetary Fund (IMF), the 17country Eurozone is expected to shrink 0.3%, compared with a 0.2% retreat in its January 2013
report, with France joining Spain and Italy in contracting. Furthermore, as per European
Automobile Manufacturers Association (ACEA), European car sales fell to a 20-year low in
May 2013 as record joblessness caused by a recession in Eurozone reduced demand at
companies such as GM, PSA Peugeot Citroen, Renault, Fiat, among others. The registrations
dropped 5.9% to 1.08 million vehicles from 1.15 million in 2012.The figure was the lowest for
the month (May) since 1993.In addition, auto-industry executives forecast that the European car
market is expected to shrink sixth consecutive year in 2013, with a possible recovery starting by

the final quarter. Moreover, Western Europes market is projected shrink to about 12.5 million
vehicles in 2014, a 29.5% decline from the pre- crisis peak of 16.8 million units, and may
stagnate at that level for the foreseeable future. Hence, the ongoing weak economic environment
in Europe could result in lower sales volume for GM which may pressurize its financial position
Tangible and Intangible assets of GM:

Tangible assets:
Manufacturing units in 33 countries.
21,000 dealers around the world.
Strong brands: Currently 18 automobile brands to satisfy as many customer needs as
possible.
Popular brands are: Cadillac, Buick, GMC and Chevrolet.
Better skilled employees about 213,000

Intangible assets:

o
Recorded revenue as of FY2013 $155.42 billion.
Strong leadership and belief in the corporate vision leads to continued growth.
Strong Innovations
Strong investor Relations: GM intends to return excess cash flow to stockholders
primarily through strong and growing dividend based on sustained improvements in the
companys underlying financial performance.
Strong reputation for CSR activities
Better technology in vehicle electrification with advancements in batteries, electric
motors and power controls. Fuel efficiency technology including direct injection, variable
value timing, turbo-charging, six-speed transmissions, diesel engines, and improved
aerodynamic designs.
Milestone: China now general Motors Biggest Market
Despite signs of a slowdown in the Chinese economy, General Motors posted record
first-half sales in china, where GM sales now have surpassed the total number of vehicles
the company sells in its home market of the United States
GM and its Chines joint venture partners saw sales surge by 10. Percent during the first
half of 2013, to nearly 1.6 million vehicles, an all-time record that positions it as the
booming Asian nations No.2 automotive manufacturer. It sold just over 1.4 million
vehicles in the U.S during the same period.

Reference:

http://media.gm.com/media/us/en/gm/company_info.html
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www.academia.edu
http://www.academia.edu/6211164/General_MotorsOF_CONTENTS
http://www.strategicmanagementinsight.com/swot-analyses/general-motors-swotanalysis.html