COVER PAGE:
General Motors
Team 7
Ryan Haussmann
Eric Snider
Daniel Thompson
Dr. Lachowicz
MGNT 357-03
November 13, 2008
Whitt 009
PROBLEM/OPPORTUNITY:
General Motors has been a staple of American society since the early 1900’s and is one
of the most well known companies in the world. GM has recently had some problems with sales
as gas prices have risen and the American economy has faltered. By looking at product design
and competitiveness we hope to find a way to turn around sales and bring GM back to its status
among the top of the vehicle manufacturers of the world.
INTRODUCTION:
General Motors was founded in 1908, by William Durant, and was once the largest
corporation in the United States and the largest employer in the world. Through the years, GM
has incorporated many companies such as Hummer, Chevrolet and Saab into one giant company.
GM posted record profits in 1999 when gas prices were low (topping out at 1.26 a gallon) and
the economy was booming. GM’s success was mainly contributed to the high sales of bulky
vehicle lines such as Hummer, GMC, Buick, Chevrolet (mainly the selling of trucks) and
Cadillac. These vehicles were very luxurious, but also very demanding to our economy and its
limited supply of gas resources. Recent gas shortages have caused the price of gas to rise
sharply, resulting in the decrease of sales for most of General Motor’s product line. The large
truck and SUV line that had carried GM in the past has become their biggest weakness.
ALTERNATIVES AVAILABLE:
Our team developed three alternatives which could resolve the decrease in sales at
General Motors. The first alternative which we developed was to change the product design to
create more hybrid and energy efficient vehicles. After researching the alternative we found the
advantages and disadvantages of creating more hybrid and energy efficient, the advantages
include staying competitive in different markets, appealing to the changing consumer tastes and
remaining competitive with other automobile manufacturers. The disadvantages of creating
more hybrid and energy efficient vehicles include a possibility of creating a diseconomy of scale
with cost of production and training costs and competitors are already leading the market.
The
second alternative that our team developed was to change the marketing strategy to increase sales
and remain competitive. The advantages of changing the market strategy involve attracting new
customers, retaining efficiency in production and not having new training costs or product
development costs. The disadvantages of changing the market strategy include not being
competitive in different markets, losing old customers, no product design changes and may be a
short term “surface fix.” The third alternative is to explore the option of merging with another
corporation to become more financially secure and open up more opportunities. The advantages
of merging with another corporation are having more financial backing, products, facilities and
employees and having more collaboration of ideas between companies. The disadvantages of
merging with another corporation involve a possible clash of organizational culture which could
cause inefficiency, new training costs, a fight for managerial power in the unified business and
merging may not be a guaranteed fix.
RECOMMENDATION:
After in-depth research of General Motors we conclude that a merger or a new marketing
strategy might boost sales in the short-run, but there is a strategy which will be effective in the
long-run. We believe the best alternative to turn around decreasing sales is the decision to
change product design with an introduction of more hybrid and energy efficient vehicles.
ACTION PLAN:
For the first step of the process we would complete research on our competitors and our
customers. A full analysis of current product designs and sales of competitors will be executed.
We will review the pros and cons of each model and compare them to our current products. We
will survey consumers currently in the market for a car on the top five factors in their vehicle
purchasing decision. We plan to implement the “voice of the customer” into both product and
service development into the production decisions for General Motors.
In order to adhere to customer needs and continue creating quality products we will
develop a quality function deployment, also known as house of quality. This will determine
which alternative fuels and hybrid products to design, if any. The QFD will relate consumer
needs to product design decisions and give General Motors the opportunity to compare their
current abilities to their competitors. The QFD will compare the use of alternative fuels and
hybrid vehicles, quality, and quantity to consumer wants and to General Motors and their
competitor’s current product line.
After completing the QFD we were able to see that General Motors is behind as
compared to industry standards. The competitors are ahead of General Motors in nearly every
category defined in the competitive evaluation. Through using importance weighting GM will
be able to determine which area of product design to pursue and can work at increasing its sales
and market share. We would now set up a meeting with heads of each department. We will
discuss findings and how customer needs can be implemented in product design. The
manufacturing department will be briefed on where we view the product line for the future and
trained accordingly. The marketing department would be briefed on a new direction of the
companies product line and develop advertising based on changes. Management will be
instructed to recruit scientists and engineers to improve our alternative fuel department and
create unique new technologies.
The next step in the process would be a complete change product lines to appease results.
After all the research and new developments General Motors shall decrease the size of their
product line and increase their quality. The customer’s needs and wants will be fully applied to
the new designs. The new product line will be able to compete with the current market due to
more fuel efficient vehicles appealing to current consumer tastes.
Finally we propose that General Motors, after 2 years, redo the quality function
deployment to determine improvement in design and fulfilling customer needs.
ANTICIPATED OUTCOME:
By implementing new, more fuel efficient product designs, we hope to increase sales
exponentially with consumers worried about the decreasing economy and the high increase in
fuel prices. By altering product design, we anticipate more vehicles to be sold compared to
competitors, and GM will rebuild the market share which they once had. With the increase of
sales, we anticipate that the stock price will rise and the General Motor’s value will increase.
We hope, with the implementations we have made to GM’s product line, GM will move back
towards the top of the automotive industry.
SUMMARY:
After looking at product design and competitiveness we have found the way to turn
around sales and bring GM back to its status among the top of the vehicle manufacturers of the
world is through changing product design with an introduction of more hybrid and energy
efficient vehicles.
BIBLIOGRAPHY:
A brief history of General Motors corp. (2008). Retrieved November 10, 2008, from
http://biz.yahoo.com/ap/080914/gm-centennial-timeline.html
Brauer, K. (2008). GM V.P. Mark Laneve on gas prices, hybrids and more. Retrieved
November 11, 2008, from http://www.edmunds.com/karl/2008/05/gm-vp-mark-laneveon-gas
Cash Flow Scenarios. Image posted to
http://pbp.typepad.com/.a/6a00d8341ca06c53ef00e55380f0e78833-popup
Donnely, M. (2008). Motor Vehicle Sales in free fall. Retrieved from Progressive Business
Publications: http://pbp.typepad.com/economy/2008/07/motor-vehicle-sales-in-freefall.html#more
General Motors Logo. Image posted to
http://images.1aauto.com/models/General_Motors_Logo.jpg
GM posts record profits. (2008). Retrieved November 10, 2008, from
http://www.cbc.ca/money/story/200/07/18/gm000718.html
Hybrid Vehicles Sold vs. Average National Gas Price (2005-2007). Image posted to
http://blogs.mercurynews.com/nauman/wp-content/photos/jdpacht2.jpg
Strumpf, D (2008). GM stock price takes another hit; Financial turmoil, weaker sales hurts
General Motors; What do you think will happen next?. Retrieved November 10, 2008,
from http://blog .mlive.com/businessnow_impace/2008/10/gm_stock_price
Year over Year Motor Vehicle Sales by Company. (2008, June). Image posted to
http://pbp.typepad.com/.a/6a00d8341ca06c53ef00e5539c2db38834-800wi
APPENDICES:
A. Meetings
Meeting 1: September 15, 2008 4 p.m. Thesis Statement
Meeting 2: October 4, 2008 1 p.m. Revise Thesis and Develop Alternatives
Meeting 3: October 27, 2008 4 p.m. Create oral status report, PowerPoint, SWOT analysis,
determine advantages and disadvantages of alternatives, choose best alternative
Meeting 4: November 11, 2008 4:30 p.m. Introduction, Compile previous sections into case
study
Meeting 5: November 12, 2008 7 p.m. Complete Action Plan, anticipated outcome, summary,
and appendices. Complete case analysis
B. SWOT Analysis
Factors
History
Company Size
Product
Development
Strengths
• Background in auto
manufacturing
• Large company with too
many resources
• Developed first hydrogen
fuel cell
• Lost track of market
strategy
• Diversity in product lines
• Too many large size
vehicles and
undemanded vehicles
• Strong brand name
• Faces recalls
Products
Brand Name
Factors
Competition
Regulation
Economic
Social
Technology
Weaknesses
•
• Have not released newly
developed technology
Opportunities
• Ability to match and
surpass competition
designs
• Set the standard for
regulation in new
products
• Expansion of global
presence
• Following the “green”
movement
• Apply to more product
lines
Possibly too diverse and
lost focus on products
Threats
• The competition has
taken over market share
and developed new
technology
•
Must Adhere to new
“Green” Standards
• Cheaper
resources/manpower
available in other areas
of the world
• Negative reputation
already acquired
• Fallen behind in
technological advances