Case 34 Essay

335 words - 2 pages

General Motors Case Study

Case 34

General Motors

What are key forces in the general and industry environments that affect the U.S. auto industry, and General Motors?

General Motors (GM) has suffered different threats and difficulties that have put in risk the continuity of its production. Before the year 2000, GM has been going through different production, financial, and development problems. Wagoner has tried in different ways to address each problem in order to make GM more ...view middle of the document...

First, the threat of new entrants highly affected the firm. GM has so many divisions and units which made the firm weak in its integration. GM had 27 different units within the firm that purchase parts that made it difficult to achieve economies of scale. All those units worked independently and do not contribute each other. In other to solve that, Wagoner started working to integrate each unit, especially overseas. Also, he took the decision to reduce the number of units and divisions which helps to integrate a lower number of divisions. In addition, GM decided to change its products line. One way was reducing the numbers of divisions and the other was to change the division style by changing the product balance. Having a different product mix, GM increases its profits by having a larger margin with some models. One of these changes was the expansion of sporty models. Another problem faced by GM is the capital requirement. Due to high losses, GM has required loans from the...
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