Question 1: What was General Motors’ strategy, and why did General Motors acquire EDS in 1984?
General Motors (GM) is a multinational, publically traded corporation that specializes in automotive production, distribution, sales and maintenance. The technological boom experienced within the manufacturing industry in the later part of the 20th century created an opportunity to implement various Information Technology Systems and services to monitor all internal activities within a given organization. With the slumming stock prices and increasing pressure from international competition, GM’s only option was to automate its ongoing operations in hopes of becoming more effective and efficient in ...view middle of the document...
• Operational – improving HR expertise and experimenting with having both unionized and non-unionized workers, different pay scales and various performance reimbursements.
• Cultural – Working environment within the GM has become stagnant. Employees were no longer motivated to perform to the fullest of their potential, a trait that EDS employees learned how to master.
Potential Benefits Experienced by EDS:
• Competitive – EDS was competing with IBM for some of their clientele but they had no international expertise and could not work on a large scale without the support of an organization as GM.
• Financial – While EDS was a subsidiary of GM, it was a separate profit center. This resulted in EDS being able to price fix in order to boost up their own corporate performance, and subsequently, their publically traded stock (12).
Question 2: Why did General Motors spin off EDS as a separate company in 1995?
In 1995, GM chose to separate from its EDS division under mutually beneficial terms. From EDS operations point of view, it was next to impossible to compete for contracts within the auto-manufacturing sector due to any potential conflict of interest arising from such a deal. Specifically EDS has lost out on bidding for two prominent...