BCS CAPSTONE page 1
Analyzing GM
Michael Jones
BCS 440
BCS CAPSTONE page 2
General Motors Business Strategy The General Motors' strategy is to position itself in emerging markets so that the company will grow simultaneously simultaneousl y with these economies. GM is switching switching gears and trying to break into other markets like China and India. Those two countries seem to be very receptive to buying GM cars. This will help GM GM restructure their business because the American economy is still not as stable economists think. With that in mind GM is really nervous about investing investing heavily into the American market. At this point 70% of its car sales are coming from China and India. GM launched 17 new products last year in Africa, Middle East and Latin America. They are expected to do do the same this year year as well. GM is redesigning the Malibu with a catalytic converter to compete with the Toyota Camry. Industry observers are doubtful that this will gain the confidence of the American people to buy a Malibu. The Malibu only sold 163,000 units last year compared to the Camry which sold almost 450,000.
IT influence on the business of GM
In 2009 Fritz Henderson Henderson resigned as GM CEO. He was apparently heading up the IT department. The CIO Terry Kline wanted to prioritize three things in the IT department. “They were improve the company's financial reporting systems and processes; and create a "world-class desktop," not just for the company's engineers, designers, and other power users, but also for every regular GM worker. That includes a company-wide rollout of Windows 7 starting in March, and to be finished for all 100,000
BCS CAPSTONE page 3
GM PCs by year's end. That third priority jibes with a related Kline mandate: Make GM's IT architecture more hospitable to leading-edge consumer technologies, particularly smartphones.” smartphones. ” (Weier 2009)
GM has 1500 IT employees and outsources 90% of its IT work to companies like IBM. At one point EDS did all of the IT work for GM but that has changed. GM put up a 15 billion multi-year IT service contract for bidding. The winner would have to be more flexible and allow GM and outsourcers to work closer together and GM could switch suppliers if necessary.
The culture was changed in the IT department department under Kline. He wanted to bring a different culture and change the old GM way of thinking in the IT department. He wanted fewer approvals. Cell phone policies w would ould be decided by the business managers. Big purchasing approvals would be done by the group group CIO’s as long as it went along with with the vision and strategy. The measuring stick for performance metrics was to in depth so Kline cut that back. Also, weekly meetings were initiated to take the place of monthly meeting so decisions would not have to wait.
Infrastructure and Architecture
GM has spent that time overhauling the IT infrastructure that keeps 160 global plants churning. Now largely complete, the massive undertaking included standardizing software and processes at every plant, updating networks, and creating four command centers--in the United States, Latin America, and Europe--each designed to let experts look into any GM factory around the world and help get idled production lines back up
BCS CAPSTONE page 4
faster. GM has two new world class software applications. One is a product route and tracking system. This will keep track of the vehicles being built on the line and make sure it is to spec. They also have put in an in-plant order management system. This will get the suppliers more in the game by letting them interact with the assembly line. This will help ensure that the plant does not run out of parts.
GM has a good infrastructure here in the USA. We have all the resources we we need. Look at the Chevy Volt for example. Here in the USA we have the power to charge the cars when they are sold. The consumer obviously needs enough electricity to charge the car. Recently GM realized that India has a poor infrastructure to support the sales of the Volt. Volt. In the city of Delhi there is not enough electricity to charge the car when it is not in use. This will obviously make it difficult to sell cars there.
GM still needs to work on an effective business continuity plan. When the earthquake happened in Japan it eventually shut down some GM plants because they could not get the parts that Japan made from anywhere anywhere else. Therefore, it crippled production for a short time. GM does stock up on inventory of assembled products like motors and completed vehicles. As far as the parts to assemble these products it would would be in their best interest to have a effective back-up plan to unforeseen events.
SWOT Analysis
Since the bail-out GM GM has had had to reorganize and restructure the company. This means that they also have to re-evaluate themselves with a SWOT analysis. This will
BCS CAPSTONE page 5
tell GM its strengths, weakness, opportunities and threats. This is essential to any business trying to re-invent itself.
The strengths of GM are its branding and worldwide presence. To expand on the internet GM created what they call E-GM. This is designed to move GM into being a dominate e-commerce business. E-GM will integrate online car buying for dealers and consumers. It will also deal with advanced auto communication systems. GM really expects this to take off to make them a real e-commerce business. Although the other major car makers are doing the same GM believes it will be ahead of the rest and set the pace for e-commerce for car makers. GM says this will create new opportunities with other clients and suppliers.
There is skepticism about whether the auto giant can compete with other online car dealers that are more nimble and quick. For example, E-bay is able to sell cars and compete with anybody on any level. The consumer already knows E-bay and what what kind of deal they could get. E-bay would be a threat to GM in this area of business. Autobytel.com Autobytel.com and Carpoint.com Carpoint.com would would also be be competitors competitors of GM. GM. These companies companies are already established in this area of business. The client base GM would be targeting would be internet savvy people who are looking for the best deal. When you do sales face to face you can sell cars to a lot of people who are not really car savvy. Internet buyers are a different breed of people.
GM will continue to develop the electronic business and technology. They must do this to compete with with other world car makers. As they have expanded to foreign markets the e-commerce will become even more needed. The age of computers is only
BCS CAPSTONE page 6
going to become bigger. To continue to succeed they must keep developing there ecommerce department.
GM does have internal weaknesses. The operational managers have spent way to much money on projects that have gone nowhere. nowhere. GM has wasted 80 billion dollars from 2004 to 2009. GM was not paying attention to the need for changing the culture with the information technology department. They let the technology suffer on the inside and as a result there has been frustrating results.
GM does have opportunity to grow in China and increase sales. Because of a strong infrastructure in China and advanced software monitoring vehicles being made and uniting the supplier more with the plant, GM will see increased sales in China at a rate of 2.5 million units by the end of 2013. The global truck sales will be on the rise due to the global presence and a well marketed product.
GM does have to take into consideration the economic challenges for everyone planning on buying a GM vehicle. GM vowed it would would not go back to its excessive ways when it filed for bankruptcy in 2009. There is now real intense competition that GM has to deal with. To win back the confidence of the consumer may take a while. The damage is done by people turning their back on GM and buying foreign cars. It will take a lot of hard work and quality vehicles to gain that trust again.
Was the bailout ethical?
When looking at both sides of whether the GM bailout was ethical both sides have a good point. One side says that if GM went went under then there would would be the ripple
BCS CAPSTONE page 7
effect and thousands of jobs would would be affected. On the other hand is it right to burden the American people with paying for the bail out. Some would say that GM put themselves in that position by spending too much and agreeing to burdensome UAW concessions and the pensions that have to be paid out every month. Who is to blame and was it ethical. There was a mismanagement of money somewhere that put GM in the red. I think that a interesting fact is that GM was only in bankruptcy for 40 days. This would imply that the bankruptcy was purposed by the accounts of GM and it was all a way to shed itself of supplier debt and UAW workers.
The GM card and GM dealerships have handled the private information of customers with good ethics. GMs privacy policy is very very clear. They will not use your information for any other use then what they state:
Abiding by the legislation legislation in place for privacy privacy
Providing you with special offers
Conducting market analysis;
To better serve you with keeping track of your warranties
Being able to collect on debts if you default on a loan for a vehicle
GMs funding of IT GMs IT department needed a total overhaul. The systems were to complex and the software was actually written by GM employees. After much research I have concluded that GM funds IT out of pocket. It seems they use the chargeback system between
BCS CAPSTONE page 8
plants for quality issues. One plant can charge charge another plant for sending them bad motors.
The knowledge management role Giving the need for cultural change knowledge management has become a big issue at GM. There has been a company-wide expansion of the Microsoft My Site to all GM salaried employees. This will allow the employees to interact like on a web web 2.0 type social network. They can upload pictures and and have their own web sites. They can also post what projects they are working on or give their thoughts on a certain topic. This will allow the employees to share as much knowledge as possible with one another and collaborate on projects and ideas. It is a way way to connect without being hindered.
GM is also giving employees a "world-class desktop." How does IT justify a new operating system as a burning priority? The promise is that it will make people more productive--largely through better collaboration, including leveraging the cloud functionality of Office 10 and SharePoint 2010--and lower IT operating costs. This will allow knowledge to be transferred quickly among employees.
Recommendations and Conclusion
GM has come a long way and has a long way to go. They have made huge strides to cut out wasteful spending and make better choices to keep the business vibrant and alive. By restructuring the IT department they now can compete with other car makers. The more relational approach to connecting with the customer is working working for them. GM has been listening to the consumer and building quality vehicles.
BCS CAPSTONE page 9
Building a web presence has been beneficial and have helped create more of a global presence.
BCS CAPSTONE page 10
References
Carzey Team. (2011 ). General Motors ExclaimsExclaims- Absence of Good Infrastructure Infrastructure in India for Electric Car rd
Launch. Carzey. Retrieved on September 3 2011 from
http://www.informationweek.com/news/hardware/desktop/222000595
Ellis, Kathleen. (2011).The Aftershocks of Vulnerable Supply Chains . Insurance Journal. Retrieved Sept nd
2 2011 from http://www.insurancejournal.com/magazines/features/2011/06/20/203032.htm th
Will, George. (2006). GM Chief Outlines the Company’s Strategy. ABC This Week. Retrieved August 6 2011 from http://abcnews.go.com/ThisWeek/Autos/story?id=1483690
Reid, Mark. (2009 ). An Analysis of GM information Systems and Their Usage for the the Firms Wider th
Strategic Objectives. University of Greenwich Business School. Retrieved August 6 2011 from
http://gre.academia.edu/MJReid/Papers/252199/An_analysis_of_General_Motors_information _systems_and_their_usage_for_the_firms_wider_strategic_objectives _systems_and_their_usage_ for_the_firms_wider_strategic_objectives
Shetty, Netra. (2001). Financial Analysis of General Motors . Management Paradise. Retrieved August th
7 2011 from http://www.managementparadise.com/forums/financial-management/215258financial-analysis-general-motors.html rd
Weier, Mary. (2009). GM’s IT Strategy . Information Week. Retrieved on September 3 2011 from http://www.informationweek.com/news/hardware/desktop/222000595
