Solongo Burennemekh Marc Hamilton Management Practices 24 October 2012 GM SWOT Analysis General Motors (GM) is the one of the biggest automaker company in the world. It was established in September 1908, headquartered in Michigan and Detroit. They do financial and automobile business all over the world, and they are very successful Multinational Corporation in the U. S. However, because of the great recession, they suffered some financial conditions and crisis. In November 2010, GM made the world’s largest initial public offering (IPO) and that decision bring them a bright future (“About GM”).
In the past hundred years, GM tries to turn its threats into opportunities, maximize its strengths as much as possible, and struggle to overcome its weaknesses. The company history said that they have various strengths and opportunities. Large market capitalization could be one of the primary strengths of GM. According to the Yahoo Finance, GM’s market capitalization equals $37. 38 billion U. S dollar and they have 8. 1 million shares outstanding in the stock market (“General Motors”). They increase their size of market capitalization by doing IPO in 2010, so they raised $20. 1 billion on the U. S stock exchange market.
Even though GM’s market share decreased and they were in bankruptcy in 2009, the company recovered its market share successfully and renewed its investor’s confidence (“About GM”). GM is leading Multinational Corporation in the world, which means they have precious global experience in the global markets. Therefore, the global experience could be other key strengths of GM. For example, they increased their global market share by 0. 4 percent from 2010 to 2011. In the Chinese automobile industry, GM is the market leader, and their sales and joint venture partners are increasing continuously (10-K).
They run business more than 150 countries, and they have complex assembly line, distribution network, manufacture, and warehousing operations in more than 60 countries. In addition of those strengths, GM has strong brand name and portfolio. Although they cut its brand names such as, Pontiac and Saturn and sold hummer to China, they still have Cadillac, GMC, Chevrolet, and Buick (“About GM”). Despite their strengths, they have some weaknesses such as, low debt rating, bankrupt, and large amount of debt. Standard & Poor’s gave its first AAA credit rating to GM in 1950s, and GM held its highest credit rating until 1980s.
Nevertheless, because of the great recession, the North America’s vehicle demand declined sharply, and it affected for GM’s sales volume poorly. The company suffered deep financial crisis, and Standard & Poor’s lowered its debt ratings CCC- in 2009 (Maynard, par. 7). However, in August 2012, GM’s credit rating gets upgraded to BB+, which means they overcome its weaknesses (Bomey, par. 2). Moreover, in 2009, GM filed its bankruptcy. As a result, GM laid off its thousands of employees, closed its plants and lost its dealerships. The U. S government gave $49. billion bail out to GM to avoid bankruptcy and restructure their operations in 2009 (Amadeo, par. 1). However, some people reported that the U. S government wasted billions of taxpayers’ money, and GM is going to file bankruptcy again, but it is not true. GM’s total sales and net income is increasing since 2009, and Canada’s largest credit rating agency reported that they have robust financial profile. Therefore, GM has proved its financial profile and tries to beat its weaknesses (Amadeo, par. 2). Additionally, they had $9. 5 billion loan from Canada, and if the U.
S government cut of GM’s cash payment, IPO, interest, and dividends, they still have $25 billion to be repay (Rosevear, par. 3). This big amount of loan and interest payment could be one of the biggest weaknesses of the GM corporation. Even so, GM still has strong opportunities in the automaker industry. For example, GM has big opportunities in emerging market. In 2011, GM’s 72. 3 percent of the vehicle sales generated outside in the U. S, and it includes 43. 4 percent from emerging market. Industry analyst forecast growth of around 12. million units in only for emerging market for the next 4 years. In this forecast, China, Russia, India, and Brazil have the highest increase of demand (“About GM”). In recent years, hybrid electric vehicles demand is expected to increase, so GM can take advantages from that market. Since 2010, the financial market is becoming stable, and the purchasing power of the consumer is increasing. This could be another opportunity for GM. Additionally, GM has the millions of loyal customers, so they can keep and attract their customers to offer more efficient and higher-quality car.
Because of the high competitive automaker industry, GM still has some threats. Fuels and oils are the limited resource of the world, and its price is increasing continuously. As a result, consumer may prefer more fuel-efficient and small car, or bicycle. Because of this threat, GM can lose its customer. Also, the company faced high labor and raw material cost due to the economic downturn. If they do not decrease their labor and material cost, they will lose their opportunities. Even though GM tries to do its best, it has lots of strong competitors such as Toyota, Honda, Ford, and Nissan.
Therefore, it is not easy to be the leader in the automaker industry. Also, the recent report said that the demand for developed market is expected to decrease in the future such as, Western Europe and Japan. Due to the fact that GM’s sales volume is going to decrease, they cannot achieve their goals (“About GM”). However, by using their strengths and opportunities, they can overcome their threats. Works Cited “About GM. ” General Motors. General Motors. 2012. Web. 22 Oct. 2012. Amadeo, Kimberly. “The Auto Industry Bailout. ” About. com US economy. About. om 28 Mar. 2012. Web. 24 Oct. 2012. Bomey, Nathan. “GM Credit Ratings Get Upgraded. ” Mail Tribune. Dow Jones Local Media Group, Inc. 27 Aug. 2012. Web. 24 Oct. 2012. “Form 10-K. ” SEC. gov. Web. 24 Oct. 2012. “General Motors. ” Yahoo Finance. Yahoo! Inc. 2012. Web. 24 Oct. 2012. Maynard, Micheline. “Bankruptcy Specter Raised as Rating on GM Debt is Cut Anew. ” The New York Times. The New York Times Company. 13 Dec. 2012. Web. 24 Oct. 2012. Rosevear, John. “When Will GM Pay Us Back? ” The Motley Fool. The Motley Fool. 22 Mar. 2012. Web. 24 Oct. 2012.