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General Motors

Mission Statement:

"G.M. is a multinational corporation engaged in socially responsible operations, worldwide.

It is dedicated to provide products and services of such quality that our customers will
receive superior value while our employees and business partners will share in our success
and our stock-holders will receive a sustained superior return on their investment."
Business strategy
To analyze business strategy we have to deeply understand the pattern of decisions deployed
within the following functional strategies Marketing strategy
General Motors, under siege for the recall of 2.6 million small cars with defective ignition
switches, will not change the strategy for selling its current lineup of new cars and trucks.
The recall, which began in February and was expanded last month, is the company's largest
crisis since it emerged from bankruptcy in 2009.
While GM's U.S. market share has declined 2.3% for the first three months of this year, it's
too early to say that the recall is hurting sales of its newest models. GM's sales rose 4% in
March from a year earlier, well above analysts' expectations and better than Ford's 3.3%
GM CEO Mary Barra has apologized to customers during congressional testimony and in
other forums. GM is reluctant, however, to incorporate an apology into its marketing.
GM is offering a $500 incentive to owners of the recalled models that they can apply toward
the purchase or lease of a new GM vehicle.
Product/Market
General Motors Corporation (General Motors), incorporated on August 11, 2009, designs,
build and sell cars, trucks and automobiles parts globally. The Company also provides
automotive financing services through General Motors Financial Company, Inc. (GM

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Financial). The Company's automotive operations meet the demands of the Company's
customers through its four automotive segments: GM North America (GMNA), GM Europe
(GME), GM International Operations (GMIO) and GM South America (GMSA). During the
year ended December 31, 2012, the Company's total worldwide vehicle sales were 9.3
million. As of December 31, 2012 the Company had ownership stakes directly or indirectly
in entities through various regional subsidiaries, including GM Korea Company (GM
Korea); Shanghai General Motors Co., Ltd. (SGM); SAIC General Motors Sales Co., Ltd.
(SGMS); SAIC-GM-Wuling Automobile Co., Ltd. (SGMW); FAW-GM Light Duty
Commercial Vehicle Co., Ltd. (FAW-GM); and SAIC GM Investment Limited, the holding
company of General Motors India Private Limited and Chevrolet Sales India Private Limited
(collectively HKJV). In March 2012, the Company acquired from Ally Financial 100%
interest of GMAC South America LLC. In October 2013, Fiat SpA's Fiat Group
Automobiles completes acquisition of 50% stake in VM Motor SpA Held by the Company.
In December 2013, General Motors Co sold its remaining 8.5 % in Ally Financial Inc.
These companies design, manufacture and market vehicles under the brands of Buick,
Cadillac, Chevrolet and GMC. In addition to the products the Company sells to its dealers
for consumer retail sales, the Company also sells cars and trucks to fleet customers,
including daily rental car companies, commercial fleet customers, leasing companies and
governments. The Company sells vehicles to fleet customers directly or through its network
of dealers. The Company's retail and fleet customers can obtain a range of after sale vehicle
services and products through the Company's dealer network, such as maintenance, light
repairs, collision repairs, vehicle accessories and extended service warranties. The
Company's authorized dealers offer parts, accessories, service and repairs for GM vehicles
in the product lines that they sell using GM parts and accessories.
The Company's dealers are authorized to service GM vehicles under the Company's limited
warranty program and those repairs are to be made only with GM parts. The Company's
dealers provide their customers access to credit or lease financing, vehicle insurance and
extended service contracts provided by GM Financial, Ally Financial, Inc. (Ally Financial)
and other financial institutions. GM is now trying to divide the emerging world between its
two partners. SAIC in Asian markets outside China and PSA in Russia and Latin America -

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though GM and PSA do not yet have specific emerging-market projects. Now they are
heading up to do business in Indonesia, Thailand and so on.
PricingIn February 2014, General Motors hit a milestone of sorts when its sales incentives, as
tracked by the research firm Edmunds.com, dropped below those of its domestic rivals, Ford
and Chrysler.
It was a satisfying achievement for G.M., which has labored to rebuild its product lineup
since its 2009 bankruptcy, and reduce its reliance on discounts to sell its cars and trucks.
But since G.M.s safety crisis began to mount in the spring, the automaker has piled on cash
incentives and cheap lease deals to invigorate sales of its passenger cars, particularly the
smaller models, joining what some of its competitors have been doing as well.
G.M.s overall sales in the United States have held up well despite the overwhelmingly
negative attention the company has drawn for failing to recall millions of defective small
cars for more than a decade.
In the first six months of the year, G.M.s sales rose 2.5 %, compared with the industry wide
increase of 4.3 %.
Yet most of G.M.s gains have been in sport utility vehicles. By comparison, its massmarket car models have struggled, be it the negative publicity, a more competitive
environment or consumers opting for bigger vehicles.
So G.M., which had worked hard to reduce its reliance on incentives, is back in the discount
game, for smaller cars. Its not the only automaker that has turned to incentives a broad
term for discounts, rebates and subsidized lease deals. Ford and Chrysler have bolstered
their use in recent months, and together with G.M., remain at the top of the list, according to
Edmunds.com.
Even with G.M.s recent increase in discounting, it is still a far cry from the days when the
company once offered employee pricing on its whole lineup, essentially taking losses on
its cars just to move them off dealers lots.

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Today, the incentives and lease deals are adjusted on individual vehicles each month, using
sophisticated data analytics and other methods.
So, by considering the present situation GM is not the price leader anymore and they dont
offer high price for their products in competitions.
Promotion, Distribution, Sales.
It also provides automotive financing services through its subsidiary, General Motors
Financial Co., Inc. (GM Financial). It finances its loan origination volume through the use of
credit facilities and securitization trusts that issue asset-backed securities to investors. GM
Financial specializes in purchasing retail automobile installment sales contracts originated
by GM and non-GM franchised and select independent dealers in connection with the sale of
used and new automobiles. GM Financial also offers lease products through GM dealerships
in connection with the sale of used and new automobiles that target customers with subprime and prime credit bureau scores. The firm sells vehicles to its dealers for consumer
retail sales and also sells cars and trucks to fleet customers, including daily rental car
companies, commercial fleet customers, leasing companies and governments. It sells
vehicles to fleet customers directly or through its network of dealers. The company offers a
wide range of after sale vehicle services and products through its dealer network, such as
maintenance, light repairs, collision repairs, vehicle accessories and extended service
warranties to retail and fleet customers.
General Motors recently named an engineer to serve as its first Cyber security chief as the
No. 1 U.S. automaker and its rivals come under increasing pressure to better secure their
vehicles against hackers. Thats the competitive advantage they are trying to really put in
place for General Motors. GM had started Flex fuel feature in new addition. General
Motors will soon begin an effort to sell high-speed Internet service to buyers of everything
from $17,00. AT&T will operate with very decent offer. A $5-a-day pass will give car
owners access to 250 megabytes. They are always coming up with new promotions and
features. It depends on their strategy how they promote the product. Sometimes push or
sometimes pull strategy.

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Research & Development Strategy

Product researchCurrently General Motors is focusing on Electric Vehicles while petroleum still dominates
the worlds markets. There are growing customer interest in gas-electric hybrids and pure
electric vehicles. To meet the customer demands for electric cars, and trucks GM has
announced a Chevrolet Spark Electric Vehicle, will be available in certain global markets in
2013. This kind of electric vehicle can run on 100 percent electricity.

2015 Chevrolet Spark EV is updated for 2015 includes enhanced acceleration, OnStar 4G
LTE with available built-in Wi-Fi hotspot with two new exterior colors: Salsa and Lime. It
uses no gasoline and has no emissions.

Product Innovation
GM gathers data from customer clinics and marketing surveys and combines this
information with formalized assessments of new technology. These analyses are used to
guide vehicle and feature concept studies, which are critically reviewed to determine
appropriate responses to emerging market and business opportunities.
General Motor Company is focused on customer needs. Petroleum dominates the worlds
markets. General Motor has discovered doing their research that, after 2008 downturn
people look for fuel efficiency vehicles.
Then they came with hybrid technology, which was not very successful since it still
consumes fuel and those hybrid cars are expensive. Therefore, General Motor continues
their work to innovate fully electric vehicle and they succeed. Moreover, that does not
pollute the environment. General Motors Company always wanted to stop environment
pollution.
The intent of the innovation process is to ensure that a steady stream of product and
technology options is developed on the basis of the companys sense of where the market is
headed. These options are potential responses that GM can use to capitalize quickly on new

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opportunities. The process is designed to be dynamic, with new information and ideas
moving continuously through the system. Each time the company goes through an
innovation cycle, we gain knowledge and discover new ways to apply it to subsequent
product and technology programs.
GM works with some of the best researchers in the world. The R&D Center has always had
excellent communication with experts in key technical areas, but recently this process has
been formalized by creating satellite labs. These are key centers of expertise (usually
universities), by means of which GM R&D can tap into an existing technological
environment. . GM also has intellectual property agreements with more than 60 universities
worldwide. The R&D Center has active contracts with most of them, including universities
as far away as China.
GM partners with suppliers, energy companies, government labs, and even competitors, in
addition to universities. The collaboration of GM, Ford, and DaimlerChrysler with the
federal government in the U.S. Partnership for a New Generation of Vehicles is a perfect
example of joint research in support of advanced vehicle technology. GM recently
announced a breakthrough on gasoline reforming technology achieved through research
collaboration with ExxonMobil. This technology, which produces hydrogen on board the
vehicle, is an important milestone on the road to development of a practical fuel cell vehicle.
GM has also begun to cooperate on research with its alliance partners. For example, research
programs have been established in Japan with Suzuki and Fuji Heavy Industries. Of course,
as noted earlier, GM and its subsidiaries around the world have worked closely for many
years
Financial Strategy:

Capital structure-

General Motors Debt to Equity Ratio (Quarterly): 0.9543 for June 30, 2014.

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At February 8, 2013 a total of 1.4 billion issued and outstanding shares of common stock
held by 319 holders of record.

Cash flowThe cash flow investment from the business goes for acquisition of companies, purchased of
leased vehicles, payments to purchased stock, debt, pension and health care plans etc.

InvestmentAt December 31, 2013 GM had 104 locations in 25 states and 81 cities or towns in the U.S.
excluding our automotive financing operations and dealerships. Of these locations 40 are
manufacturing facilities, of which 12 are engaged in the final assembly of vehicles, other
manufactured automotive components and power products. Of the remaining locations 24
are customer care and aftersales operations.
There are 16 locations in Canada and they have assembly, manufacturing, distribution,
office or warehousing operations in 59 other countries, including equity interests in
associated companies, which perform assembly, manufacturing or distribution operations.
Their subsidiaries, or associated companies in which they own an equity interest, own most
of the above facilities.

-Direct investments in private equity, private debt and real estate securities, are generally
valued in good faith via the use of the market approach (earnings multiples from comparable
companies) or the income approach (discounted cash flow techniques), and consider inputs
such as revenue growth and gross margin assumptions, discount rates, discounts for lack of
liquidity, market capitalization rates, and the selection of comparable companies.

Stock price management-

As they are publicly traded so it is very easy to get all the information in market. They
disclose their own information.
In 2009, General Motors shed several brands, closing Saturn, Pontiac and Hummer, and
emerged from a government-backed Chapter 11 reorganization. In 2010, GM made an initial

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public offering that was one of the world's top 5 largest IPOs to date and returned to
profitability later that year.
In 2010, General Motors ranked second on the list with 8.5 million units produced globally.
In 2011, GM returned to the first place with 9.025 million units sold worldwide,
corresponding to 11.9% market share of the global motor vehicle industry. The top two
markets in 2011 were China, with 2,547,203 units, and the United States, with 2,503,820
vehicles sold. The Chevrolet brand was the main contributor to GM performance, with 4.76
million vehicles sold around the world in 2011, a global sales record.
On April 24, 2014, CNNMoney reported that GM profits fell to $108 million for the first
three months of 2014. GM now estimates the cost of their 2014 recall due to faulty ignition
switches, which have been linked to at least 13 deaths, at $1.3 billion. Shares of GM were
down 16% for the year before the new announcement of GM's lower profits.
Human Resources Strategy
WorkforceUntil now, in recent decades, GM has peopled its new factories mostly from banks of laidoff workers and employee transfers from other locations. GM is now forecasting enough
manufacturing expansion to require large-scale employee recruitment. They are looking for
people who display teamwork, and people who can handle multiple jobs. They want people
who can drive quality through organization, they need to be problem solvers, and have an
aptitude for leadership.
General motors employees earn $65,000 annually on average, or $31 per hour, which is 13%
higher than the national salary average of $57,000 per year. According to career bliss data,
the highest paying job at General Motors is a Global Director at $146,000 annually while the
lowest paying job at General Motors is a Lube Technician at $18,000 annually.

General Motors is likely to spend more than $500 million on employee bonuses and profit
sharing based on the company's performance.

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GM, which made a record profit in 2011, paid bonuses of at least $182 million to whitecollar workers such as engineers, car designers and managers. They paid $332.5 million
from profit to factory workers as a bonus.
The white-collar bonuses are determined by a worker's pay grade, individual performance
and company metrics that measure whether GM met goals including pretax earnings, market
share, cash flow and quality. This year's salaried bonuses will be smaller than last year's,
when the company met all of its goals. A small number of top performers will get pay raises
or larger bonuses.
Managerial
GM recognizes that diversity in the workplace is all about creating an inclusive Workplace
of Choice that welcomes and enables all employees to perform at their highest potential
toward achieving GM's business objectives and each individuals professional goals.

GM invests in educating and training our employees on the importance of diversity as a

business and cultural imperative. Its important that all employees feel included and has
voice in shaping the quality of work life at GM. GM sponsor 12 different employee resource
groups that serve as a vital communications link between senior leadership and the ideas and
thoughts of employees from various backgrounds and experiences, ethnicity, gender, sexual
orientation, national origins and generations. Most importantly, GM engages all of our team
members in helping to design build and sells the world's best vehicles. GM recognize that
people are truly our greatest asset and we will only be successful when our employees are
able to freely be themselves and perform at their highest capabilities inside GM and within
the community.

GM and the GM Foundation support diversity and community organizations in various ways
including sponsorships and participation in events. In addition, since its inception in 1976,
the GM Foundation has helped support American charities, educational organizations and to
disaster relief efforts worldwide. The GM Foundation puts an emphasis on diversity in
supporting Education, Health and Human Services, Environment and Energy, and
Community Development initiatives mainly in the communities where GM operates.

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Stakeholders are working together to achieve profitability, growth and retention of GM

women dealers.

The National Candidate Program is the training and development arm of the Dealer
Development program. Its mission is to prepare minority and women candidates to become
GM dealer operators/owners.

About GM and strategic alignment

Now, the first question is GM aligned? For us it is not aligned. Why they are not aligned, to
answer this we have to know the situations at a glance.
Everybody knows the fate of GM. What does strategic alignment have to do with the demise
of the once largest automobile manufacturer in the world...? Everything!
When the purpose and brand values of company aren't clear, there will never be a clear
strategy. Without a clear purpose and strategy people do not focus, and are not able
to identify with the brand and what it stands for. GM's internal organization has been
suffered for decades, its production has been hampered by strikes, and its marketing has
since long lost track of the developments in the outside world where car buyers have
increasingly been disappointed by the failing reliability and lack of fuel efficiency of the
GM cars they bought.

The Saturn case: a demonstration of lacking in alignment

A clear example of lack of strategic alignment in GM is the story of Saturn.

About 25 years ago - in 1985 - GM founded Saturn, the car brand intended for a rearguard
action against the fuel efficient and high-quality foreign-made cars that had flooded the
market after the 1973 oil crisis (Why did it take 12 years...?).

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GM founded Saturn in the hopes that "A different kind of Car Company" would bring
foreign-car fans to GM. Initially it actually worked; most Saturn buyers had never bought a
GM car before. In fact, many owners didn't even realize they had a GM product in their
driveway.

It's not that Saturn were such bad cars, the models just weren't terribly interesting, attractive
or exciting. Owners were mainly attracted by Saturn's friendly no-haggle car pricing policy.
Saturn also earned a reputation for fuel economy and dependability, despite the fact that
Saturn was actually about as dependable and efficient as similar cars from other GM
divisions.

For years, GM didn't seem to know what to do with Saturn and the brand languished with
cars lacking inspiration and appeal. Eventually GM decided to make Saturn just as it made
other GM models - basing them on the same underlying outdated engineering as its other
cars - but making the designs more eye-catching. It took GM 23 years (!) - Until 2008 - to
complete the change over to a new, more attractive line of car models. Then the economy
tanked, marketing money dried up and with Saturn sales being sluggish, GM decided to pull
the plug on Saturn.

Saturn has never become the success GM intended it to be, mainly because the Saturn
management didn't get the freedom and mandates to run their own business, and employees
were never geared towards delivering the premium reliability and efficiency required to
become the no. 1 best selling car in the market. They remained the typical GM workers in
the typical GM bureaucracy they had always been, instead of rethinking their business
processes and developing their own 'Saturn Way'. Saturn's business purpose (deliver an allAmerican, reliable and fuel efficient car to the US market) and strategic goals (become the
no. 1 car brand in the US) were clearly out of line with GM's business processes (dominated
by stifling bureaucracy) and company culture (sluggish, slow apparatchik style decision
making combined with lack of identification with the brand values), and they failed to
change this. In 2009 Saturn filed for bankruptcy, and the brand will be phased out by 2011.

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Meanwhile, the Toyota Camry became the no. 1 best selling car in the US instead, closely
followed by the Toyota Corolla.

After the 1973 oil embargo Cadillac - the GM luxury brand - joined other luxury brands in
trying to attract more entry-level buyers with a smaller, more fuel-efficient car. Of-course
the most important element of a luxury brand is its image and one bad model can ruin it.
Instead of coming out with a truly new product, GM added the Cadillac crest to what was in
fact a rebadged Chevrolet Cavalier, while adding thousands of dollars to the price tag. In
effect, it was neither a good Cadillac nor a good value, and it never became a success.
In the first decade of the 21st century GM tried the same trick again; it started putting
badges of GM brands on 'no-name' but more fuel-efficient foreign cars.

Instead of listening to their buyers GM for decades has consistently ignored world scale
ecological and economical developments. Contrary to what Opel - one of GM's most
successful car brands - did in Europe, GM in the US continued building bigger cars based on
ancient fuel gurgling engine technology.

It was just a few years ago - at the 2004 North American International Auto Show in Detroit
- which Robert Lutz, GMs vice chairman of product development at that time, said about
the Toyota Prius: "It just doesn't make environmental or economic sense to try to put an
expensive dual-powertrain system into less expensive cars which already get good
mileage". Lutz also said: "Hybrids are an interesting curiosity and we will do some, but do
they make sense at $1.50 a gallon? No, they do not."
Well, as we all know, the curiosity called Toyota Prius is one of the most successful car
models in the market; the 2010 Prius drew almost 100,000 consumer orders in the US
months before going on sale.
.GM missed crucial opportunities to rethink its purpose, its goals, its strategy, and in line
with that its organizational model, and last but not least its company culture.

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On June 1, 2009 GM filed for bankruptcy protection, set to close more than a dozen
facilities and cut more than 20,000 jobs. It was Charles Darwin who said: "It is not the
strongest or most intelligent that survive, but those who can adapt to change".

GM has become one of this world's industrial dinosaurs. GM since decades has been
heading the same way the dinosaurs went. Let's hope that GM is able to realign itself with a
clear, new business purpose, and turn the tides in time.

The buying decision of General Motors-

After all these analysis, we as a consultant recommended to buy this company. Before
explaining why should buy we are going to explain first why would anyone, sell shares of
General Motors? The company has been turning itself around since its bankruptcy
restructuring in 2009. But there's one big problem most interested investors are focusing on:
its massive recall debacle. It's not yet clear how much its recalls will cost and whether the
company will face criminal charges as well. This year (2014), among 37 million recalls
issued about two-thirds came from GM.

Other concerns include net profit margins and net income trending downward while debt is
high and rising -- though revenue has also been rising and free cash flow is robust at roughly
$5 billion annually. Taken together, those details make General Motors far from a slamdunk investment, but a growing top line is hugely valuable, suggesting that earnings can
grow once operations get more efficient.

The drawbacks of General Motors may lead investors to turn to other automakers such as
Ford Motor Company (NYSE: F ), but despite its own recent successes, Ford is carrying
much more debt than General Motors and has recalled millions of vehicles, too. They are
also working on their discount projects for recalling issues.

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Now, we can say why to buy General Motors?

Here is the twist. Despite General Motors' massive recall, its sales are up. In fact, in part via
a $500 incentive, it's getting many owners of recalled vehicles to buy new ones. Its first 6
months of this year sales report was very strong, featuring double-digit growth. Its recent
vehicle redesigns have been effective, and more are coming.

A key area of promise for General Motors (and other automakers) is China, and General
Motors leads the pack there, investing heavily in further growth. It's also making significant
investments in other populous developing markets, such as Brazil.
Then there's its newly reinstituted dividend, recently yielding a meaningful 3.3% and likely
to rise over time. Many also see promise in new CEO Mary Barra, who has been with the
company for more than 33 years in many capacities.
Overall, while General Motors is indeed facing some challenging times, long-term investors
should consider it for their portfolios. Its price-to-sales ratio was recently 0.4, well below the
industry average, and its forward P/E ratio is below eight. Warren Buffett, a legendary value
investor, has more than $1 billion in GM stock, and he added nearly 3 million shares in the
last

quarter.

A major technological shift is happening in the automotive industry. Most people are
skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real
threat" to one of his favorite businesses. An executive at Ford called the technology
"fantastic." The beauty for investors is that there is an easy way to ride this megatrend.

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