The Collapse of General Motors

7396 WordsMar 8, 201230 Pages
MGX 9660 - International Business Theory and Practice Case n°10: The Collapse of General Motors PHAM Trang (23283300) REBOURG Malcolm (23625678) YAO Aileen (20460996) 1 Table of Contents I - Introduction………..………...………………………………………….….….p 3 II - What are the internal and external factors that contributed to GM’s decline and eventual bankruptcy protection application?……………….....….p 4  Internal Factors...………….……..…………………………...……….……….…p 4  Extenal Factors……….…..…………………………..……….………………….p 5 III - Discuss the latest stage of the new (smaller) GM……………….………...p 6  What are the characterisics of the new GM?..………………………………...…p 6  Some encouraging signs of recovery………………………………………....….p 9  Threats regarding GM’s trials…show more content…
This heavy burden made the business impossible to sustain in the long run. High cost of internal supplies GM’s decline can also be concluded by the failure of cost cut. As sales decline, variable costs, manufacturing costs and material purchases should also be reduced. However, since GM has significant fixed costs, for instance the pensions and healthcare costs, it has been difficult to do costs cut in a successful way. As a result, the total costs of GM remain much higher than the one of its competitors. Wrong evaluation of customer needs Since 1980, GM has failed to respond to customer preference and needs. This resulted in wrong focus on vehicle types in the U.S. market as customers preferred smaller, cheaper and more efficient cars rather than the bigger vehicle that GM had to offer. However, GM’s profit mainly relies on the sale of SUVs and trucks, which is no more popular and this led to the decline of sales and revenues. In addition, GM’s cars are less fuel efficient compared to its competitors such as Toyota and Honda. This resulted in a decrease of GM sales in Asian and American markets. Furthermore, there is little differentiation among the vehicles produced, so the various customer needs cannot be satisfied and it is more likely for customers to switch to other brands that have better design. 4 External Factors Powerful competitors Toyota, one of GM’s most powerful competitor, has
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