The Decline and Collapse of General Motors

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The Decline and Collapse Of General Motors

ntroduction
General Motors (GM), who once dominated the automobile industry, has now plummeted, almost to the point of extinction. Throughout the 1940’s to the 1970’s General Motors (GM) had dominated the automobile industry. By the 1980’s, GM was suddenly facing a shift in the economy and consumer demands.
GM’s Earlier Successes
In the 1950’s, GM agreed to pay their workers well, by signing groundbreaking long-term employment union contracts which included:
• workers to be the highest paid in America
• pay rates were automatically increased with the rate of inflation
• workers were paid during shutdown periods
• extensive health coverage
• strong retirement benefits
• substantial
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GM was given the opportunity to make radical changes and regain its market leadership, they failed. The Saturn was introduced, but has recently closed its doors.
Adam Hartung (a business advisor), says GM could have avoided its present dilemma. According to Hartung, Smith shouldn’t have opened a new division separate from the main firm. Instead he says Smith should have focused on making dramatic changes within the existing company’s labor structure, dealer structure, and vehicles, by imitating its competitors.
GM’s Demise
It was GM’s arrogance that led this company to their present demise. GM had monopolized the auto industry for so long, they thought they were infallible; believing that its competitors would never have the resources or capability that they had. GM never considered shifts in the environment (gas prices and a declining economy) and consumer demands for quality and fuel-efficient automobiles.
Too busy with their own internal problems, like employee contracts that forced them to focus on high profits; they had ignored and underestimated their competitors. GM has lost its share of the market. Had they focused on the innovation they had when the company was first established, they may not be in the situation they are in today. It appears that they had drifted away from their mission to become and stay the leader of the automotive industry, now their paying the price. Recently, GM’s stock price had fallen from $96 per
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