Global downfall

and

failure in India

of

by

Vedant Dubey &

Akshata Mahadik

INTRODUCTION

• Creation: 1897-1909
• General Motors was founded by William “Billy” Durant on September 16, 1908.
• In 1899, Opel entered the growing automobile market with the Opel-Patent- Motorwagen System Lutman and became a part of General Motors thirty years later
• Acquire more than 20 companies including Oldsmobile, Cadillac, and Oakland, today known as Pontiac.
• Acceleration: 1910-1929
• Philosophy and strategy of “a car for every purse and purpose,”
• The milestone 1927 Cadillac LaSalle, with curves rather than sharp corners and a long, low stance, made people see cars as far more than just a mode of transport

PROBLEM NO 1: NO PROPER MARKET SEGMENTATION AND PRODUCT DIFFERENTIATION.

Marketing terms

Market Segmentation

Product Differentiation

GM had five major car divisions: Chevrolet, Pontiac, Buick, Cadillac and Saturn.

This is their mid-priced Sedan segment in 2008

Chery Malibu 2008 Version ($20320)

Saturn Aura 2008 version ($20405)

Cadillac CTS 2008 version ($36560)

Pontiac g8 2008 version ($28250)

Buick Lucerne 2008 version ($27275)

WHAT SHOULD BE DONE DIFFERENTLY:

• The portfolio should be reduced from 5 to 2 or 3.
• The portfolio should be such that it focuses on different market segments, so there should be a brand for high end luxury cars, a brand for low and medium priced cars and a brand for commercial and heavy duty vehicles.
• There should be a central commissioning body for approval of designs and price so that there is no overlapping

PROBLEM NO 2: CHOICE OF QUANTITY OVER QUALITY:

• This is a classic Trade off that often corporates come across and to deal with it is often a challenge.
• General Motors chose quantity of cars over quality, which was accepted by their former Vice Chairman Bob Lutz, he said “ the company failed to implement adequate quality control and assurance measures during the late 90s and early 2000s onwards for the sake of meeting production quotas”.

• The problem of this approach is it increases the variable cost of producing each unit of car and reduces unit margin.
• Variable Cost: The variable cost is the amount of money spent on the production and sales of a particular product or services.
• There is also impact on the dealers of the car;
• many more dealers are required than necessary and due to this dealers make less car margins.
• there is an increase in inventory and the display cost.

Also, it hampers the quality of the product.

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WHAT SHOULD BE DONE DIFFERENTLY:

• There should be more emphasis on Quality of the product, making it better and also reduction the in the quantity of cars produced.
• The number of vehicle assembly plants should be reduced and reorganized according to the new quantity.
• The number of dealers should reduce so that there is good profit margin for them to sustain.

WHY

GENERAL MOTORS

FAILED

IN INDIA ?

Some cars launched by GM in India.

Beat

SR - V

Forrester

Magnum

Tavera

WHAT SHOULD BE DONE ?

• Know the complexity and diversity of the market before entering.
• Must follow proper long term strategic plans and have strong management.
• Should manufacture quality goods with the use of advance technology.
• Increase reliability and availability of spare parts.
• Improve dealership networks and customer service centres.
• Make necessary modifications and keep up with the competitors.
• Concentrate on brand-building activity or start customer loyalty programs.

GENERAL MOTORS TODAY

• In 2009, Obama government gave wail outs to GM, Ford and Chryslers by investing 25 billion USD.
• It was estimated that without this GM workers alone would have lost 3 million jobs which would have then increase their then unemployment rate by 0.2%.
• Under the leadership of Mary Barra, today GM has recovered and emerged to become the largest company in automobile industry in America with around 17% market share.

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THANK YOU !