Problem Faced by Gm

General Motors Corporation (GM) is a multinational automobile manufacturer founded in 1908 and headquartered in the United States. GM is the world’s largest automaker as measured by global industry sales and has been the global sales leader for the last 77 years.

As of 2008, General Motors employs about 266,000 people around the world. It manufactures its cars and trucks in 35 different countries and sells them under the brands of Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall, and Wuling. As of 2008, General Motors is the ninth largest publicly traded company in the world. In recent years the company has endured significant financial turmoil, including a 38 billion dollar loss in 2007.

A major problem faced by General Motor Corporation is rising fuel prices.

With GM being a large producer in both trucks and SUV’s, sales have drastically decreased due to the lack of fuel efficiency. The rise in fuel prices has played a significant role in creating the opportunity for development of both hybrid and more fuel efficient vehicles. Hummer, the sport utility vehicle (SUV) brand which symbolised Americans’ love for hulking gas-guzzlers, is being put up for sale by General Motors because its customers have deserted in droves since petrol prices soared higher.

Throughout our vehicle brands GM have 13 vehicle models that achieve at least a 30 mpg highway rating or higher for the 2010 model year. GM made the vehicles more efficient through the use of a variety of technologies such as Active Fuel Management, six-speed transmissions, variable valve timing, and direct injection. GM also offer five hybrid vehicles – Chevrolet Tahoe, Chevrolet Silverado, GMC Yukon, GMC Sierra and Cadillac Escalade.They are the leader in fuel economy .

The second problem faced by General Motor Corporation is growth of Competitors .

This is GM’s biggest weakness. The alternative energy/hybrid trend has begun to take place in the automotive industry and GM has been one step behind the competition in terms of alternative energy vehicles. This has led to many problems including loss of market share and a decrease in company profit. In order for any automotive company to be successful from this point forward they must be Hybrid friendly and fuel efficient.

With the rise of foreign competitors like Toyota, Honda and Nissan in the 1970’s and 80’s, rivalry in the American auto industry has become much more intense. Firms compete on both price and non-price dimensions. The price competition erodes profits by drawing down price-cost margins while non-price competition (e.g., new car rebates and interest free loans) drives up fixed cost (new product development) and marginal cost (adding product features).

Lack of differentiation opportunities

One of the other reasons there is such high rivalry is that there is a lack of differentiation opportunities. All the companies make cars, trucks or SUVs. The competitors are compared to one another constantly. In recent years there has been significant market share variation, another indication of rivalry and its very strong threat to profits.

Fourth, is Pension Payouts.

GM is responsible for providing generous pension benefits to its employees, which at the time seemed like a great idea, however they are now experiencing problems as more and more people begin to collect.

Fifth – increased Health Care CostsGM, like many large companies with quality employee health care benefits, is experiencing a large financial hit that only gets worse as time continues.

The last problem faced by General Motor Corporation is rising Supply Costs, i.e. Steel

Once again this threat affects the entire automotive industry and forces each company to cut manufacturing and production costs as much as possible, without taking away from the quality of the product. GM has become too dependent on the US market and must take advantage of the opportunity to expand globally. The competition is booming too strong to focus on just one country.