GM in Trouble
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Case Code : BSTR320
Case Length : 20 Pages
Period : 2008-2009
Pub Date : 2009
Teaching Note :Not Available
Organization : General Motors
Industry : Automobiles
Countries : US
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
The history of General Motors Company (GM) can be traced back
to 1903, when Buick Motor Company (Buick) was incorporated by David Dunbar
Buick. In 1908, William Crapo Durant (Durant) started GM as a holding company
for Buick. GM expanded rapidly through acquisitions in its early years...
GM - Losing Market Share
In the 1970s, GM had to face new challenges such as issues related to environmental pollution and rising gas prices. It also started facing competition from foreign car manufacturers such as Honda Motor Company (Honda) and Toyota Motor Corporation (Toyota)...
In the early 2000s, GM had to face a number of challenges like rising fuel prices, rising costs for healthcare and pension benefits of employees, and competition. In December 2000, GM announced that it would phase out its Oldsmobile division and cut 16,000 jobs in the US and Europe. Started in 1897, Oldsmobile was considered as the oldest car brand in the US...
What Went Wrong?
According to the analysts, the major reasons for GM's financial problems were its huge pension and healthcare liabilities and poor business strategy. The global financial crisis in 2008 only resulted in further deterioration of the company's financial health...
GM's white collar retirees had been enjoying pension benefits from the 1940s. In 1950, the company had created a defined benefit pension plan for hourly and salaried employees who had worked for the company for more than five years.