GM Strategy Essay Example | Topics and Well Written Essays - 3000 words

GM Strategy - Essay Example The emergency of the low cost Japanese made cars compounded the difficult situation of competition which was already taking a toll on General Motors. Various global changes also took place in the motor industry such as new technological innovations, new marketing strategies that specifically focused on meeting the interests of the customers among other factors. In response, GM invested heavily in its endeavour to keep pace with these global changes. However, the major setback that hampered its efforts was the aspect of bureaucracy resulting from hundreds of divisions within the company which made it difficult to have focused, well coordinated operation systems. During its heydays, GM used to pay very high benefit packages since it was very profitable especially during the mid 1970s when it dominated the US markets. However, due to changing global trends especially the emergency and ultimate dominance of other rival competitors such as Toyota and Nissan, GM has lost some of its competitive advantages to these rivals. Compared to Toyota, GM pays as much as $35 for pension benefits whilst Toyota pays around $11, which gives it a cost advantage of about $1500 a car contrary to GM’s position. GM has to charge less premium than its strongest competitors hence it sells its vehicles at a loss. GM is now in a predicament of continuing paying high benefits to its workers against the backdrop of losses owing to the union laws that are a bit stringent such that it cannot abruptly cut these benefits to meet the global trends nor simply layoff some of the workers. It seems GM’s revenues are higher than those of Toyota but at the end of the day Toyota has higher earnings as a result of the fact that GM spends more money on operating costs and other expenses. GM makes more cars than it can profitably sell which means that it would end up selling at a loss. In fact it is no longer getting profits from its