General Motors

Case Introduction

Historically, General Motors has been the largest and most successful automakers out of the “big three”, GM, Ford, and Chrysler. Some of the most classic vehicles on the road today were produced by General Motors. They not only produced older classic cars, but they continually produce some of the highest preforming cars and trucks we see on the road today. They have been able to produce cars that range from modest to some of the most sought-after cars in the world. Alfred P. Sloan, CEO of General Motors in the 1920s, said this, “a car for every purse and purpose” (Dugar).

General Motors Company was founded on September 16, 1908, as an American multinational corporation headquartered in Detroit, Michigan. General Motors set out to design, manufacture, and market their automobile company. They now produce vehicles in 37 countries under ten brands, Chevrolet, Buick, GMC, Cadillac, Opel, Holden, Vauxhall, Wuling, Baojun, Jie Fang, and Uzdaewoo. Up until 2008, General Motors was the world’s largest automobile manufacturer, which produced over nine million cars and trucks a year in over 30 countries. This changed in 2008 due to GM being taken over by Toyota (Dugar).

Mission and Vision Statements

Mission Statement:

‘G.M. is a multinational corporation engaged in socially responsible operations, worldwide. It is dedicated to provide products and services of such quality that our customers will receive superior value while our employees and business partners will share in our success and our stock-holders will receive a sustained superior return on their investment.’

Vision Statement:

‘Over the past 100 years, GM has been a leader in the global automotive industry. And the next 100 years will be no different. GM is committed to leading the industry in alternative fuel propulsion.’

‘GM’s vision is to be the world leader in transportation products and related services. We will earn our customers’ enthusiasm through continuous improvement driven by the integrity, teamwork, and innovation

of GM people.’

General Motors Company’s mission statement gives us a view into what the company is doing and continues to do to further their business and development. It shows the consumer its clear target and shows what the company as a whole would like to emphasize as a predominant automaker. The two-part vision statement promotes their past successes, while also showing the commitment to being a “…world leader in transportation products…” Not only does this point to their successes, but it also shows us how they are going to inspire the world through their products, by continuously driving to improve through their integrity, teamwork, and innovation. General Motor’s mission statement not only integrates its plans for moving forward, it also gives us a view of how important their stockholders are to them as a company, by saying, “…stockholders will receive a sustained superior return on their investment.”

Environment Analysis

General Motors Company’s NAICS code is 336111 – Automobile Manufacturing

Taking a look at the external environment of automobile manufacturing shows us that vehicle sales in the United States had a large “boom” period due to the individuals and businesses who did not purchase new vehicles during the Great Recession. But since then car sales have far past the cyclical peak. This is not only true of the United States, but other countries, including China. There is too much global automobile assembly capacity even though there is a lack of demand. On top of there not being a demand for manufacturers, there is a demand for small cars in the United States. For example, US consumers have not purchased Chevy’s hybrid, the Volt, like they had predicted. Each one of these factors being considered, they have taken a huge hit to General Motor’s plants in the United States. For example, the Chevy factory in Lordstown, Ohio, that produces the Cruze is only using one shift a day. This is a hit to the automobile industry, because in the past few year small cars have been a huge moneymaker. With a booming economy and not much need for a small economy car, the average US consumer has no need for a Chevy Cruze or Volt in their lives. The factory in Ohio only produced 180,000 vehicles this past year, compared to 248,000 in 2013 (Shih).

Unfortunately, these factories have a very high fixed cost and low variable cost for their operating model. Because this is true across the world these capital-intensive factories have greatly reduced their production of cars. The cars that they end up manufacturing have had to consume the left-over fixed costs which ends up pushing profit into a downward spiral. This downward spiral is happening all across automobile manufacturing and is bad news for many individual’s jobs. Especially those employed by General Motors in the United States. Each day, factories are not making the cut in terms of revenue, which forces automobile companies to make tough decisions. Market shifts is another detrimental issue that revolves around reallocating resources within the manufacturing segment.

The question of what is the best way to go about doing this is not asked enough, because of its sensitive nature. These market shifts and reallocation of resources have cost thousands of people their jobs. Though these shifts can affect thousands of people, companies have to understand that tastes change, and they have to be ready to reallocate resources to better match the market. This shift in the United States’ demand for small sedans to trucks and SUVs has really affected the car market. General Motors in particular has really been affected by it. Everyone had predicted that the United States would shift to electric and self-driving cars, but this is not quite yet true, and General Motors has really suffered because of it. Even though electric and self-driving cars is not “the now”, it might be the future, and I believe if General Motors Company reallocates their resources and funds into developing this market, it will pay off in the near future.

General Motors ability to capture such a large market and effectively position themselves decade after decade is unmatched. Their differentiation strategy comes with offering a range of premium automobiles for the common man to the rich and famous. Along with their product differentiation, they have been able to give the world a variety of products in the automobile industry that appeal to a wide range of people. They have their foot in every segment of the automobile arena, and excelling at every one (Denning).

This question in the car industry of how to reallocate one’s assets to be the best company they can possibly be is one General Motors has seemingly effortlessly been able to do for years. They have used bankruptcy to get rid of unnecessary assets. This first began at the peak of the Great Recession when they eradicated Saturn, Oldsmobile, Pontiac, and Hummer brands. General Motors was also able to use this bankruptcy tactic to eliminate labor, dealer, and renegotiable labor contracts. All of these contracts as well as assets were decades of work that were no longer needed in today’s markets. General Motors was able to realize through their own internal analysis that these were no longer needed. This use of bankruptcy was the perfect way to reallocate these resources to further the company (Pratap).

Strategic Analysis

General Motors for the past few years has floundered and found themselves pushing economy cars, when in reality this is not exactly what the market wants or needs. They thought that electric cars (Chevy’s Volt) were the “now,” but, unfortunately, consumers are not quite ready to be fully on board with what General Motors has come up with. In a booming economy, consumers are more likely to be buying the expensive SUVs and crossovers, not the Chevy Volt. General Motors’ position in the global automotive industry has grown stronger in the past couple of years than it was during the recession. Since the passing of the recession their sales and profits has drastically increased, contrary to popular belief. One money making avenue that has not increased General Motors’ revenue since the recession was their push for sedans and smaller economic cars. Because of this decrease in profit from factories like the one in Lordstown, Ohio, General Motors has to decide what to do about this, and how to attack this problem at its core. Previously, their strategy was to capture the world’s interest in electric cars, but the Chevy Volt and other General Motors electric cars floundered and never really captured their audience like Toyota’s Prius once did. They did not bring substantial profits, and did not perform like they had originally predicted (Pratap).

The automotive industry is showing reports that the industry will double by the year 2020. This being said, this is a huge determining factor for General Motors and whether or not they will be relevant in the next two years. It is essential that they make the right decisions from here on out to ensure they grow and transition into the future. This future that might hold electric vehicles as well as autonomous driving. Because the world is enduring a rapid transition, it will be a fight as General Motors tries to manage and ensure a spot at the top. They will need to continuously fund new technologies, new ideas, and a new organizational model (Pratap).

Problem Statement

General Motors Company’s problem is that its success depends on its ability to anticipate the needs of the automobile market and consumers within the market. Because of the changing economy and General Motors customer’s spending, the nature of the automobile markets are hard to predict.

Below depicts General Motor’s revenue:

Because General Motors has had some tremendously rough times in the past and they have pushed past this, I truly believe that a restructure of their operations and reallocation of their assets, manufacturing, and higher funding of research and development in the next few years is necessary to move forward as one of the largest automobile manufacturers in the world (Denning).

Strategy

Reallocation of resources is a necessary step that GM will need to take in the near future to move forward as a company in need of adjusting their market. This is the strategy I suggest and would need to be done prior to discussions about closing its doors. I believe that the best path for General Motors is it to restructure their operations. Not only restructuring their operations, but also funding the research that is needed to ensure they foresee any changes in their market.

This reallocation of resources would, unfortunately, include closing down many of the factories that produce the Chevy Cruze and Volt in the United States. Because there is not a need for small sedans in the United States market, reallocating these resources by focusing strictly on larger SUVs and Crossovers would be money and time well spent.

On top of this restructure, I would also suggest a higher funding of electric cars, as well as, self-driving vehicles. Even though there is not a high demand in the United States market for electric cars, trends show that in the next decade if automobile companies are not a part of the electric car movement, they will then be irrelevant. To ensure that General Motors stays with the times, reallocating funds to research and development of these “futuristic” cars is necessary to ensuring a prosperous future for General Motors.

As of November 26, 2018, General Motors announced that they “plan to idle five factories in North America and cut roughly 14,000 jobs in a bid to trim costs.” This unfortunate news is not all bad. I believe it is the smartest move that General Motors has made in the last year. Even though it puts a bad reflection of the auto industry, adjustment and change is needed. Customer’s tastes and market shifts has forced General Motors’ hand. Many news outlets are reporting this as bad news and that is a detriment to many American jobs (Liker). While looking at the positives, General Motors has made the best move possible. It is much better to make the big moves now instead of waiting. General Motors will now be able to transfer or reallocate funds for researching future market trends and investing in the upcoming changes to the automotive industry (Boudette).

Might this closure of these factories be the restructuring of their operations that I mentioned, and that is needed if they want a prosperous future? This is exactly the move they needed to make to be capable of furthering research and development into electric cars, self-driving cars, and reallocating funds to be able to focus on what the market desires from General Motors. This conclusion to reallocate and reinvest in the future is exactly what General Motors needs to remain relevant. Overall, I suggest General Motors Company to use this decision to push their company to be the best they know how (Boudette).

References

Boudette, N. E. (2018, November 26). G.M. to Stop Production at 5 Plants in U.S. and Canada. Retrieved November 26, 2018, from https://www.nytimes.com/2018/11/26/business/general-motors-cutbacks.html
Denning, S. (2018, December 01). Why The General Motors Layoffs Were Strategic. Retrieved December 02, 2018, from https://www.forbes.com/sites/stephaniedenning/2018/11/29/why-the-general-motors-layoffs-were-strategic/#74bc33ae5d5e
Dugar, V. (2016, April 16). Case study of general motors. Retrieved December 01, 2018, from https://www.slideshare.net/VishalDugar/case-study-of-general-motors
Liker, J. (2018, March 07). Assessing the Sins of Volkswagen, Toyota, and General Motors. Retrieved November 20, 2018, from https://hbr.org/2015/09/assessing-the-sins-of-volkswagen-toyota-and-general-motors
Pratap, A. (2018, November 15). Strategic Analysis of General Motors (GM). Retrieved November 23, 2018, from https://www.cheshnotes.com/general-motors-gm-strategic-analysis/
Shih, W. C. (2018, December 01). The Challenges GM Is Facing, and the Reasoning Behind Its Plant Closures. Retrieved December 2, 2018, from https://hbr.org/2018/11/the-challenges-gm-is-facing-and-the-reasoning-behind-its-plant-closures

 In view of the of the recent appearances of the CEOs of the big three automakers namely Chrysler, Ford, and General Motors before the House and Senate Committees regarding their financial problems, herewith are recommendations on the White House’ position on the issue. Brief background The issues raised by these three giant carmakers are that they are losing ground against their foreign competitors and that for the past eleven moths of 2008, their sales are dropping. According to some analyst, based on GM’s November sales, customers are “worried about the potential bankruptcy” (Taylor, A. par. 3) of the company.

According to Taylor, GM’s sales for the first eleven months have fallen 21. 9% which is comparable to Ford’s 20. 6% and Chrysler’s 27. 7 %. This negative figure is far worse compared to their Asian rivals like Toyota which is down by 13. 4%, Honda by 5. 4%, and Nissan 9. 1% (Taylor, par. 5). According to the report of Planning Perspectives Inc. an auto industry consulting firm, 68% of the executives for industry suppliers who participated in their survey about the impact if General Motors declared Bankruptcy, they would likely close their business.

In this case, Steven Gray noted that some 275,000 would lose their jobs in the Midwest alone (Gray, par. 2). These issues are very important to the United Economy as millions of employees stand to lose their jobs if these three giant automakers declared bankruptcy. This will incur enormous economic losses both to the governments and to the society in the form of taxes and incomes. Overview of different of the different option along with advantage and disadvantages The current global economic recession has severely affected the big three automakers as compared to their Asian competitors.

However, Monica Davey and Susan Saulny reported that in Michigan, the home of the big three automakers, many people are against the bailout of the three companies. Citing across the state interviews over the last two weeks, Davey and Saulny said that criticism against the automakers bailout request surfaced again and again (Davey & Saulny, par. 6). Some even blamed the three companies for their own economic misery (par. par. 10). The commentary of Jack R. Nerad on the issue of bailout of three giant automakers is worth considering in taking options on this issue.

In his article entitled Commentary: Can the Big Three Survive a bailout? Nerad’s analysis of the downfall of the big three has to do with not being geared towards producing small fuel-efficient cars, which the foreign manufacturers did. Thus, the question whether the three survive a bailout is very important to be answered. Nerad viewed the bailout as simply the government’s effort “to bring to the market unwanted vehicles that assure that “they fail somewhat later rather than sooner” (Nerad, par. 5). The best option for the government in the meantime is just to wait and see.

Anyway, regardless of any financial assistance to these three giants, it may not really turn the tide of the economic recession. The advantage of this option is that it will help the government determine the real problem of these companies in view of the reported restructuring plan of these car manufacturers. The disadvantage is obvious, thousands will lose their jobs, but this will just be temporary as with right action towards the rehabilitation of these companies, they can recover and all these employees can be recalled back to their works.

Recommended course of action which will most likely lead, not only to a short term, but also a long term, financially feasible and politically acceptable resolution —i. e. , provide for a sustainable recovery of the U. S. automobile industry at little or no ultimate cost to the American people. Certainly the big three are experiencing the impact of economic recession which might cause layoffs inevitable whether there is bailout or no bailout, and other companies are expected to downsize their workforce to cope up with the crises.

While the economic role played by these three companies are vital not only to the state of Michigan, but to the United States in general, it is important that President Elect Barack Obama employs a careful policy on the three car manufacturers of wait and see, as most of the opinion pointed to the fact that even if there is no bailout, these three giant automakers stand to lose their ground against foreign automakers. The president should require these firms to show concrete plan of action for the government to grant their loans.

This concrete plan of action should include product restructuring. This means producing smaller but fuel-efficient cars that could effectively compete with its foreign competitors. Commerce Secretary Carlos M. Gutierez and Samuel W. Bodman, stated in their letters to the democratic leaders of Congress, that a satisfactory plan should address the issues that deal with competitiveness, labor and management costs, debt structure and even plans for new and existing vehicles (Marr, Kindra par. 3).

This product restructuring can be financially feasible in the sense that if the big three produce affordable smaller yet fuel efficient cars they could regain their market and they could be on their way to recovery. Adopting this measures can help this automobile companies recover with cost to the American people except the loan that will be provided to these companies. Work Cited Davey, Monica & Saulny Susan “Even in Michigan, Not Everyone Wants a Lifeline” New York Times, Dec. 2, 2008 http://www. nytimes. com/2008/12/03/us/03michigan. html? _r=1

Gray, Steven “The Ripple Effect of a Potential GM bankruptcy” TIME CNN Friday, Nov. 28, 2008 http://www. time. com/time/printout/0,8816,1862737,00. html Marr, Kindra “US Automakers Told to Draft Viability Plan November 26, 2008 http://www. washingtonpost. com/wp-dyn/content/article/2008/11/25/AR2008112502568. html Nerad, Jack R. “Commentary: Can the Big Three Survive a Bailout? ” CNN Politics. Com Updated, Wednesday, Dec. 3, 2008 Taylor Alex III “Even with a Bailout, GM”s Profit Prospects Look Bleak” Wednesday, Dec. 3, 2008 http://www. time. com/time/printout/0,8816,1863892,00. html

Chapter One – Company, industry and competitors
One of the largest automobiles manufacturing company’s in Europe is Daimler-Chrysler. The report will present a case study of the organization, including past and present performance, and future expectations. In order to provide an effective assessment of this business, we shall also compare its performance with other organizations within the industry.

Section 1 – Business description
Daimler-Chrysler concentrates its business on a limited number of core areas, (Annual report 2005). These are automobiles, including SUV’s[1], sports and passenger cars, minivans and pick-ups, and according to the report it is the “world’s largest manufacturer of commercial vehicles.” It is also has an interest in aircraft and other service businesses, and is involved with the aerospace and defense industry, having a 33% stake in EADS[2].

Section 2 – Company History
Having been formed as a result of a $42 international merger between Daimler, the biggest German industrial company, and Chrysler, a top three automobile manufacturer in the US (Business 1998), Daimler-Chrysler as an entity has only been existence since 1998. The merger made it the fifth largest global automobile manufacturer.

Despite this relatively short period of existence, the organization has engaged upon a series of acquisitions and divestitures in the past eight years. Most of its acquisitions took place within the automotive industry, the two most significant of which were the purchase of significant stakes in the Japanese carmaker Mitsubishi (34%)(Andrews 2000), and the Korean company Hyundai (9%). In 2001, it increased its stake in Mitsubishi stake to 37%. In 2002 and 2004, it bought significant stakes in the Japanese companies Mitsubishi’s and Hyundai’s truck making businesses (CNN 2002), consolidating its position as the world’s largest truck maker. In the case of Mitsubishi, the truck section was separated into a new business in which DaimlerChrysler holds a majority interest.

However, the relationship with Hyundai was fraught with difficulties from the onset and the two organizations failed to integrate successfully. As a result of this, together with a dispute over the expansion of DaimlerChrysler’s interests in China, the investment in Hyundai was sold (Gail Edmondson 2004). This was followed in 2005 with the sale of its stake in the then ailing Japanese carmaker Mitsubishi. Months earlier the company had refused a request from the Japanese company for financial help. At the time, the company was experiencing its own problems with Mercedes struggling against its aggressive German competitor BMW and Chrysler still struggling to become profitable.

In the meantime, Daimler has continued its expansion into the Chinese market, announcing in September 2006 that it would be opening its first car-making factory in China as part of an investment in the region close to $2 billion (Joe McDonald 2006).

Outside of the direct car and truck industry, the company has also been active in other business areas. In 2000, it sold a controlling interest in its information technology business Debis Systemhaus and later the same year it sold its rail subsidiary, DaimlerChrysler Rail Systems GmbH (Adtranz) (Article 2001). At the time, the CEO of Daimler commented that the company wanted to concentrate more on its core businesses of automobiles and automotive products. A few months later DaimlerChrysler purchased the Detroit Diesel Corp, an engine maker (Business 2000).

            Shortly after the merger, DaimlerChrysler promised significant expansion, at that time promising that it would create at least fifteen thousand jobs in the two years from 2000 to 2002 (Report 2000). However, it appears that this promised expansion was to be short lived and the business ran into some difficulties.  This is supported by the way in which the divestitures have occurred in recent years. All of this culminated in an announcement early in 2006 (Berlin 2006) by DaimlerChrysler that was embarking upon a reorganization program, which meant the loss of at least six thousand jobs throughout its workforce as it sought to achieve savings in excess of $1 billion.

 Since the merger, the group has only seen the development of a few new products, apart from upgrades on previous models. Predominantly, these new products have been in the Chrysler range, with the new Crossfire, which is powered by a Mercedes engine, and the light trucks Sprinter and Freightliner. With the succession of a new CEO, see details later in section 4 of this chapter, there is the promise of a much wider development of new product ranges in the future.

One of the issues that has dogged the corporation since the merger, and possibly contributed somewhat to its lack-luster performance, is the number of lawsuits that it has been involved in over this period. The most high profile of these is action taken by one of DaimlerChrysler’s biggest investors, the billionaire Kirk Kerkorian (Simpson 2000). Kerkorian has filed a $9 billion suit, claiming that the board of Daimler, and in particular the CEO, had lied at the time of the merger in order to get the votes it needed to succeed.  The groups CEO at the time had claimed the merger to be a “merger of equals,” whereas Kerkorian claims the actual intention was for Daimler to affect a takeover. In the initial case, Kerkorian lost his case and, although he has appealed this decision, this has not been successful either.

In addition to this case, Daimler has faced a number of others. It settled $300 million with pension funds that were threatening to take it to court. However, in a recent decision in the German courts, former shareholders of Daimler prior to the merger have won a multi-million euro case for compensation for the value they received for their shares at the time (Business 2006). The company is to appeal this decision. In separate issues, it also had to endure a $1 billion euro claim from Bombadier over their purchase of the rail division, and a claim by employees over racial slurs. It is plain that such cases are impacting upon the groups performance.

At present, there are a number of events that will affect DaimlerChrysler’s cash flow and the group’s value.

a)                          Outcome of legal action. Should the appeal against the German court decision in favor of former shareholders not succeed, the settlement in excess of €200 million will have a significant impact.

b)                          Current profitability levels. In mid September 2006, the group announced a lowering of its full year profits for the year 2006 to $6.4 billion, partially as a result of expected losses in the Chrysler division.  (See http://www.daimlerchrysler.com/). However, they are hoping that the introduction of eight new vehicles in the second half of the year will halt this decline.

c)                          Airbus earnings have also been affected adversely during the year. The impact that this on the groups financials is in addition to those which are mentioned in b) above.

All of the above have led to a position where the group’s market share, particularly at Chrysler, together with the drop in share price in September 2006, will put additional pressure on the company’s cash flow, and has already negatively affected its value.

Section 3 – Products and Competition
DaimlerChrysler has financial services and other sectors of business, which produce a little over 12% of its revenue. However, for the purpose of this paper, we will be concentrating our research on the automobile side of the business when discussing the company’s products and its main competitors.

Major products
Three main automobile product families form the core products of the DaimlerChrysler group.

Mercedes
At the top end of the range within the Mercedes group are the Maybach luxury cars, which were added to the group’s models in 2002. Much of this vehicles livery is hand crafted. At the core of the group is the Mercedes range, with its distinction of being the oldest car manufacturer in the industry. This range comprises of models from mid-range to luxury saloons and sports cars. Finally, there is the innovative Smart Car range, which was first launched in 1988. The unique design and concept, the first model being promoted as an ideal town car with its small size, has given these vehicles an almost “cult” following.

            The Mercedes range is produced at six plants in Germany as well as one plant in each of France, Brazil, South Africa and the United States. Sales of the Mercedes range of vehicles are promoted globally. However, in 2005 (www.DaimlerChrysler.com) the main marketplaces were Germany (29%), Western Europe (35%), United States (19%) and Japan (4%). The exception to this is the Smart Car range which, whilst available in other markets, is not making its US debut until 2008.

            With over one million two hundred vehicles sold in 2005, the Mercedes section contributed €50,015 million to the Groups revenues but, according to the annual report, reorganization of the Smart Car and other cost, this sector of the business actually made a loss of €505 million.

Chrysler
Chrysler offers a more varied range of vehicles under its three brands, which are Chrysler, Jeep, and Dodge. Chrysler and Dodge offer a full range of small to large saloons, together with sports models. In addition, both marques produce minivans. The Jeep marques concentrate on the production of four-wheel drive SUV’s catering for all sizes and similar vehicles. Chrysler also produces parts and accessories for its consumers and these are marketed under the Mopar brand.

             The main concentration of the Chrysler brands production is in the US, where it has several manufacturing plants. However, it does have manufacturing and production facilities in Canada and Mexico and a few other strategic international locations, including Brazil, Asia and Austria. Sales of the product range are marketed throughout 125 countries internationally.

            Although Chrysler had the largest unit sales in the group, at just over 2.8 million it exceeded Mercedes and the Truck division combined (www.daimlerchrysler.com), its total revenue contribution is on a par with Mercedes at €50,116 million. Unlike Mercedes, Chrysler made a profit of €1,534 million in 2005.

DaimlerChrysler Trucks
The Truck group sector of the business has the distinction of being the world’s largest producer of commercial vehicles. It has achieved this position through a range of acquisitions being built onto the core Mercedes and Chrysler models.

The products range covers vehicles from heavy to long haul truck, as well as public service vehicles, such as buses and other specialist heavy goods vehicles. The trucks division operates through six main brands, which include Mercedes, Freightliner, Sterling, Western Star, Thomas Built Buses and Mitsubishi Fuso. This sectors vehicle are manufactured and produced in nine locations globally, with the main core of these centers being concentrated in Germany, U.S., and Japan.

            With 529,499 units sold in 2005, this sector of the business contributed €30,368 million to the groups revenue and €1,606 million to operating profits in 2005 (www.daimlerchrysler.com).

            As can be seen from table 1., cost of sales, including manufacturing, production and workforce attributed to that area of the business, represents the single largest cost component for the business, consuming 82% of the groups revenue, with selling and administration, and research and development following respectively.

Table 1 Annual Report 2005

Source: DaimlerChrysler Annual Report 2005

Competitors
Although there are numerous automobile manufactures in the industry, in essence DaimlerChrysler has four main competitors. These are General Motors, Toyota, Ford Motor Co, Honda, and TATA. The largest of these would depend upon the criteria used. For example, in terms of revenue, General Motors is the market leader, just ahead of Daimler Chrysler, with Toyota in third position (see Table 2).

Table 2 Leading Automobile Manufacturers

Leaders in Total Revenue (ttm)

GEN MOTORS [GM]
$205.0 B
DAIMLERCHRYSLER AG [DCX]
$195.7 B
TOYOTA MTR CP ADS [TM]
$182.3 B
FORD MOTOR CO [F]
$170.4 B
HONDA MOTOR CO ADR [HMC]
$86.1 B
TATA MOTORS INC [TTM]
$5.8 B

Source: Yahoo Finance

            In terms of market share, based on units sold, General Motors was the market leader in 2004 (Alan Ohnsman 2004), although in that year the three big Japanese companies made significant gains with increases of between 7 and 9%. At present the top five producers for 2004 on this basis are: –

1)      General Motors                                  8.52 million units

2)      Toyota                                               7.29 million units

3)      Ford Motor                                        6.47 million units

4)      DaimlerChrysler                                4.19 million units

5)      Honda                                                3.17 million units

With Nissan close behind Honda, these three companies are significantly closing the gap on the traditional market leaders. However, in terms of Revenue, DaimlerChrysler is actually in second place to GM, with Toyota and Ford third and fourth respectively.

Competition
Competition within the Automobile industry is fierce and the organizations involved use a variety of different methods as they vie for sales and market share. The Japanese manufacturers tend to compete based on price with feature levels. Their cost advantage over other manufacturers, in some cases as much as much as $3,000 (Alan Ohnsman 2004), makes this position viable and it is forcing companies such as General Motors and Ford Motor Co to offer substantial discounts to attract buyers.

            The DaimlerChrysler group competes in a number of ways to suit each particular sector. For example, Mercedes uses quality and safety to markets its products, seeing itself in direct competition with companies such as BMW and AUDI, rather than the Ford models. Chrysler products are of a more general basis and they are now using price as their main promotional tool. The truck sector of the business uses two methods of promotion. First is the quality of the product and secondly, due to fact that it has a number of different marques within the range, it is able to affect the competition from several name fronts. The one unique area of products within the group is the Smart Car product. These vehicles are promoted by using their uniqueness and the creation of a cult following.

            At the time of writing the dominant company within the automobile industry is General Motors. It’s strength comes from it’s historical position of growth, in the days before globalization, when it became the dominant auto company in the USA, at one time accounting for nearly fifty percent of all the automobiles sold in that country. During this time, it built a large number of plants across the country and consolidated its position through acquisitions. However, in recent years its dominant position has come under threat from the Japanese manufacturers, particularly Toyota, which resulted in a significant drop in the company’s market share. Although in 2005 General Motors managed to achieve a slight increase in its market share, the losses that has sustained, together with the strength of the opposition, its position is far from secure.

            For DaimlerChrysler, the more worrying competitors to itself are the Japanese giants as, with products, which compete directly with its own vehicles, they present the greater threat to the German-US conglomerate.

Section 4 – Corporate Control
The ultimate corporate control of the DaimlerChrysler organization rests in the hands of a management board. Beneath this tier of management, there is a supervisory board in direct charge of each sector of the business sectors. In accordance with national and internationally regulations, it also has supervisory boards that control areas such as governance and audit committees, and whose task is to oversee management and organization activities. In addition, to this the corporation would also be influenced by its major investors.

Management Board
Dieter Zetsche (52) – Chairman / Head of Mercedes Car Group

Following the resignation of Jurgen E. Schrempp at the end of 2005, Zetsche took over as CEO of the business. Born in Turkey, Zetsche has a long history with DaimlerChrysler, having joined the business in 1976. He had a reputation for turnaround successes, exercising this ability first at Mercedes in Argentina before taking on a similar task with Freightliner in the US. Before becoming CEO, it was Zetsche who set Chrysler on the road to recovery.

Thomas W. LaSorda (51) – Chrysler Group

Thomas LaSorda moved to Chrysler from General Motors in 2000. He had been with GM for thirteen years, and this is where he learned about the automobile industry. LaSorda has been involved in labor relations and the automobile industry for most of his working life. He is the first non-German person to have been put in charge of the Chrysler operation since its merger with Daimler in 1988.

Andreas Renschler (47) – Truck Group

Renschler is a graduate in economic engineering. He joined Daimler in 1988 just before the merger with Chrysler. Since then, he has undertaken a number of international projects for the company in addition to involvement with its Smart car sector.

Bodo Uebber (46) – Financial Services

Bodo Uebber joined the group in 1985. He is a qualified accountant. He spent some time working as a director of finance at the Chrysler group in the US, before being appointed to his present position in 2004. His employment contract with the organization was recently extended by five years.

Thomas Weber – Group Research & Mercedes Car Group Development

After a seven-year term as Scientific Associate at Stuttgart University, Weber rejoined Daimler, where he had originally served his apprentice, in 1987. In 1994, he became head of all Mercedes engine production before being appointed to as a deputy to the management board and became a full member in 2004.

Management Compensation package
The total compensation package for the management board of DaimlerChrysler for 2005, as revealed in the Annual Report, was as follows: –

                        Fixed Compensation                                                 €  9.3 million

                        Short/Medium term performance related                  €24.6 million

                        Long-term performance related                                €  1.0 million

            Making a total package of €34.9 million. In addition they were granted 454,914 phantom shares at a price of  €35.41. Pension provisions were changed in that year to a defined-contribution plan. These benefits are comparable with other organizations in the industry.

            However, the management of General Motors has been forced to take pay cuts, with the CEO reducing his by 50% (BBC News 2006) and none of the management will receive bonuses. Ford Motor Company management packages are under similar pressure.

            With pressure being exerted on the US and European Industry from their Japanese competitors, as explained earlier, the implications are that the scale of management compensation packages at DaimlerChrysler will come under increasing pressure, unless they produce the improvements required by their stakeholders.

Institutional Shareholders
Institutional shareholders are important to any major corporation. They provide long term funding for the business (Blommstein & Funke 1998) and enable stability in its value. In addition, these shareholders are increasingly acting as guardians for the investors in the business. DaimlerChrysler have a number of Institution and Fund Management investors, including Deutche Bank, Kuwait Investment Authority and Dubai International.

            General Motors have similar investors including Barclays bank, Southeastern Asset Management and Credit Suisse. Fords three main institutional shareholders are Brandes Investment Partners, Barclays Bank International and Deutche Bank.

            Institutional recent share activity for the last six months has seen the following occur: –

                        DaimlerChrysler                                 No details available

                        General Motors                                  No Change

                        Ford Motor Company                                   (81,204) sold

Section 5 – Financial Analysis
The financial information and analysis contained within this section has been researched from information available at www.finance.yahoo.com. The following are the comparable opinions for DaimlerChrysler, General Motors and Ford Motor Co.

Table 3 Analysts estimates

Daimler

General

Ford

2006

Chrysler

Motors

Motor Co

Average Earnings Estimates
3.01

3.74

-0.75

Number of Analysts

3

12

15

Average Revenue Estimates
193.46

170.88

147.76

Billions

Number of Analysts

2

10

9

Current Recommendations

Buy

3

6

0

Hold

2

7

6

Sell

1

2

8

Total Analysts

6

15

14

Seen against previous market estimates, DaimlerChrysler surprised the market with its last quarter earnings returning 2.84 against predictions of 1.00. General Motors have had a similar impact producing earnings of 2.03 in their June quarter against estimates of 0.55. Of the three analyzed only Ford produced a negative performance with its June quarter earnings coming in at -.03 against predictions of 0.12.

Based upon the above information, the analysts have predicted the following performance for the companies over the next five years.

Table 4 Five-year predictions

Daimler

General

Ford

Five year predictions

Chrysler

Motors

Motor Co

Average Earnings Estimates
16.70

8.40

0.00

Average Revenue Growth
2.20%

5.80%

6.70%

            In our opinion, based upon the information that has been analyzed within this chapter, and the research that has been studied, we would suggest that these forecasts are on the optimistic side. In our opinion the continuing impact of the Japanese and Far East countries, together other issues such as environmental problems will certainly affect the profitability of the businesses. In this respect, we would say that the analysts estimates of earnings are at the top end of the range and the reality will fall short of this.

Chapter Two – Historical financial analysis
Within this chapter, it is our intention to produce an analysis of the financial performance of DaimlerChrysler over the past five years. To ensure continuity of data comparison, we shall continue to use General Motors and Ford Motor Co. data as comparables.

Stock Price and Performance
The following charts show the share performance of the three companies over the past five years.

            From these it can be seen that DaimlerChrysler have performed significantly better than its two American based competitors, increasing its share value by approaching thirty percent during that period, although it has underperformed against the DOW, being some 20% adrift in performance comparisons. However, this still only leaves the shares at the same value as they were in mid-2002.

In comparison, General Motor’s shares have reduced in value by around twenty five percent. Despite this, in the past six months the company’s shares have virtually kept pace with the DOW performance, currently less than 5% adrift. Ford Motor, the most volatile performer of the three, has seen its share value almost halved and has consistently underperformed against the DOW, now currently around 60% adrift in terms of performance.

Based upon these results, if one had invested $100 in each of these companies in October, the following charts shows how that investment would have fared over the past five years.

Table 5 Share price comparisons

Daimler

General

Ford

Five year share price

Chrysler

Motors

Motor Co

October 8 2001

34.81

42.37

17.29

October 9 2006

49.99

31.90

8.19

Investment

October 8 2001

100.00

100.00

100.00

October 9 2006

143.61

75.29

47.37

It is clear from the above charts show that, out of the three organizations studied, DaimlerChrysler, despite not performing as well as the markets, has been the best performer of these, increasing the value by nearly 44%, and would have achieved an annual geometrical mean gain of 8.72%. General Motor’s value reduced by -24.71%, returning an annual geometrical mean loss of -4.94%.  Ford Motor Co’s performance produces a decrease in value of -52.63%, an annual geometrical mean of -10.53%.

            The charts reflecting the performance of the companies also show that all three companies performance showed significant deterioration of performance during the period from June 2002 to January 2004, when all of the shares returned approximately to June 2002 levels. However, from that time forwards, DaimlerChrysler is the only company that has seen a sustained improvement in its performance. General Motors and Ford both have experienced a continuous downward trend in their valuations up until mid-2006 when there was a mild improvement.

Financial Performance
The following section contains the historical information relating to the DaimlerChrysler and the two other companies being used as comparables, General Motors and Ford Motor Co. The information and charts, which have been used to provide this information, have been sourced from http://moneycentral.msn.com.

Growth Performance

DAIMLERCHRYSLER

Income Statement – 10 Year Summary (in Millions)

Sales
EBIT
Depreciation
Total Net Income
EPS
Tax Rate (%)
12/05
149,776.0
3,438.0
12,683.0
2,851.0
2.8
14.92
12/04
142,059.0
3,535.0
11,262.0
2,466.0
2.43
33.3
12/03
136,437.0
596.0
11,595.0
-418.0
-0.41
164.26
12/02
147,368.0
5,925.0
13,838.0
4,795.0
4.74
18.82
12/01
150,386.0
-1,654.0
14,632.0
-763.0
-0.76
0.0
12/00
162,384.0
4,476.0
13,897.0
2,465.0
2.45
44.66
12/99
149,985.0
9,657.0
9,565.0
5,106.0
5.06
46.94
12/98
131,782.0
8,093.0
7,331.0
4,949.0
5.03
37.24
12/97
117,572.0
6,145.0
6,303.0
6,547.0
6.78
-8.41
12/96
101,415.0
5,693.0
5,392.0
4,169.0
4.2
27.17
Growth Rates %
Company
Industry
S&P 500
Sales (Qtr vs year ago qtr)
0.40
10.30
17.40
Net Income (YTD vs YTD)
106.10
32.10
29.50
Net Income (Qtr vs year ago qtr)
145.60
20.10
37.30
Sales (5-Year Annual Avg.)
-1.60
6.21
11.45
Net Income (5-Year Annual Avg.)
2.95
5.76
13.45
Dividends (5-Year Annual Avg.)
-8.59
13.26
8.94

GENERAL MOTORS

Income Statement – 10 Year Summary (in Millions)

Sales
EBIT
Depreciation
Total Net Income
EPS
Tax Rate (%)
12/05
192,604.0
-16,931.0
15,769.0
-10,458.0
-18.51
0.0
12/04
193,517.0
1,186.0
14,152.0
2,804.0
4.95
-77.23
12/03
185,837.0
2,997.0
13,513.0
2,899.0
5.09
23.69
12/02
177,867.0
2,110.0
11,569.0
1,813.0
3.14
27.39
12/01
169,051.0
2,454.0
11,871.0
1,222.0
2.19
44.58
12/00
184,632.0
7,164.0
13,271.0
4,452.0
6.68
33.4
12/99
176,558.0
9,047.0
15,036.0
5,576.0
8.53
34.46
12/98
155,445.0
4,944.0
13,602.0
3,049.0
4.32
33.09
12/97
160,905.0
7,569.0
14,646.0
6,483.0
8.32
13.54
12/96
158,015.0
6,492.0
11,840.0
4,953.0
6.03
26.54

Growth Rates %
Company
Industry
S&P 500

Sales (Qtr vs year ago qtr)
12.20
10.30
17.40

Net Income (YTD vs YTD)
NA
32.10
29.50

Net Income (Qtr vs year ago qtr)
-242.40
20.10
37.30

Sales (5-Year Annual Avg.)
0.85
6.21
11.45

Net Income (5-Year Annual Avg.)
NA
5.76
13.45

Dividends (5-Year Annual Avg.)
0.00
13.26
8.94

FORD MOTOR Co

Income Statement – 10 Year Summary (in Millions)

Sales
EBIT
Depreciation
Total Net Income
EPS
Tax Rate (%)

12/05
177,089.0
1,996.0
5,945.0
2,228.0
1.14
-25.65

12/04
171,646.0
4,853.0
6,654.0
3,633.0
1.8
19.33

12/03
164,338.0
1,339.0
8,806.0
902.0
0.49
9.19

12/02
162,258.0
1,064.0
10,194.0
355.0
0.19
32.14

12/01
160,504.0
-7,419.0
15,478.0
-5,347.0
-2.95
0.0

12/00
169,091.0
8,299.0
14,493.0
5,456.0
3.62
32.78

12/99
160,703.0
9,854.0
11,846.0
6,502.0
5.26
32.96

12/98
143,350.0
24,280.0
10,890.0
21,368.0
17.19
11.37

12/97
153,627.0
10,939.0
9,865.0
6,920.0
5.62
34.2

12/96
146,991.0
6,793.0
9,519.0
4,446.0
3.64
31.89
Growth Rates %
Company
Industry
S&P 500
Sales (Qtr vs year ago qtr)
-5.80
10.30
17.40
Net Income (YTD vs YTD)
NA
32.10
29.50
Net Income (Qtr vs year ago qtr)
-127.10
20.10
37.30
Sales (5-Year Annual Avg.)
0.93
6.21
11.45
Net Income (5-Year Annual Avg.)
-16.35
5.76
13.45
Dividends (5-Year Annual Avg.)
-25.98
13.26
8.94

            From the above information, it is clear that from a financial viewpoint, apart from Ford Motor Co’s exceptional results in 1998, the three businesses were performing on a par in terms of net income for the five years to 2000. For the three years from then to 2003, all of the businesses suffered, with at that stage DaimlerChrysler being the worst affected, before a limited recovery took place. General Motors suffered a serious setback in 2005, making a significant loss.

            However taking the situation overall the automobile industry has historically been an under-achiever when one compares the last five years results with the S&P 500, in all areas except dividends. DaimlerChrysler has lagged considerably behind the industry in the same period on all counts, with net income only achieving half of the average, although it has been more stable than the other two comparable companies. It has also appears to have achieved a better level of stability over the past three years.

            In general terms it is evident on these indicators that DaimlerChrysler is in a slightly superior position than the two US based organizations. It is most likely that the reason for this lies in the fact that it has more experience in dealing with an international marketplace. In this respect, the German company is more capable of being able to react to the requirements of consumers and stakeholders in a number of different cultures.

            DaimlerChrysler has also shown itself more adept at being able to integrate acquisitions into its organization. Despite some initial unrest, the merger/takeover has proven more successful than Ford’s acquisition of the UK companies Jaguar and Land Rover.

Financials

            Within this section of our report, we will outline the financial information relative to the three businesses. As with growth performance, we have again sourced the information from http://moneycentral.msn.com.

DAIMLERCHRYSLER

Financial Condition
Company
Industry
S&P 500
Debt/Equity Ratio
2.17
1.82
1.26
Current Ratio
1.5
1.1
1.3
Quick Ratio
1.2
0.9
1.1
Interest Coverage
NA
1.3
37.5
Leverage Ratio
68.5
57.4
29.1
Book Value/Share
44.77
35.84
17.89

Investment Returns %
Company
Industry
S&P 500
Return On Equity
11.2
11.1
22.5
Return On Assets
2.0
3.9
8.1
Return On Capital
3.4
6.5
10.7
Return On Equity (5-Year Avg.)
4.9
10.6
17.8
Return On Assets (5-Year Avg.)
0.9
3.4
6.1
Return On Capital (5-Year Avg.)
1.5
5.3
8.2

Management Efficiency
Company
Industry
S&P 500
Income/Employee
10,514
25,230
108,142
Revenue/Employee
509,126
552,772
834,109
Receivable Turnover
2.3
8.0
27.1
Inventory Turnover
6.6
9.6
9.5
Asset Turnover
0.8
0.8
0.8

GENERAL MOTORS

Financial Condition
Company
Industry
S&P 500
Debt/Equity Ratio
3.90
1.82
1.26
Current Ratio
NA
1.1
1.3
Quick Ratio
NA
0.9
1.1
Interest Coverage
-0.7
1.3
37.5
Leverage Ratio
79.6
57.4
29.1
Book Value/Share
20.58
35.84
17.89

Investment Returns %
Company
Industry
S&P 500
Return On Equity
-62.8
11.1
22.5
Return On Assets
-2.5
3.9
8.1
Return On Capital
-3.0
6.5
10.7
Return On Equity (5-Year Avg.)
-1.7
10.6
17.8
Return On Assets (5-Year Avg.)
-0.2
3.4
6.1
Return On Capital (5-Year Avg.)
-0.2
5.3
8.2

Management Efficiency
Company
Industry
S&P 500
Income/Employee
-33,545
25,230
108,142
Revenue/Employee
611,946
552,772
834,109
Receivable Turnover
2.0
8.0
27.1
Inventory Turnover
13.2
9.6
9.5
Asset Turnover
0.4
0.8
0.8

FORD MOTOR Co.

Financial Condition
Company
Industry
S&P 500
Debt/Equity Ratio
11.08
1.82
1.26
Current Ratio
NA
1.1
1.3
Quick Ratio
NA
0.9
1.1
Interest Coverage
NA
1.3
37.5
Leverage Ratio
91.7
57.4
29.1
Book Value/Share
7.26
35.84
17.89

Investment Returns %
Company
Industry
S&P 500
Return On Equity
-9.5
11.1
22.5
Return On Assets
-0.4
3.9
8.1
Return On Capital
-0.5
6.5
10.7
Return On Equity (5-Year Avg.)
3.2
10.6
17.8
Return On Assets (5-Year Avg.)
0.2
3.4
6.1
Return On Capital (5-Year Avg.)
0.3
5.3
8.2

Management Efficiency
Company
Industry
S&P 500
Income/Employee
7,720
25,230
108,142
Revenue/Employee
524,611
552,772
834,109
Receivable Turnover
1.6
8.0
27.1
Inventory Turnover
12.9
9.6
9.5
Asset Turnover
0.6
0.8
0.8

            The preceding indicators give a broader of Daimler’s performance, together with the other companies. It is clear that the financial condition of their company is closer to the industry and market mean than the others. Indicators also prove that Daimler is the most stable of the three organizations and the better investment. The investment indicators, both current and historic, show how much better Daimler is faring in this respect. Therefore, this would make its stakeholders feel more secure.

            Measured by management efficiency, the results also prove that of the three Daimler is the leading company, with General Motors lagging far behind.

Summary
In study DaimlerChrysler in comparison with General Motors and Ford Motor Co., we have sought to study its performance against competitors that have similar management ethos, historic structures and organizational constraints. In addition, they have all been subjected to the same employee conditions in respect of demands for pay structures, pension, health and other benefits, although the latter problems are now being addressed.

            Currently DaimlerChrysler is in a better financial and corporate position than the other two competitors are. However, despite the advantage it has in this comparison, the company is still faced with some severe pressures in terms of the future. Not least of these will be its ability to compete with the continuing onslaught that the Japanese manufactures are making on the industry.

            If DaimlerChrysler is to continue to achieve sustainable growth, it needs to adapt its business to a format that more closely resembles these Far East organizations. It will need to re-evaluate its production and manufacturing procedures to achieve similar levels of returns and values, and at the same time analyze the specific reasons behind the success of companies such as Toyota, particularly in their ability to market and sell their products, thus continuing to gain market share.

            Since the change of management at the top of DaimlerChrysler, is has stabilized its position. However, that position is still somewhat precarious. As a matter of some urgency, the management needs to use that stability to introduce the necessary changes in its systems and procedures, in order that these can serve as a platform for continued and sustainable growth. Unless it takes this opportunity, the company could find itself struggling to maintain its current market share and position.

References
Annual Report (2005) Driven by Values. DaimlerChrysler. Recovered 1 October 2006 from http://www.daimlerchrysler.com/

Business: The company file (1998). Daimler and Chrysler get rolling. BBC News 17 November 1998.

Reuters (2005). Dubai buys large stake in Daimler-Chrysler. New York Times. January 31, 2005.

Farrell, Rita K. (2006). Kerkorian Appeals Ruling Backing Daimler-Chrysler Merger. New York Times, 27 September 2006

Simpson, Jeff (2000). Acquisition of Chrysler Corp: Kerkorian files a $9 Billion Suit. Las-Vegas Review Journal.

Andrews, Edmund. L. (2000). DaimlerChrysler nears deal to but 33.4% of Mitsubishi. New York Times.

Business (2002). Daimler to buy Asia truck makers. CNN News.

Edmondson, Gail (2004) Hyundai And DaimlerChrysler: Driving In Different Directions? Business Week.

Maynard, Micheline (2005). Daimler Sells the Last of Its Shares in Mitsubishi. New York Times.

McDonald, Joe. (2006) DCX opens first Chinese factory for Mercedes, Chrysler sedans. Associated Press.

Business (2000) DaimlerChrysler extends Detroit Diesel tender offer. New York Times, 29 August 2000.

Article (2001) Bombardier wins approval to acquire Adtranz. Railway Age. Issue April 2001.

Business (2006). Former Shareholders Win Compensation from DaimlerChrysler. Dutsche-Welle. Bonn.

Report (2000)  DaimlerChrysler’s expansion plans will create 15,000 New Jobs by 2002. Financial Times Deutschland.

Berlin (2006). DaimlerChrysler To Cut 6,000 Jobs. CBS News, 24 January 2006

Ohnsman, Alan (2004). Toyota, Honda and Nissan are grabbing global market share. Bloomberg, Asia. November 4, 2004.

GM chief agrees to halve salary. BBC News 7 February 2006

Blommestein, H.J and Funke, N. (1998) Institutional Investors in the New Financial Landscape. OECD Publications.

[1] Sports Utility Vehicles
[2] European Aeronautic and Defense company.

Looking from different angles, General Motors is clearly having bad turn outs in their operations as indicated by their GM’s performance for the few years. Though GM’s assets increased from 2002 to 2004 yet their revenues barely increased over the same year and their net was almost stagnant on the same period. Amidst the different market forces affecting the General Motors such declining market shares caused by stiff market competition, rising cost of fuel, health care and pension costs for their employees, and so forth, GMC is facing enormous financial difficulties causing the company to earn a junk bond status for their investments.

What should GM do about its junk-bond status? GM should implement Related Diversification measures by developing low cost and fuel efficient quality cars in order to effectively regain the market share. Liquidation of assets and sell some company assets that are not performing well to have a tangible cash worth. Implement Retrenchment by regrouping through cost and asset reduction. The most well performing asset should be given more emphasis.

Why has GM lost much of its competitiveness? GM lost much of its competitiveness because. They failed to invest on product development by seeking to improve their current products and by developing cheaper but quality cars.  They also failed to developed new market for new products. This could have been done by increasing its market share through purchase of portions of stakes of local car makers in a particular country where market potential is high.

Finally, GM has also failed to employ horizontal integration which seeks ownership or increased control over competitor. During GM’s earlier years, this was the strategy that brought the company rapid improvement and tremendous growth. To what degree is GM positioned to take advantage of new technology (e. g. , hybrid vehicles)? GM’s situation apparently is in high degree to take advantage of new technology in view of some of their outmoded units.

GM need market development by introducing present products or new services. They also need product development by improving present products or developing new ones. This means that GM has take advantage of new technology by developing cheaper but equip with latest technology cars to regain their competitive advantage. They also need to convert some of their asset into cash through asset reduction scheme for fluidity.

Ford Corp. General motors (MM) and Ford are two of the leading manufacturing companies of trucks that I know of. In saying, both have their strengths and differences in areas such as quality of parts, driver comfort, fuel economy, and engine selection. When these companies put together their trucks, it is taken into great detail for these two companies to make their product better than their competitor. GM designs more detail and reliable trucks than ford can produce.

For instance, Ford only offers three engine options that they will put in their trucks. They have a 4. 2 Liter IV, a 4. 6 Liter Triton IV, and their biggest engine in light duty trucks is the 5. 4 Liter Triton IV. Although these engines produce decent horsepower and torque, GM has six engine options with higher ratings. The first three engine selections GM has are the 4. 3 Liter IV, 4. 8 Liter IV, and 5. 3 Liter. They also have two other selections offered are the 5. 3 Liter IV and their biggest engine in light duty trucks the Vortex 6. 0 Liter IV.

Both engines offer the best technology known as the active fuel management system, which shuts off four of the eight cylinders when power is not needed. Last but not least, GM also has a 6. 2 Liter IV which is limited to certain trucks or packages. Not many trucks get very good fuel mileage. Ford is one manufacturer that offers fuel efficient motors, but their bigger engines tend to drink a little too much gas. For example, their smallest engine gets 16 MPEG in the city and 21 MPEG on the highway. Their largest engine in a light duty truck gets 14 MPEG in the city and 18 MPEG on the highway.

On the other hand, GSM’ smallest engine averages 17 MPEG in the city and 1 MPEG on the highway, and with a much bigger engine and higher power output than the Ford 5. 4 liter, averages 15 MPEG in the city and 19 MPEG on the highway. Trucks are not the easiest vehicles to drive or operate, which is why driver comfort is a need to a great truck. Ford and GM offer a number of conveniences to consumers’ and making the drivers experience more enjoyable and relaxing. Some options offered by Ford are back up sensors, side mirrors with turn lights inside, heated seats, adjustable pedals, and controls on the steering wheel.

GM offers their consumers heated side mirrors with turn signals inside the mirror and an auto dim eater, and park assisting with LED lights which allow you to see, as well as hear how close the rear of the vehicle is to any object. GM also offers dual memory and heated seats, adjustable pedals, rain sense wipers which turn on automatically, remote start, a cargo management system which allows consumers to attach toolboxes and equipment to rails installed of in the bed, and On Star turn by turn navigation, two different dashboards, side impact air bags, and the standard stability system.

No one wants to hear the noise of the road or the vehicle. This is why both Ford and GM have used higher quality materials with sound deadening treatment in their newer model trucks. This helps eliminate road and wind noise as well as the possibility of future squeaking or rattling. Creating more gaps within the design of the truck will also eliminate such sounds. The more interior accessories available on a truck the more people are interested in the trucks. Climate controls which allow both to have different temperatures, adjustable pedals, heated windshield dashboards, side impact air bags, and the standard stability system.

In reference to all of the great options that both companies provide, I have and will always be a reheard GM believer. I have credibility to talk about both being as how I have been a mechanic on both for several years. In the facts provided GM provides so much more in driver comfort which alone should be enough to convince a person in choosing GM. In conclusion, both GM and Ford manufacture great trucks. Giving consumers a number of options of available perpetration and interior options make the two different. The key to having the best truck isn’t to offer Just a number of available options but, to offer them all with reliability trucks.

WEED represents “W is “what do you want,” D is “what are doing about it”, E is evaluation”, and p is setting a plan” into motion (Easterner, 2006, p. 21). The case study of Natalie below is an example of how conflict can affect the choices one makes in attempt to meet one’s five basic needs. The case study will discuss how regret, acceptance, or belonging can affect a persons choices and how overcoming negative emotions can help one live a more fulfilled life. CASE HISTORY OF NATALIE Natalie is a successful attorney in Washington D. C. , who advocates for those in the LIGHT community who face discrimination in the work place.

Natalie is a lesbian and has been with her partner Michelle for five years. Natalie grew up in a Caucasian upper middle class neighborhood, in Georgia and is an only child. Natalie met Michelle while in law school in Virginia. When the started dating Natalie still had not come out to her parents, Natalie initially passed Michelle off as her roommate. Natalie came out to her parents after graduation and decided to move to Washington D. C. To be with Michelle. Michelle proposed to Natalie and Natalie accepted. Same sex marriage is legal in Washington D. C.. After the wedding, Natalie and Michelle are planning to have a child.

Natalie parents know that Natalie is a lesbian but they overlook this fact and hide it from others. Natalie flew her parents to Washington D. C. For a weekend to tell them of her exciting news. Natalie parents were extremely upset, embarrassed, and threatened to disown Natalie if she married Michelle and began a family. Natalie has put her wedding on hold not wanting to lose her relationship with her parents. Michelle thinks that Natalie is allowing her parents to decide their lives and has now given Natalie a deadline to make a decision. Natalie has succumbed to depression and is now seeking therapy to help her cope with the situation.

CASE ANALYSIS To create a workable and effective environment is its important the therapist create a foundation by being courteous, determined, enthusiastic, firm, and genuine with the client (Capsize & Gross, 2007). Cross Culturally, reality therapy is very adaptable. Having a workable knowledge base of the social group whom your working with is important in adapting the WEED system to meet the needs of the client. It is important that I familiarize myself with members of the LIGHT community, specifically hose who are still closeted about their sexuality and individuals who have Just recently come out to their family members.

Therapist need to check their own personal bias and Judgments at the door before entering therapy sessions. Establishing a positive environment will allow the process of reality therapy to be more effective. Natalie must feel safe in disclosing information and be able to share her true feeling without fear of Judgment. To help Natalie work through her problems it is important that Natalie is able to identify what she truly wants. In discussing wants, questions asked were; what do you want from our parents? What do you want from Michelle? What do you want for yourself right now? What do you want for yourself in the future?

What do you want out of therapy? Knowing exactly what one wants helps identify what need is being fulfilled. Clients must be committed in order to reach self actualization and identify how their current behaviors are not meeting their five basic needs (Mother, 2008). Natalie knows that she wants to marry Michelle but she loves her parents and does not want to lose them. Natalie wants understanding and acceptance from her parents; she wants to feel like she belongs. Natalie is also worried about making the wrong choice she regrets postponing her wedding and loves Michelle and would feel even more regret if Michelle left her.

Regret can transform into self-betrayal and expose a person’s real self rather than the ideal self that they portray to the world (Cameron, 2009). Natalie wants a family and to be happy. Natalie wants Michelle to be more understanding about her parents and be patient with them. Natalie hopes that therapy will help her solve her problems and make better choices for the future. Now that Natalie and I have identified her wants, we look at what she has been owing to accomplish her wants. It is also important that Natalie come to terms with the face that she cannot control her parents.

Natalie is a lesbian and her parents do not approve. No matter how much Natalie parents ignore or attempt to hide this fact it does not change the fact that she will never be heterosexual. Natalie must also come to terms that her parents do not know what is best for her life and she is the only one who can make that decision. Regret stems from individuals inability to take responsibility for their behavior (Cameron, 2009). Natalie regrets postponing her adding and blames her parents for her actions. Natalie is caught between her ideal self and her real self and is lost.

Natalie knows if she continues with postponing the wedding Michelle will leave her. Attempting to point the finger at another is not taking accountability for ones actions. Natalie must focus in order to see she cannot change other people or the past. To be successful in therapy Natalie must recognize the need to change, which she does. Evaluation is a major part of the WEED system. Now that Natalie wants, action, and direction have been identified, we need to evaluate the reasonableness of her resent actions, and if she has, a chance of getting what she wants.

The need to belong is powerful. Ones happiness directly correlates with the ability to successfully maintain both old and new relationships (Wobbling, 2005). As reoccurring themes, appear during the session summarizing statements that Natalie makes in different ways can help Natalie rethink or evaluate her own behavior. It also assist in keeping Natalie focused on what is going on now in her life and moves her away from placing blame or attempting to change others (Capsize & Gross, 2007). Natalie must evaluate her situation and determine where she stands with her arenas.

Natalie is somewhat relying on her parents for emotional security and acceptance, by not being honest and open about her sexuality she has lost her own identity and now lacks a sense of self. Natalie is successful at work, takes very good care of herself, and is financially comfortable. Natalie dependency stems from the fact her identity is only complete when she feels feels accepted. By Natalie living her life based on acceptance by her parents, she is playing the position of a rescuer in the Karma Triangle. Rescuers in Karma Triangle feel powerless and make behavior choices out of fear.

The need to please her parents indicates her own neediness and shows her dependency. To offset her need to please her parents she also rebels against them in an attempt to free herself from the control (Hostage, 2008). The cycle of pleasing then rebelling does not work. It is more likely to cause new problems since behavior choices made are out of fear. Natalie really wants to marry Michelle and have a child. Initially Natalie believed she wanted acceptance from her parents. After self-reflecting on the choices Natalie has made in the past, Natalie realizes that she has not and will not gain her parents acceptance in this manner.

Natalie realizes that her future choices need to be her own and without influence of her parents opinions. “Hostage states that there are not better tools to explain that the behavior choices clients have been making are their best attempts to close the gap between what they want and what they perceive they are getting (2008, p. 67). ” Ultimately, Natalie has to realize that it is possible for her get what she wants she Just has to make the right choices. Now that Natalie is ready to make different choices in her life, we move into the planning stage of therapy.

During this stage, the healing process begins with a workable plan. The plan needs to be simple and attainable. If the plan is too complicated, Natalie may become discouraged and give up. Natalie must decide when and how she will implement this plan making it measurable, the sooner the better. After clearly drawing boundaries that will encourage Natalie independence, I would assist Natalie in the implementation of her plan. Natalie may want to meet with her parents in a neutral location with a third party present. Having this meeting in my office may make the conversation easier for

Natalie. No matter how Natalie parents react, she has to be consistent and committed to the plan in order to obtain want she wants for herself. Natalie wants to be accepted. She Joins a LIGHT married couple support group where she interacts with others who are in similar situations. Natalie apologizes to Michelle and they set a date for their wedding. Natalie asks her parents to come to Washington D. C. To a therapy session. In an environment where she feels safe Natalie confronts her parents with the truth about her sexuality and tells them this is who she is and she cannot change.

Natalie takes back the control of her life and tells them how she has lived her life based on her parent’s ideals and will no longer continue to do so. Natalie actions have lifted a heavy burden from her shoulders and now she is able to enjoy her life without feeling guilty. Natalie now can make decisions based on her own personal situation without worrying about acceptance from her parents. CONCLUSION Being true to one self holds a person to a certain level of accountability. By becoming more responsible, evaluating ones choices and planning to correct behavior, one can work to fulfill their five basic needs.

GM History: General Motors (GM) was incorporated in 1916 and is primarily engaged in the development, production and marketing of cars, trucks and parts worldwide through its four automotive segments: GM North America (GMNA), GM Europe (GME), GM Latin America/Africa/Mid-East (GMLAAM) and GM Asia Pacific (GMAP). GM finance and insurance operations are primarily conducted by GMAC LLC (GMAC), which provides a large range of financial services.

GMNA primarily meets the demands of customers in North America with vehicles developed, manufactured and/or marketed under the brands, such as Chevrolet, Buick, Saab, GMC, Pontiac, Cadillac, HUMMER and Saturn. The demands of customers outside North America are primarily met with vehicles developed, manufactured and/or marketed under the brands, such as Opel, Saab, GMC, HUMMER, Vauxhall, Buick, Cadillac, Isuzu, Holden, Chevrolet, Daewoo and Suzuki. During the year 2008, GM total worldwide car and truck deliveries were 8. 4 million.

Substantially all of its cars, trucks and parts are marketed through retail dealers in North America, and through distributors and dealers outside of North America, the majority of which are independently owned. Mission: GM mission is to redefine themselves and to lead the reinvention of the global auto industry. Market risk: In general, market risk relates to the level of the risk within the industry. This risk can be linked to technology risk. The speed of change in technology continues to accelerate and will do so for the foreseeable future.

Market risk relates to failure to keep up with competitors in this area and cost that arise through production of technologies that do not enhance the experience in line with customers’ needs (ACCA Text, 2008/09) Exchange rate volatility will be important since operations are global. Fluctuations in exchange rates affect the values of contracts with customers as well as the cost of operations and the value of the products. Interest rate and commodity price risk also form part of market risk in GM. Recession Risk: Recession risk relates to financial market risk and economic risk.

Related financial risk includes problems with liquidity to support the huge cost of manufacturing, customer credit risk when dealing with government and companies around the world. Economic risk facing GM stems from changes in economic conditions such as economic growth or recession, government spending policy and taxation policy, unemployment level and international trading conditions (ACCA Text, 2008/09) Manufacturing cost risk: This is the risk that the manufacturing cost cannot be recovered by GM.

Change in technology to meet with current market demand will lead to increase cost of manufacturing vehicles that can be transferred to the product price. There might be situations where customers will not buy new products or that the sale demand for current products will decline unexpectedly. A new product launched onto the market might fail to achieve the expected volume of sale, or the take-up might be much slower than expected. Management risk: Management risk involves strategic and operational risk within the organization. Strategic risk is the risk arising from the possible consequences of strategic decisions taken by GM.

Strategic risks will also arise from the way that GM is strategically positioned within its environment. GM is exposed to higher risks as the business entails manufacturing of new products although the potential returns may also be much higher. Operational risk relates to the potential losses that might arise in business operations such as losses resulting from inadequate or failed internal processes, people and systems, poor quality or lack of production. This risk can be managed by GM’s internal control systems (Crouhy et al, 2006)