General Motors Europe as of Essay

Download this Essay in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Essay:

The second decision was implemented and the same treatment would be applied to both Opel and Vauxhall. The first alternative would not have been extremely viable for the simple reason that both German and British manufacturers are subjected to the same environmental features and this means that there is no logic reason as to why they should be treated separately; they both fall under regulations of the European Community, they both pose risks of financial losses and they both could revive and support the company's overcoming of the crisis.

Having made the decision of how to treat the two companies in relationship to each other, a question is now being posed relative to what the Detroit headquarters should decide in terms of the future of Opel and Vauxhall as integrant parties of General Motors. On the one hand, the parent organization considered selling the two subsidiaries and as such renouncing most of its operations within the European arena; on the other hand, they considered not selling the subsidiaries, but continuing to invest in them and maintaining them as integrant parties of GM. The following lines detail the two alternatives.

4.1. Selling Opel and Vauxhall

The alternative of selling Opel and Vauxhall was made in early 2009, as the financial crisis was beginning to take a toll on General Motors. Internal analyses pointed out to the fact that Opel was a far too large organization, employing over 55,000, and expanding over too much factory space. Despite these features, it contributed only limitedly to the Group's annual revenues.

After months of discussions, the board at GM decided to sell the British and German subsidiaries to Magna, a Canadian manufacturer of car parts. The loan would be offered by a Russian bank, Sberbank, making as such the Canadian-Russian consortium the majority owner of Opel and Vauxhall. They would possess 55% of the interest; 35% would remain with General Motors and 10% would go to the staff members. The proposition to sell the two subsidiaries to Magna was well received by German chancellor Angela Merkel, who praised the initiative for its ability to save jobs; Magna promised that it would not close any Opel organization on German territory (Wilx, 2009).

4.2. Keeping Opel and Vauxhall

It took half of a year for General Motors to make the decision to sell Opel and Vauxhall; yet, before a materialization of this decision could be observable, the board focused more intensely on their second alternative -- that of keeping the German and British subsidiaries. Such a course of action would undoubtedly increase the pressure for the American owner, which would not manage to reduce the threat of the crisis. Additionally, they would be forced to invest their own resources to revive the company and it would as such be uncertain if the company would be profitable by 2010, as estimated by Magna's takeover (Stoll, Fuhrmas and Walker, 2009). It would also have a negative impact onto Germany, as the measure would require Opel to reduce 30% of its costs, meaning that it would have to let go an estimated 10,000 employees (Yahoo News, 2009).

Despite these threats and limitations, the company would be able to retain its strong reputation, and even enhance it by proving its abilities in times of financial hardship. It could also strive and convince the German and British governments to offer it subsidies and bridge loans in order to move passed the crisis. And when Opel and Vauxhall regain their pre-crisis strength, GM will be the sole beneficiary and the sole controller. Given this situation, it is most advisable for General Motors to not take the easy way out through selling the two subsidiaries, but to keep them and strive to revive them.

On the 4th of November 2009, less than two months after the deal with Magna had been declared, the General Motors officials announced that the agreement was off and that they would not sell the two German and British subsidiaries. This recent decision was based on improving business conditions for the organization, but also the hope that the German and British governments and communities would support the company (Wards Auto, 2009).

5. Stakeholder Strategies

Due to the difficulty in making the final decision, as well as the large number and complexity of the parameters involved, it is possible for the board at General Motors to once again change their ruling. This possibility arises as the organizational leader focus on ultimate goals and benefits, as promoted by the principles of strategic management. Whichever the ultimate course of action however, fact remains that various categories of stakeholders would be impacted by the future endeavors, and that the organization would have to implement various strategies.

Considering that General Motors sticks to the decision of not selling Opel and Vauxhall, they would have to implement several strategies in order to deal with the issues of the stakeholders, such as some of the following:

Downsizing strategies will have to be developed and implemented in order to reduce operational costs; the strategy will significantly reduce the on the job satisfaction of the remaining staff members, and will also reduce the reputation of the organization within the German community

For the same purpose of cost reduction, the managerial team at General Motors would also have to renegotiate its contracts with the purveyors in order to convince them to offer the necessary commodities at lower retail prices

The governmental institutions will also be approached with requests for financial support; GM will try to convince the British and German authorities to implement plans similar to the American TARP and support the automobile manufacturer through these times of financial difficulties

Considering however that it would be possible for the General Motors Company to change its mind and sell Opel and Vauxhall after all, they would have to implement the following strategies relative to their stakeholders:

Concerning the business partners, they would hand all control to the Canadian-Russian consortium, meaning that GM's 35% interest would no longer be able to massively influence the decision making process

In terms of the shareowners, these could be satisfied on the one hand as the company does not have to invest additional financial resources in reviving the German and British subsidiaries (most sources will be ensured by Magna) and that it can distribute the revenues in the form of dividends, but they could on the other hand be dissatisfied as the company does not register any income from the sales transaction

Massive financial resources would have to be invested in marketing endeavors in order to attract the customers and link the new ownership to the solid reputation of Opel and Vauxhall

In terms of the staff members, General Motors would present them with the opportunity to buy shares; a total of 10% of the company's total interest would be transferred to the employees.

6. Conclusions

The General Motors Company is a leading presence within the international automobile industry. In its century long existence, the American automaker has been faced with countless challenges, but has always managed to pull trough; the most recent example in this sense is given by its ability to emerge from a bankruptcy file. Yet, in order to overcome the modern day difficulties raised by the internationalized economic crisis, tough decisions had to be made. One such decision referred to the most adequate course of action to be implemented relative to company's subsidiaries in Europe -- German Opel and British Vauxhall. The initial discussions pointed out towards a strategy to sell the two subsidiaries; yet, after further consultations, and based on beliefs of improved economic conditions and political support, General Motors decided to keep the two subsidiaries.

References:

Stoll, J.D., Fuhrams, V., Walker, M., September 11, 2009, at Last, GM Sets Deal to Cede Control of Opel, the Wall Street Journal

Welch, D., August 24, 2009, Can GM Sell Opel and Not Fully Walk Away? Business Week, http://www.businessweek.com/bwdaily/dnflash/content/aug2009/db20090824_086842.htm last accessed on November 5, 2009

September 10, 2009, Opel and Vauxhall to Go to Magna, War and Peace, http://www.warandpeace.ru/en/news/view/39142 / last accessed on November 5, 2009

November 3, 2009, GM Decides to Keep Opel, Kills Sale Agreement with Magna, Wards Auto, http://wardsauto.com/home/gm_keep_opel_091103 / last accessed on November 5, 2009

November 4, 2009, GM Decides to Keep Opel, Forex, http://finance.kalpoint.com/highlights/corporate-news/gm-decides-to-keep-opel.html last accessed on November 5, 2009

2007, the Automotive Industry and 2008, Best Auto Review, http://seatbealt.blogspot.com/2007/11/automotive-industry-and-2008.html last accessed on November 5, 2009

November 4, 2009, GM Plans 10,000 Job Cuts at Opel, Yahoo News, http://news.yahoo.com/s/afp/20091104/bs_afp/germanyusautocompanygmopel last accessed on November 5, 2009

2009, General Motors Company, Reuters, http://www.reuters.com/finance/stocks/overview?symbol=GXM.N last accessed on November 5, 2009

2009, the Industry Handbook -- Automobiles, Investopedia, http://www.investopedia.com/features/industryhandbook/automobile.asp last accessed on November 12, 2009…[continue]

Cite This Essay:

"General Motors Europe As Of" (2009, November 05) Retrieved December 4, 2016, from http://www.paperdue.com/essay/general-motors-europe-as-of-17831

"General Motors Europe As Of" 05 November 2009. Web.4 December. 2016. <http://www.paperdue.com/essay/general-motors-europe-as-of-17831>

"General Motors Europe As Of", 05 November 2009, Accessed.4 December. 2016, http://www.paperdue.com/essay/general-motors-europe-as-of-17831

Other Documents Pertaining To This Topic

  • General Motors GM Is One

    " Conclusion Overall GM is currently confronting some of the most difficult obstacles that it has ever had to overcome. Government intervention is no guarantee that the company will be able to overcome these obstacles. Billions of dollars have been given to the company in an effort to save it from further demise. However, capital alone will not save the company, there must be a strategic effort of the management to properly

  • General Motors Was Taken Over

    GM's market share is a source of strength because it provides the company with considerable muscle and brand recognition. That is leads the Chinese market and is a major player in the U.S. market provides it with opportunities for economies of scale, and to introduce new products. The company's size gives is considerable bargaining power with suppliers. This in turn allows it some degree of cost control, especially now that

  • General Motors Organizational Change Changes

    Still, the future stated goal of GM is to develop an electric or hybrid version in all of its existing brands lines -- Chevrolet, Cadillac, Buick and GMC. Outcome of changes GM's most notable success has been overseas, where it is currently ahead of all of its competitors in the rapidly expanding Chinese market. "While GM is outpacing Ford in overseas competition, GM cannot solely depend on China for growth. While

  • General Motors Decision to Withdraw

    Three of the most important ones are succinctly revealed below: (a) The declining demand for the company's vehicles -- this issue led to the necessity for more financial resources, which eventually materialized in the acceptance of aid under TARP (b) The growing competition placed by international manufacturers -- this situation raised an impending necessity to reorganize the company in a means that it better addresses the needs and wants of customers (c)

  • Strategic Plan for General Motors Upper Mid Sedan Vehicle Segment

    Strategic Plan for General Motors Upper Mid Sedan Vehicle Segment Mission Statement To maintain and consolidate the status of the company as the number one auto manufacturer in the U.S. By employing the core values of continuous improvement, innovation and integrity and teamwork. To foster consumer enthusiasm and also enhance the team by giving them individual respect and responsibility. External Environment Remote Environment Economic: Currently the U.S. economy is experiencing a slowdown. The buying power

  • Revitalization of the American Car Industry

    General Motors was founded in 1908 and has been the largest manufacturer, designer, building and marketer of cars and trucks throughout the world since 1921. It sells vehicles in more than 200 countries worldwide and maintains assembly, manufacturing, distribution or warehousing operations in 53 of these countries. In 2000, it sold 8.6 million cars and trucks - constituting 15.1% of the entire world vehicle market (the world's biggest share) at

  • Strategic Management Report Toyota Motor

    Therefore, they use strict evaluation criteria to make choice among different alternatives. Keeping in view the strength of customers' bargaining power, Toyota and other automakers are expending huge amounts on advertisements and promotional campaigns to create awareness about their brands and convince these customers to prefer them over all other brands (Jenny & Scammon, 2010). 5. Internal Environmental Analysis for Toyota Motor Corporation 5.1. The Resources Types: Like other types of business


Read Full Essay
Copyright 2016 . All Rights Reserved