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GM v Honda
In FY 2010, General Motors earned revenue of $135 billion and earned profit of $6.17 billion on this. The 2010 FY figures are distorted because of the impact of the government bailout, but in prior years GM was losing over $30 billion per year, despite recording higher sales ($177 billion in 2007 and $147 billion in 2008). Sales hit their nadir in 2009 with just $104 billion, so part of the company's success in 2010 was that sales began to rebound. Sales thus far in fiscal 2011 are higher again, with the company on pace for around $149 billion. Net income is also stronger, the company having recorded almost $8.5 billion in net income in the first three quarters of fiscal 2011.
Honda's revenue and profit figures show a similar trend, where the company had stronger profits in 2007 and 2008, only to slump in 2009 and 2010. The company's fiscal 2011 showed a slight increase. It is worth noting that while GM's fiscal year end is Dec 31,...
This is why Honda's revenues bottomed out in FY 2010 while GM's bottomed out in FY 2009. Honda's net income, however, has been consistently stronger than that of GM. The company has earned a profit in each of its last five fiscal years. The struggles of GM pre-bailout were a result of pension expenses, and it was bailout-era pension restructuring that allows GM to turn a profit now, compared with steep losses before the bailout. The company still has some pension obligations (Shepardson, 2012).
GM today has a relatively healthy balance sheet, with a current ratio of 1.12 and a debt/equity ratio of 2.83. The bulk of the liabilities are classed as "other," totaling $43.4 billion. These are the remaining pension liabilities that GM is considering buying out. The company has $26 billion in cash. Honda's balance sheet is stronger, with a current ratio of 1.31 and a debt/equity ratio of…
References:
MSN Moneycentral: General Motors (2012). Retrieved February 6, 2012 from http://investing.money.msn.com/investments/stock-price?Symbol=GM
MSN Moneycentral: Honda ADR. (2012). Retrieved February 6, 2012 from http://investing.money.msn.com/investments/stock-income-statement/?symbol=HMC
Shephardson, D. (2012). Analyst: GM may buy out retiree pensions. Detroit News. Retrieved February 6, 2012 from http://www.detroitnews.com/article/20120112/AUTO01/201120408
General Motors Company, commonly called as GM is one of the largest automobile manufacturers in the world. It is an American multinational corporation headquartered in Detroit, Michigan. It has business operations in more than 157 countries around the Globe. It was founded in 1908 as General Motors Corporation; and renamed as General Motors in 2009. The top brands of the company include Chevrolet, Isuzu, GMC, Jie Fang, Cadillac, Vauxhall, Baojun,
" 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
The economic environment is difficult. The United States may finally be showing signs of emerging from recession, but the recent economic difficulty has taken its toll of Ford. Following the short-lived spike provided by the 'cash for clunkers' program, auto sales have slumped again. Many competitors saw sales fall dramatically in the wake of that program. Ford, however, did not suffer as much. While two of its most popular models,
Recommendations The key competitive advantages that Ford Motor Company of Canada must concentrate on include the following. First, the continue growth of supplier relationship management and tight integration at the quality level of sourcing and procurement (Baker, Artinian, 1985) is critical. This will alleviate any increases in the 78% of their cost structures that are dedicated to sourcing and procuring products, well above industry norms. Second, the use of R&D funds
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