General Motors Founder William Durant

Business Durant and General Motors Alex Madsen's book "The Deal Make: How William C. Durant Made General Motors" is a biographic account of Durant's life, documenting his failures as well as his achievements and giving an insight into the dynamic life of this entrepreneur. Durant is best known as the founder of General Motors, but his story is far from normal. The book starts at the end, telling the story of his funeral in Manhattan in 1947 (Madsen, 2001).

At his funeral there were many long standing friends and colleagues who are life's he had touched (Madsen, 2001). Durant was remembered as a vibrant and risk taker, impatient and determined. The book then goes on to look at his life.

It is noted that while working at a range of early jobs, including stacking lumber at a mill and as a travelling cigar sales person he demonstrated many of the characteristics which he would be known for; unswerving confidence combined with a soft spoken voice and patience that was convincing to those he spoke to (Madsen, 2001). It was as a sales person he entered into the transportation industry, selling horse-drawn carriages, standing the Flint Road Cart Company in 1886 (Madsen, 2001).

This may be argued as one of his earliest major successes, as by 1890 this company, with the gaining of a new partner, had become the Durant-Dort Carriage Company, which would become the world's largest carriage Co. (Madsen, 2001). Ironically, Durant was not initially convinced of the benefits of cars, believing that they were noisy allowed. However, with the increased public interest he saw an opportunity, and moved into the automotive industry, initially starting out by entering a Buick into the 1904 New York auto show, selling more than 1,000 cars.

Durant founded General Motors in 1908, supported with $500,000 in stock from Buick, created from the consolidation of 13 existing automotive companies, as well as parts manufacturers (Madsen, 2001). General Motors was his triumph and his downfall; initial successes saw him undertake a highly aggressive acquisition strategy, at times acquiring one company every three weeks.

The strategy was highly risky, and in 1910 he lost control of General Motors to the Wall Street financiers after becoming overextended, only to regain control in 1915 after founding Chevrolet and utilizing a successor Chevrolet to regain control of General Motors through a share purchase, at this time he worked with Alfred P. Sloan (Madsen, 2001). However, Durant was not hold onto General Motors, is once again he overextended himself, and once again lost a company, moving onto established Durant motors.

However, the 1929 collapse of Wall Street limited funding, the company shut down in 1933 (Madsen, 2001). Durant did not give up, although he left automotive industry, and purchase the bowling alley which became bankrupt in under a year. 2. What do you think the entrepreneur did wrong? Durant's main failures revolve around his high level of risk taking. It maybe argued that his aggressive approach towards business, and his willingness to take risks, resulted in an overoptimistic view of potential outcomes, that was not always realize.

For example, in 1909 he acquired Cartercar for General Motors, a company which was developing a different type of car using a friction drive (Madsen, 2001). Durant's view was this could be very valuable, and saw a future for it, but his investors and finances did not agree. His acquisition policy appears to have been his downfall, as it was this that resulted in his overextension and in 1909 an $8 million deal to purchase Ford fell through, when the bankers turned him down (Madsen, 2001).

Had Durant demonstrated a higher level of risk assessment, and been more considerate in the way he made acquisitions, there would have been a great potential for success, without losing control of General Motors twice for the same reason (Madsen, 2001). 3. What did the entrepreneur do right? Durant did many things right. He had a high level of self-motivation and drive, and when he was knocked back he got up and continued. Without this he may never have sounded General Motors in the first place.

Durant, along with Henry Ford, was able to recognize the way in which the market was changing, and a great potential opportunity which existed in the automotive industry. In 1908, when previous other car companies have scaled back production, Durant took a risk and stockpiled many cars ready for sale, and as such gained many sales when the market is picked up (Madsen, 2001). Durant also developed some effective business practices, including the franchise system to selling cars, which still continues today (Madsen, 2001). 4.

What would you do differently? The main difference in approaching the development of a new business, I would like to think I would undertake a greater level of business analysis in order to maximize opportunities, while minimizing risk to exposure. An attitude that is except the presence of risk is necessary for an entrepreneur, but this can be beneficial if it is measured rather than unconstrained risk. However, this is stated in hindsight, with knowledge of the way in which the market progress.

Therefore, when undertaking an assessment of a developing market, it would also require a much greater level of market knowledge, as well as discussions with those who are involved in research and development in order to determine the way in which the market may move. I would also like to think I would have bet relationship with financiers, winning over to support my plans, so that they understand them from the beginning. 5.

What economic principles were present in the book? There are a number of economic principles present in the book. One economic.