General Motors Company (GMC): Decision the Company Has Made (Research Paper Sample)

GENERAL MOTORS COMPANY
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Introduction
This research will focus on General Motors Company. It is a company that deals with manufacturing, marketing and distribution of automobile and also renders financial services. It began in the U.S. and later spread its operations all over the globe hence, becoming a multinational company. This research will try to look at its background as a company, its origin, industrial classification and also its governance. Secondly, it will try to find out the investment decisions that the company has made over the years and the effects of those decisions on the productivity of the company. Thirdly, the paper will also look at its source of funds in reference to markets, instruments and instructions used. Lastly, the paper will interrogate how the company uses these funds in its operations (General Motors, 2012).
Background
General Motors Company (GM) is a multinational company that deals with manufacturing, marketing and distribution of automobile, and provision of financial services.. It was formed in September 16, 1908 in Flint, Michigan in the United States of America by William "Bill" Durant. Before forming the company, Durant was in the business of manufacturing horse-drawn vehicles. Initially it started with one company: Buick Motor Company, but later on acquired more than 20 companies including: Oakland, Oldsmobile and Cadillac, among others.. As the demand of automobile grew in the1920s, GM ensured it remained in the vanguard in production, design and marketing of automobile (General Motors, 2015).
The company transformed the motor industry immensely through its state of art designs. For instance, the production of Cadillac Lasalle in 1927, saw the transformation of the usual sharp cornered cars to curved ones. The company remained poised and sanguine amid the political and economic instability in 30s and 40s. It did not relent on its mission to consistently innovate, design and produce automotive that played second fiddle to none in the world. In the year 1940, the former GM president, William Knudsen was appointed by the then president of the U.S Roosevelt as the chairman of the new wartime office of production management. Further, GM supplied the allies with goods more than any other company. This increased the volume of the company’s sales by a great margin and also boosted its reputation in the entire North America. In 60s and 70s, GM had a fair share of its challenges and achievements. This was as a result of stiff competition which emanated from Japan and German who began to import their cars into the U.S market. This had an adverse effect on the company since it lost its monopolistic status in the U.S market. Consequently, GM resulted to manufacturing small vehicles which were lighter in weight and fuel efficient so as to have the upper hand in the automotive industry (General Motors, 2015).
In 70s, the company made a state of art innovations. For instance, it introduced engines that could run on low-lead or unleaded gasoline, cars that used air bags, and invented catalytic converter that is used to reduce emissions from cars. In 1980s and 1990s, GM opted for a single company globally. This was to enable it to operate efficiently and also, be in a better position to compete internationally. In 1995, the company made one of its biggest sales; five million cars were sold in the U.S and three million outside North America. In the same year, GM entered into a joint venture partnership with FAW-GM, SAIC-GM-Wuling and Shanghai GM in China. This new development enabled the company to cut its niche in one of the biggest markets in the world. As a result the retail and fleet sales shot up. (General Motors, 2015).
By the beginning of 2000, the company had become a single global company. This helped it to compete fairly with the emerging markets, such as China and Brazil. Moreover, the quality and design of its cars had greatly improved. For instance, the introduction of Daewoo in 2002 came in handy in marketing other brands such as Chevrolet, Buick and Cadillac in the global market. In the year 2007, GM made another milestone in the industry. The technology of using a range extender when the battery of a car was depleted was ingenious and so other companies followed soot. However, in 2008, the company suffered another blow due to the global recession. It ran out of operating cash but it was given a loan by the U.S treasury on a condition that it should continue with the tough restructuring of its operations in the U.S (General Motors, 2015).
In the year 2009, General Motors Corporation filed for bankruptcy and a new General Motors Company which took most of the former company’s strong assets was formed with the U.S. treasury, Canadian governments, and UAW Retiree Medical Benefits Trust as major shareholders. The new GM is smaller and rejuvenated to ensure its products and services are competitive globally. The main brands of its vehicles are: Chevrolet; Buick; GMC, and Cadillac (General Motors, 2015)
Investment decision taken
The vision of General Motors Company is to design, create, and sell the best automotive in the world. To achieve this, it has adopted a strategic plan that will make this vision to materialize. For instance, it envisages to: maximize its sales by delivering a product portfolio of the best cars in the world; expanding its influence globally by targeting the developing markets and also strengthen itself in developed markets; to maximize its profits by cutting the cost of operations, and also ensure that GM financial gives its dealers and customer best financial options (General Motors, 2012).
Over the years, the company has made some investment decisions so as to make it realize its goals. First, since its inception, the company has been expanding its reach through acquisitions. In 1920s, it acquired Buick Motor Company as its very first acquisition and later on went ahead to acquire more than 20 companies. This decision helped it to be a household name in North America in the early 30s and 40s (General Motors, 2015). Secondly, the company has invested a lot in Information Technology. For example, according to its annual report of 2012, the company decided to create four innovation centers to develop proprietary business application software which could guarantee the accuracy and the security of the data (General Motors, 2012).
Thirdly, GM has expanded its influence globally by entering into joint-venture partnership. For instance, in China there are 10 joint venture partners who sell the company’s brands. This has helped a lot in terms of sales and marketing of its products. In the year 2012, sales increased from the previous year by 11.3%. The company is also projecting that, the market in China could reach 30 million units annually. Moreover, the company has entered into alliances with other motor companies so as to increase its revenue in sales and cut cost. For instance, in 2012 GM made a broad-based alliance with Peugeot SA (PSA). The alliance was to help GM to cut material and logistic cost (General Motors, 2012).
General Motors Company has been investing in product development for the sake of customer retention. It plans to achieve this by assembling vehicles that have the best quality in the market and are durable. To ensure that its dealers and customers have access to reliable, transparent and competitive financial options, GM financial liaises with other financial partners, such as Ally Financial, Inc. (Ally Financial). Its clients are given loans and also leasing option. This ensures that there is a consistent flow of sales and eventually an increase in revenue (General Motors, 2012).
Sources of funds
General Motors Company gets its funds from a myriad of sources. First, through revenue collected in the sales of its product. The company has a humongous network of dealers, joint-venture partners and subsidiaries who sell and market its products. The proceeds realized from sales are reinvested back to the company’s operations (General Motors, 2012). Further, the company also sources its funds through leasing. It leases its automotive to its customers and after the leasing period, the company gains through the accrued interest. GM also source its capital through equity financing. Since the year 2010, GM shares have been trading publicly in the New York Stock Exchange (NYSE) and Toronto Stock Exchange. This has helped the company to raise money for its operations ...