- Identified major factors that will influence the company/industry over the next 1-5 years
- Identified impact on stock performance and strongest competitor over the past 18 months
- Dealt with Current Performance issues
- Key financial trends for self and strongest competitor for the past 3 years
- Assessment of Current Competitive Position _________
SOLUTION This solution is FREE courtesy of BrainMass!
The major factors that will influence the company/industry over the next 1-5 years:
The increase in global presence of General Motors during the next 1-5 years;
The changes in cost structure of General Motors during the next 1-5 years.
The increase in the demand for "green" vehicles during the next 1-5 years;
The changes in fuel prices during the next five years:
Impact on stock performance & strongest competitor over the past 18 months:
Eighteen months ago the price of GM stock was $34.80. Currently, the price is $31.02. During this period the lowest price of the stock was $26.85 and the highest price reached was $38.60.
We consider the stock of Ford Motor Co, the strongest competitor of GM. Eighteen months ago the price of Ford Motor stock was $356. Currently, the price is $576. During this period the lowest price of the stock was $325 and the highest price reached is $576.
Current Performance Issues of General Motors:
The company is still having a high cost structure which has not been sufficiently reduced. Also, there are problems related to bureaucratic culture. The decision making process at GM is still slow. The reaction to market changes takes considerable time. Further, GM has been adversely affected by car recalls. Also, GM is facing a declining network of dealers in the US. There are more than 1,000 dealers whose franchise agreements will not be renewed. The company faces issues relating to working capital management. Its relationship with suppliers is adversely affected because of low liquidity. The liquidity problems of GM are compounded by the fact that credit rating agencies have given low debt ratings to GM.
The key financial trends for GM and strongest competitor for the past 3 years are as follows.
Between 2013 and 2015 the sales revenues of GM have declined from $155 billion to $152 billion. During the same period its gross profit has increased from $18.0 billion to $18.3 billion. In the same period its operating income has declined from $5.1 billion to $4.8 billion. The net income during the period has increased From $5.3 billion to $9.8 billion. During this period the change in cash/cash equivalents has been a decline from $1.5 billion to negative $3.7 billion.
Between 2013 and 2015 the sales revenues of Ford Motor Company have increased from $146 billion to $149 billion. During the same period its gross profit has declined from $23.8 billion to $23.0 billion. In the same period its operating income has declined from $12.8 billion to $7.6 billion. The net income during the period has decreased from $11.9 billion to $7.3 billion. During this period the change in cash/cash equivalents has been an increase from negative $1.19 billion to positive $3.5 billion.
The assessment of competitive position:
The current competitive position of General Motors is based on a large number of well recognized and reputed brands such as Chevrolet, Pontiac Cadillac and Buick. These brands have wide recognition worldwide. Further, General Motors has presence in countries such as Poland, Russia, South Africa Ecuador, Egypt, Germany, Argentina, Australia, Belgium, Brazil, China, Colombia, South Korea, Spain, Sweden, and Thailand. This provides General Motors with a strong competitive platform. It has high scope for expansion in China and other emerging economies. Further, there is a high demand for General Motors trucks globally. Currently, there is strong demand for General Motors hybrid vehicles. Currently, the competitive position of General Motors is strong.
4. Helper, Susan, and Rebecca Henderson. Management practices, relational contracts, and the decline of General Motors. No. w19867. National Bureau of Economic Research, 2014.