stand alone project

Discussion Question 6-1

Student’s Name

Institution’s Name

Date

Part A: CEO Profiling and Assessment of Effectiveness

The paper is going to focus on the General Motor Corporation. The General Motors Corporation CEO is Mary Teresa Barra. She is the Chief Executive Officer and Chairman of this company. She was appointed as the Company CEO in 2014 January 15th and as the chairperson of the Board of Directors in the company in the 2016 January 4th. Barra has a great academic and professional achievement and competency which has highly facilitated her ability to work effectively in her current position. She began her career in 1980 with GM as a Co-op student in the General Motors Institute (Kettering University) at the Pontiac Motor Division. In 1985, she graduated from this university with a degree of Bachelor of Science in electrical engineering. Barra I 1990 graduated from the Stanford Graduate School of Business with Masters in Business Administration after getting a GM fellowship in 1988 (General Motors, 2017).

Mary Teresa has Before she was named as the company CEO, Mary Teresa served as the Global Product Development Purchasing and Supply Chain Executive Vice President of General Motors since 2013, August, and as the Global Product Development Senior Vice President in General Motors since 2011 February. During these roles she was accountable for the program management, engineering, the design, and GM vehicle quality across the globe. Barra has also served as the GM Global Human Resources Vice President, Global Manufacturing Engineering Vice President and Detroit Hamtramack Assembly Plant Manager. Teresa has also served as Competitive Operations Engineering Executive Director and in a number of staff and engineering positions. She has also served as a board member in several institutions that include General Dynamics, Stanford University, Detroit Economic Club and Detroit Country Day School among others. She was in 2016 named as the “world most powerful woman in business” by Forbes Magazine. She was also given the fifth position among the “100 most powerful women in the world”. She has achieved much more recognitions in the world due to her ability in business.

Mary Teresa was appointed as the CEO in January 2014 to Succeed Daniel F. Akerson. Akerson was having an early retirement from his position as the GM CEO at the age of 65, to take care of his wife who was battling cancer at advanced stage. Mary Teresa took her position as the CEO of the company at the age of 51 and after serving the company for 33 years. She has since managed to enhance the company’s operations by reducing the cost of operation and maximizing the profits (Wayland, 2013; Vlasic, 2013). She has also managed to create profitable changes in the design model of some of the company products. She in 2016 received a pay rise as a result of enhancing the company’s level of profitability in her second year as the CEO; 2015. Her academic and professional history demonstrates her great ability especially in the auto industry where she has been for life after being sponsored by the GM to pursue her bachelor education. She has been working in the company at various level and in various departments which clearly demonstrates her understanding in the company’s operations and her great ability in taking the company to great height. Mary has already started showing her leadership ability by enhancing the company profitability after being the CEO of the company for only two years (Wayland, 2014; Smith, 2013). Barra did not follow the GE strategy fully. Actually she disrupted the program first by minimizing sales in less profitable buyers for instance rental companies, and majoring more in individual buyers and company dealers against the company’s traditions. Teresa has tried to reinvent, reinvigorate, and rescue the GM with intention of lifting the company up to make profit. Teresa started her role with a hefty recall of the company’s vehicles, a role she handled exceptionally and gave the company the ability to make profits in the future. The company was recently ranked in position five in Fortune 500, where ranking is highly based on the revenue of the company (Barra, 2016; Muller, 2014). This shows that her change of strategies have highly benefited the company.

Part B: Board of Directors Profile and Analysis

The GE directors are first nominated and later elected by the company’s shareholders. Their nomination and election is highly guided by the company’s bylaws that provide guidance to these procedures. Based on the GM bylaws, shareholders groups and shareholders are permitted to nominate the board of directors in the annual proxy statement firm. Other members are selected by the board itself, which then recommend them to the shareholders for election. The screening process is delegated to the Governance Committee to the board with CEO and Chairperson input, and other board members as suitable. To help in the evaluation and identification of qualified candidates of director, the governance committee regards board candidates’ recommendations submitted by shareholders by use of the same criteria it uses while assessing other candidates. Moreover, the governance committee is obligated for assessing each incumbent director as annual process part for commending to the board. Some of the aspects evaluated before making this recommendation include individual meetings participation and attendance history. They also checks on individual contribution to other board activities, the board self-evaluation results, and any actual or possible conflict of interest. Directors are then elected annually in the annual shareholders meeting to serve for a term of one-year. In case of any issues the board might elect directors to work until the following annual meeting. The company board is comprised of 11 members, including the chairman who is elected by the board members (GM.com, 2017).

The current bylaws provide restrictions on the board of directors to be nominated. They are according new bylaws the nominated board members require holding not less than three percent shares of the automaker for about three years. Moreover, shareholders groups that attain the standard of the share ownership will be capable of nominating 20% or up to two people of the board. The current board comprised of 11 members inclusive of the board chairperson who is the CEO of the company. Apart from the chairperson, there is no any other an insider in the board members; the rest are outsiders. In addition, only one more member has a history of working with automobile companies or industry. The rest have worked in very different industries who are not directly or indirectly related to automotive industry. Most of the board members in the company; 7 are retired and hence they no longer have any association with their previous companies of employment. This means that they can now dedicate their strength to the company with intention of helping it to grow further and to be more profitable, with intention of enjoying extra benefits as investors. This also shows that they do not have any conflict of interest since they are not working in a company that would overshadow their connection with General Motors. Those that are employed do not work in a company that directly or indirectly compete with GM. This means that they do not demonstrates any form of competition threats to the company. The new rule ensures that board of directors members have interest to protect in the company. The company bylaws need any nominated members to have at least 3% ownership of the company. This means they will have company’s best interest in mind. This is their main strength. The main weakness is that most of them do not have an extensive experience in motor industries and hence they can only provide soft management tips without much insight on automobile industry (GM.com, 2017).

Most of the current board members have been recently elected with the change of the CEO. Apart from the board chairperson, who is also the company CEO, there are four other members who joined the board during or after the new company CEO was appointed; 2014. Four more members joined the company between 2010 and 2014, while only two joined before 2010 (they both joined in 2009). Although the recent CEO came with various changes of strategies, this is not clearly demonstrated in the new change of directors. The new directors do not show any unique features that would be associated with the changes in the company. They have achievements just like the old ones. However, it is clear from the current board of directors’ previous experience that involves a lot of innovation and scholar work. This would simply mean that the company is focusing on employing innovative measures to withstand the competition in the industry (Muller, 2014).

Part C: Industry Assessment

General Motors Company is an American automotive company that was incorporated in 11th of August 2009. Its major operations include selling, building, and designing automobile parts, crossovers, trucks, and cars. It also offers automotive financing service via General Motors Financial Company Inc.

GM Porter Five Analysis

Threats of New Entrant

GM is in automotive industry, an industry that requires a lot of capital investment to start and great technological knowhow. Automotive industry requires a lot of capital to purchase the manufacturing facilities and to establish a distribution network. Moreover, the existing companies benefit a lot from economic of scale in their production, this makes is hard for new entrants to compete with the existing companies such as GM in the market. To develop automotive products great technological knowhow is required. The situation is even worse in this era where the industry has embraced Information Technology and tried to integrate it in the automotive technology. The aspects of durability, reliability and safety are highly considered by the customers to gain customers trust in once products in the industry. Thus, GM does not face much threat from new entrants.

Customers Bargaining Power

There are various companies in the world who manufacture similar products in the local and global market. This simply means that automotive buyers have the ability to leave the seller or manufacturer who they do not like to a manufacturer of their preference, based on the products quality, safety, technological integration, and prices. Thus, the company is experiencing a higher customer bargaining power from all its customers including governments, individuals, and commercial companies who are its main customers. More need to be done to enhance the company’s ability to keep its customers and to attract more.

Suppliers Bargaining Power

There are a number of available suppliers that the company can approach to get quality raw materials they require. This limits the suppliers bargaining power. The availability of a viable and reliable alternative gives the company an upper hand when dealing with its customers. It can easily bargain or discounts or price reduction and also major its purchase on the raw material, knowledge and product quality.

Power of Substitution

There are various alternatives that customers can use and their cost of switching is considerably low. GM customers can use other means which include public transportation which favors companies that manufacture transport vans, trains or bicycles. However, the level of convenience is not the same. This moderates this risk.

Competitors Rivalry

GM experience great competitions from large local and international companies that export to the America and other parts of the world where GM supplies its products. The company faces stiff competition from Toyota Motor Company, Ford Motor Company, Volkswagen AG, Honda Motor Co Ltd. and FCA US LLC Company. GM competitors are employing extra effort produce more technology sensitive products based on the customers preferences at a cheaper cost, especially Toyota. Thus makes the competition to be stiff to an extent that the company needs to enhance its operations to meet customers demand in the market and reasonable cost (Morningstar, 2017).

Shareholders

GM was incorporated in 2009, and has been giving its investors great returns compared to its competitors in the market. The company gives a divided yield of 4.2% which is above the industrial average. Although the company has not been doing very well in the past, the company has demonstrated a great improvement under the governance of Mary Teresa. It is currently showing a favorable curve which can easily attract more investors in the company (GM.com, 2016).

Other Factors Necessary for the Company

The automotive industry is currently experiencing drastic change of technology. Most companies in the industry have invested in research and development to enhance their innovative ability. This has resulted to invention of competitive cars that make use of technology including information system to operate effectively. The company needs to keep up with the changes to remain competitive.

Part D: Direct and Indirect Competition

GM is experiencing direct competition from Toyota which they compete to produce similar cars with equal or more capability from that of its competitors. A good example is the production of Tesla by Toyota which is directly comparable to Chevrolet from GM, which was created to uplift the GM ability to compete with Toyota in the market. GM also experience indirect competition from Ford that creates much bigger cars which include Vans or public transportation. The vans serve similar purpose as GM cars, though they are not directly comparable (Bomey, 2016).

Part E: Internal Strength and Weaknesses

Resource and capability Valuable Rare Cost of Imitation Organization Weakness

Financial Yes No No No Medium

Human Resource Yes No No No Strength

Executives (CEO) Yes Yes Yes Yes Strength

Technology Yes Yes Yes Yes Strength

Intangible, brand name and trademark Yes Yes No Yes weakness

The company has good revenue which assists it in enhancing effective operations that include manufacturing and distribution this act as the company’s strength. It also has other valuable resources that include human resource and the company’s CEO who is willing to make changes to enhance the company’s profitability. However, the company’s trade mark and brand name is not very strong, especially after a massive 2014 recall. The brand is associated with a number of faults which especially in manufacturing. This is the greatest company’s weaknesses. This makes it hard for the company to maintain high competitive ability in the market (GM.com, 2016).

Part F: External Opportunities and Threats

Strength

Strong financial position

Human resource

Determined CEO

Enough equipment and facilities Weakness

Weak brand image

Recent safety related recall

Unsuitable marketing strategies

Opportunities

Exploration of new international potential market

Inventing in research and development

Inventing more in safety and quality SO

Development of quality hybrid cars with use of IT technology

WO

Consider developing quality assurance department

Threats

Competition in technology implementation

Competition in the quality of the products

Competition in innovation aspect

ST

Investing more in research and development to enhance the level of quality and creativity for originality WT

Defining better marketable technics that are cost effective

Part G: Overall Competitiveness

GM is highly recognized in the United State market where it has been dominating the market for a while. However, the recent recall; 2014, made most of its customers and potential customers to distrust in its products. As a result, the company is experiencing a decline in the US market share. Based on the 2014 data, GM is ranking third globally after Volkswagen and Toyota that take the first positions in the market. GM competitiveness has been impacted by many issues including its inability to keep up in innovating new products. However, the situation is anticipated to change with the new governance (Wernle, 2013).

Part H: Recommendation

The corporation shareholders wealth can be increased in the future by developing quality and safe products that are highly innovative to increase the company’s products competitiveness in the market. This can as well be done by enhancing the production efficiency which will enhance cost reduction and profit maximization. I would expect that the after working on the quality, safe and innovative products, and the company will manage to sell their products through simple marketing via social media and television adverts. I am also expecting that they will manage gain more customers from referral. This will be anticipated to improve the customers trust and hence raise the company’s competitiveness in the market. Enhancing the company’s marketing strategies to ensure the customers are always aware of the newly creatively developed products and that they are convinced that these products will meet their needs and preferences effectively, without compromising their safety will be one of the greatest marketing achievement. I am also expecting that cost reduction and improvement of efficiency, and application of innovation will highly improve the industrial application of technology and take the technological based competition to another level, especially if efficiency will enhance the reduction in the cost of the innovative based products.

References

Barra, M. (2016, Apr 22). GM CEO Mary Barra got a huge pay raise. Fortune. Retrieved from http://fortune.com/2016/04/22/mary-barra-gm-pay-general-motors/Bomey, N. (2016, May 21).Tesla fighters: GM, Toyota strategies diverge. USA Today. Retrieved from < http://www.usatoday.com/story/money/cars/2016/05/21/tesla-fighters-gm-toyota-strategies-diverge/84581412/>

General Motors. (2017). Leadership. Retrieved from https://www.gm.com/company/leadership/corporate-officers/mary-barra.htmlGM.com. (2016). General Motors Company form 10-k. Retrieved from < https://www.gm.com/content/dam/gm/en_us/english/Group4/InvestorsPDFDocuments/10-K.pdf>

GM.com. (2017). Retrieved from < http://www.gm.com/company/company-overview.html>

Morningstar. (2017). General Motors Co. Retrieved from < http://financials.morningstar.com/competitors/industry-peer.action?t=GM>

Muller, J. (2014, Jun 16).Exclusive: Inside new CEO Mar Barra’s urgent mission to fix GM. Retrieved from https://www.forbes.com/sites/joannmuller/2014/05/28/exclusive-inside-mary-barras-urgent-mission-to-fix-gm/#13ce5a2a1c3aSmith, A. (2013, Dec 10). GM names Mary Barra as CEO –first woman to run major automaker. CNN. Retrieved from HYPERLINK “http://money.cnn.com/2013/12/10/news/companies/gm-ceo-mary-barra/” http://money.cnn.com/2013/12/10/news/companies/gm-ceo-mary-barra/ HYPERLINK “http://money.cnn.com/2013/12/10/news/companies/gm-ceo-mary-barra/” http://money.cnn.com/2013/12/10/news/companies/gm-ceo-mary-barra/

Vlasic, B. (2013, Dec 10). New G.M. Chief is Company woman, born to it. The New York Times. Retrieved from http://www.nytimes.com/2013/12/11/business/gm-names-first-female-chief-executive.htmlWayland, M. (2013, Dec 10). GM CEO Dan Akerson to retire; Mary Barra to succeed. Retrieved from <http://www.mlive.com/auto/index.ssf/2013/12/gm_ceo_dan_akerson_to_retire_m.html>

Wayland, M. (2014, Jun 10). GEM CEO Mary Barra touts rapid change, business accomplishments at annual meeting. Retrieved from http://www.mlive.com/auto/index.ssf/2014/06/gm_ceo_mary_barra_touts_rapid.htmlWernle, B. (2013). Toyota still reigns, but Ford is flexing its muscles. Automotive News. Retrieved from < http://www.autonews.com/article/20130701/OEM05/307019995/toyota-still-reigns-but-ford-is-flexing-its-muscles>