In 2005, General Motors (GM) – the world's largest automotive manufacturer is now stepping to the point, where strategic thinking, planning and breakthrough are necessary. Three consecutive years of global market share declines, high pressure from world-class competitors, health care and retirement burdens, and rapid changes in consumer profile are the reason of that. How GM should minimize such threats and in the same time capture potential opportunities with its strengths is very interesting issue in term of strategic management and policy. This presentation was composed to fulfill the requirement of my masters degree subject. The analysis and solution in this presentation were originated from a business case blended with my knowledge, research and idea. Even though, they may not 100% correct, or not reflect the current situation and solutions of GM, I still hope that this presentation would help those who is interested the situations occurred in 2005

1. General Motors – 2005 G E N E R A L M O T O R S 2 0 0 5

19. G E N E R A L M O T O R S 2 0 0 5 External Environment: Opportunities and Threats Industry Environment (cont) √ - Intensity of Rivalry among Competitors - - Threat of Substitute Products √ - Bargaining Power of Buyers - - Bargaining Power of Suppliers - - Threat of New Entrants Threat Opportunity Factors Industry Environment Factors

26. G E N E R A L M O T O R S 2 0 0 5 Internal Environment: Strengths and Weaknesses SWOT Analysis (cont) Finance 2003: 0.81 2002: 0.92 2004: 0.74 Current 2003: 0.65 2002: 0.77 2004: 0.54 Quick Liquidity Ratio Ability to pay short term obligation GM is losing its ability to cover liabilities compared to prior years. Result 2003: 0.94 2002: 0.98 2004: 0.94 Debt to Asset 2003: 1.17 2002: 2.09 2004: 1.09 Debt to Equity Leverage Ratio Percentage of fund provided by debt and equity GM can reduce risk from creditors and Stockholders. Result

27. G E N E R A L M O T O R S 2 0 0 5 Internal Environment: Strengths and Weaknesses SWOT Analysis (cont) Finance (cont) 2003: 0.41 2002: 0.48 2004: 0.40 Asset Turnover Activity Ratio How much revenue is being generated for every $1 of capital employed Currently non-evaluable Result 2003: 0.015 2004: 0.015 2002: 0.010 ROS 2003: 0.006 2004: 0.006 2002: 0.005 ROI Profitability Ratio a company's operational efficiency and utilization GM can better utilize its assets to generate revenue. Result 2003: $482,029 m 2002: $379,142 m Asset

43. G E N E R A L M O T O R S 2 0 0 5 Comprehension of Recommended Strategies Operate in multi-business: automotive and financial Conglomerate Continue operating in global environment Globalization Pursue growth in both business lines Growth Drop out some less important plants around the world Turnaround Outsource less important parts to other suppliers Outsourcing A New Set of Corporate Strategies Strategic Formulation, Evaluation, and Recommendation

45. G E N E R A L M O T O R S 2 0 0 5 Comprehension of Recommended Strategies Continue with broad- differentiation to serve big range of markets Broad-Differentiation Global Capitalize on R&D and technology advancement to accelerate differentiation Innovation GMNA Modify existing products to create more demand in the US. Product Development GMAP Direct resources to penetrate the fast growth Chinese market Concentrated Growth The Rest develop new markets to shift the global market share Market Development A New Set of Business Strategies Strategic Formulation, Evaluation, and Recommendation

47. G E N E R A L M O T O R S 2 0 0 5 Comprehension of Recommended Strategies Focus on engineering rather than capacity to be product leadership and follow the business strategy of innovation Engineering Focus Production Design and produce based on the “technology creates values” to serve real needs of consumers Value Focus R&D Do research based on the “ technology creates values” to tackle consumer’s behavior change more properly Value Focus Track and monitor changes in customer’s behavior and lifestyle to build better internal customer profiles Customer Orientation Marketing Change marketing strategy from “push” to “pull” to respond to today’s situation Demand Pull HR Restructure employee benefits to reduce overhead cost of health care and retirement plan. Restructure Benefits A New Set of Functional Strategies Strategic Formulation, Evaluation, and Recommendation

51. G E N E R A L M O T O R S 2 0 0 5 Strategic Implementation The Balanced Scorecard: Learning and Growth Perspective Learning and Growth Perspective Objectives Measure Target Human Capital Increase education and experience of employee Number of employee training in deep functional expertise Employee participation in professional or trade associations Percentage of employees with advanced degrees Minimum five courses per staff per year. Minimum twice per staff per year. 15% of employees getting advanced degrees within three years Enhance team-working skill Number of employee training in soft skill Minimum five courses per staff per year Emphasize a use of Personal Development Plan (PDP) Percentage of employee who attend the PDP program Percentage of employees who meet their PDP goals 90% within a year – about 25% quarterly 75% annually – about 20% quarterly Strategic Implementation, Evaluation, and Control

52. G E N E R A L M O T O R S 2 0 0 5 Strategic Implementation The Balanced Scorecard: Learning and Growth Perspective (cont) Learning and Growth Perspective Objectives Measure Target Information Capital Enhance the communication of knowledge and project experience across function Number of co-development projects Number of regional and global conference Internal communication rating 10% of overall projects per year Regional conference quarterly and global conference semiannually Reach 85% within three years Increase information available for access Percentage of employees who has this information available to them Reach 90% within three years Increase information capital readiness Percentage of accomplishment of information technologies and systems versus needs Minimum 75% in every area Strategic Implementation, Evaluation, and Control

53. G E N E R A L M O T O R S 2 0 0 5 Strategic Implementation The Balanced Scorecard: Learning and Growth Perspective (cont) Learning and Growth Perspective Objectives Measure Target Organizational Capital Enhance teamwork productivity Number of completed (in time and budget) co-development projects Number of internal cross-trained employees Increase 10% per year Increase 15% per year Employee satisfaction Number of employee feedback Turnover rate Empowerment index (number of managers) Minimum 75% of employee involve the survey Maximum 7% per year globally A ratio of manager to employee decreases 5% per year for five consecutive years Encourage healthy lifestyle Lost-time accidents Worker’s compensation claims Injury frequency rates Percentage of participants to healthy-promotion initiatives Decrease 10% per year Decrease 10% per year Decrease 10% per year Reach 70% within three years Strategic Implementation, Evaluation, and Control

54. G E N E R A L M O T O R S 2 0 0 5 Strategic Implementation The Balanced Scorecard: Internal Processes Perspective Internal Business Processes Perspective Objectives Measure Target Operational Management Processes Decrease operating cost Inventory turnover Planning accuracy Outsourced parts cost Labor cost Decrease 5% per year Maximum 15% of effort, cost and schedule deviations Decrease to 15% comparing with a current expense within two years Decrease 4% per year due to a restructure of employee benefits Increase quality On-time delivery rate Defect percentage Warranty claims Reach 90% within two years Maximum 0.05 % per part/model Maximum 0.05% per part/model Strategic Implementation, Evaluation, and Control

55. G E N E R A L M O T O R S 2 0 0 5 Strategic Implementation The Balanced Scorecard: Internal Processes Perspective (cont) Internal Business Processes Perspective Objectives Measure Target Innovation Processes Increase a success in innovative projects Dollars spent on research and development Employee hours on research and development Number of new projects or services introduced Number of new product joint ventures New product or service cycle time Revenue from new products or services Increase the R&D/sales ratio to 6% in two years Minimum 30 hours per week for R&D staff and minimum two hours per week for other Staff At least two new innovative products or services introduced per years regionally (e.g. product safety, customer health and environmental impacts) Minimum two new projects per year for each region Maximum three years before replacement Increase 10% each year Strategic Implementation, Evaluation, and Control

56. G E N E R A L M O T O R S 2 0 0 5 Strategic Implementation The Balanced Scorecard: Internal Processes Perspective (cont) Internal Business Processes Perspective Objectives Measure Target Innovation Processes Accelerate innovative projects Number of new products or services in the pipeline Time to market of new products and services In each region, at least two new products or services being progress concurrently at all time (e.g.. hybrid and hydrogen car) Faster by 10% each year Regulatory and Social Processes Emphasize Corporate Social Responsibility (CSR) activities Dollars spent on CSR Employee volunteer hours Number of CSR activities Increase 5% per year Minimum two hours per employee per month At least 12 activities per year per region Strategic Implementation, Evaluation, and Control

57. G E N E R A L M O T O R S 2 0 0 5 Strategic Implementation The Balanced Scorecard: Internal Processes Perspective (cont) Internal Business Processes Perspective Objectives Measure Target Customer Management Processes Better understanding of customer needs Number of customer profile produced Number of lead user utilization Minimum five new customer profiles produced regionally 90% of overall projects conduct ‘lead user’ within three years Enhance retaining customers rate Percentage of returned customers Grow 5% per year Deepen customer relationship Revenue from cross-selling multiple products and services Increase 10% per year Strategic Implementation, Evaluation, and Control

58. G E N E R A L M O T O R S 2 0 0 5 Strategic Implementation The Balanced Scorecard: Customer Perspective Customer Perspective Objectives Measure Target Create brand and technology awareness and recognition Number of ads launched per region Number of trade show attended Increase 20% in three years, 8% annually At least one per region semiannually Increase customer satisfaction and loyalty level Number of customer complaint Number of complaints resolved the first time Customer response time Number of proposals made Reduce 25% each year Increase 15% each year Reduce 50% in three years, 20% annually Minimum two proposals per year per region Strategic Implementation, Evaluation, and Control

59. G E N E R A L M O T O R S 2 0 0 5 Strategic Implementation The Balanced Scorecard: Customer Perspective (cont) Customer Perspective Objectives Measure Target Increase number of customers Total number of customers Retention rate New customer acquisition numbers Global market share U.S. market share Chinese market share Increase 15% in three years, 6% annually Increase 10% in three years, 4% annually Increase 10% in three years, 4% annually Reach 18% in three years, increase 1.5% annually Reach 27.5% in three years, increase 1.2% annually Reach 15% in three years, increase 4% per year Strategic Implementation, Evaluation, and Control

60. G E N E R A L M O T O R S 2 0 0 5 Strategic Implementation The Balanced Scorecard: Financial Perspective Financial Perspective Objectives Measure Target Increase profitability Annual revenue Annual revenue from new products Gross profit margin from new product Return on Investment (ROI) Increase 10% each year Increase 35% each year Increase to 15% in three years Increase 20% in three years, 10% annually Increase shareholder satisfaction Share price Dividend payout Increase 75% in one year, then increase 7% annually Increase 10% annually Strategic Implementation, Evaluation, and Control

64. G E N E R A L M O T O R S 2 0 0 5 References