History of GENERAL MOTORS and background of General Motors

William Durant, the founder of General Motors initiated the plan of launching the company in 1902. Officially, the company started in 1908. Durant was a businessman by profession and was a true visionary man. He foresaw that soon the age of carriages will be over and the world will be in need of some fast moving vehicles. Today, it stands among the world’s one of the largest automakers. The company started its business as a holding company and its business was mainly upon Buick. Later on the same year, it started dealing in Elmore, Oakland and Cadillac.

The real fortune of Durant started in 1907 which was a financial distress year for the small companies. Many of these were dependent on the bank’ credits for running their business. The market was panic and it was the right time for Durant to hit his nail. He decided to buy a small company of car builders. He took the benefit of the opportunity and also bought some of the companies who created car accessories. It was not before 1908 that General Motors started its business with a new phase as these all bought companies were brought under one unit which made GM really top class company of the world.

It was the result of genius of Durant that he was able to bring the company to its peak business with his overnight plans and strategies. Yet it was his over genius that General Motors faced its financial distress in 1910. It was such a great trouble for the company that the world found Durant being removed from the company he started and founded. The financial collapse of the company pushed the states bank to interfere in the matter and to prevent the demolish condition of the company; the later result of which was the bank’s decision of the exclusion of Durant. Very soon in the next year i.e. 1911, the company was able to re-establish itself and open its gates in the world market and started its business across Canada and U.S.A.

The sudden shock for the Durant let him to think upon the idea through which he could make his way back to Gm. He took another company Chevrolet and soon he was back in GM. It was mere his bad luck that one again America was in the period of power recession and Durant was out again.

In 1920, GM grew gradually and made wonderful business. General Motors soon had to face its giant competitors in the market who were Ford and Chrysler.  It was Alfred Sloan whose genius and the steady hard work brought new life to General Motors and it started glowing again. It was all on his constant concentrated implementation of strategies that GM was back to business and became the world’s largest auto selling company.

GM got an edge over Ford who was not ready to change his philosophy and offered very little variety to the public. While GM emphasized upon quality and brought innovations in the vehicle market. It was also due to the break offer of GM which made its sale up to its height. GM released the policy that public could have the luxury of car on credit.

GM also saw the time when it became the largest company of auto in the United States. The latest crisis was faced in 2005 when GM was reported to have a loss of $4 billion in single year. Many employers were fired and the five plants had to be stopped. GM has engraved its name in the vehicle history though not in boom now a days.

Three stakeholders of general motors

The profitability and the success of a company’s business are much dependent not only upon the stockholders but also on the stakeholders. These stakeholders can be local or may be global. One of the benefits of the foreign stakeholder is to enlarge the sales of a company on international level. These stakeholders are benefitted through a contract, if the company goes bankrupted; the stakeholders may or may not get worth profit depending upon the nature of the bankruptcy and the contract made between the two parties.

As far as the case of General Motors is concerned, it owed a lot to pay both to the government and to the foreign banks. It definitely mush depended upon the mind sets of the stock holders who remained firm and did not turn an ear to the voices of some of the stakeholders who smelled the danger and kept on crying for the revision of the policies and the market strategies which were the clear reason of the demise of the company. It was not before the crises of 2005 that the company directors needed to think seriously that now something is needed which can save them from being bankrupted.

One of the General Motor’s stakeholders is the USA government with the help of which the company saved many times before the event. Many a times it happened that the company was under serious threat of the bankruptcy and could not manage amounts to be paid. US government interfered and assisted the company by giving some government loans which saved the ultimate destruction of GM. But sooner or later it has to be over as in the case of other crises in US history which could not have been saved from the bankruptcy even after the interference. The same was finally with the GM which opened its assets to public as the US government did the same as with many others even in the presence of chapter 11.

The second important stakeholder who had to suffer badly was the investors of the company. The total amount due on the company is of $31 million which has to be paid off by 2023 and beyond which seems impossible with the $15 million in cash. It seems as the creditors will suffer in long term as company has a lot to pay its part maker and certainly is in short of the assets. So, the creditors’ loss cannot be measured and it may be of unthinkable scale.

One of the important and the foreign stakeholder of the company are the Chinese SAIC Motors. GM enjoyed long and durable partnership with SAIC. SAIC Motors management decided to go for the partnership in the public offering made by GM. It decided to take 1% of GM’s assets presented in the public offering. SAIC has helped GM at numerous occasions and has made a strong bond by investing a huge amount in the company’s assets. The decision was pleasurable for the GM’s CEO who claimed it as another milestone with the strong bonding with SAIC.

The stakeholders have always been an important key player of a company’s success. It could have negative or the positive effects upon the international marketing of a company’s business. GM has a history of the stakeholders who left the company midway in the trial and whose partnership led the company to the worst days. However, it is up to the efforts of the shared community that several times GM was able to survive and bounced back in the market with the innovative vehicles.

By: Ammarah Khan

    

One Response to “History of GENERAL MOTORS and background of General Motors”

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