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Dethroning of General Motors

In: Business and Management

Submitted By bigdogmax
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Pages 11
Dethroning of General Motors

Abstract
General Motors, GM was unseated from being the world’s top auto manufacture to Toyota. There were many factors involved which resulted in GM losing its position. This paper will explore several of the factors such as union relationships that resulted in payroll differentials between GM and foreign transplants, legacy costs, and the job banks program. Secondly, poor strategic management decisions including product development and the quality gap issues between GM and its Japanese competitors. Finally, the effects of foreign competition including imports from Japan, foreign transplants here in the U.S. and currency manipulation by the Japanese Government will be explored.

“What’s good for GM is good the country.” This statement is attributed to former General Motors CEO, Charles Wilson during his 1953 Senate confirmation hearing to become President Eisenhower’s Defense Secretary. The quote has been taken out of context over the years. In response to a question posed by a senator who asked Mr. Wilson if he could make decisions that would be harmful to GM, Wilson stated he would be able to, but continued by adding that he could not imagine such a situation, “because for years I thought what was good for the county was good for General Motors and vice versa.” (“The Rise and Fall of General Motors”, 2009, What’s good for GM section, par. 1) Because GM was such a large portion of the U.S. economy during the 1950’s, if difficult times fell on the country it would mean the same for GM. The vice versa would mean that if GM was struggling it probably would be due to problems the U.S was facing. In retrospect, the statement is not one of arrogance, but a heartfelt response given the economic reality of the time. Fast forward to 2008, and it seems like the quote from the 1950’s is true. The worst economic downturn...

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