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Sunday, August 11, 2019

Will GM's Strategic Plan Lead to Future Success Case Study

Will GM's Strategic Plan Lead to Future Success - Case Study Example The third strategy that GM has implemented is the premium pricing strategy that has led to higher margins and prices thus ultimately leading to higher profits per unit sales. GM has cut the incentives for the dealers in order to attain higher margins. The fourth strategy linking the executive compensation to company performance through ensuring the executive bonuses are dependent on the margins posted by the company. The company has also carried out staff rationalization in order to reduce the boated wage bill. Based on the case study, GM’s vision is to become the most profitable automaker in the world. The company is not interested in expanding its market share, but its strategies aim at reducing the operating costs and increasing the unit margins in order to improve the profitability of the company (Daft 183). The vision is realistic since it managed to regain from Toyota as the largest automaker in term of sales figures and has increased its profit margins. The company has also controlled costs. In this case, higher margins and sales volumes will make GM the most profitable automaker if the measures implemented in controlling costs are successful. The first SMART goal is to raise profit margins by 10 percent. This goal is specific and measureable since the current profit margin is 6 percent and this could go up to 10 percent after restructuring the company and improving operational efficiency. The reduction in engineering and manufacturing costs through downsizing the auto platforms will significantly reduce the manufacturing costs. Use of standardized plants and assembling will also improve efficiency of operations and lower costs. Other companies that have few auto platforms have managed to attain a return of 10 percent of sales and this goal is realistic and time-bound since GM will have only 14 auto ‘platforms’ by 2018. The second SMART goal of GM is to make more than $ 10

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