Aditya Udyal

Aditya Udyal

01-10-2022

16:16

#casestudy #motivation #strategy #lesson

1."A Problem is something you have hopes of changing. Anything else is a fact of live". This quote is very much relatable to this case study which will help you to dive in more easily and understand the below thread.

2. No business in the world which are monopoly in it's field/category will ever want to have declining market share after having top workforce available across the world. But it did happen with General Motors.

3. General Motors (GM) an American automotive company was founded in 1908. In it's initial stage, it did everything that served as key to GM success. Finally, the actions they put in gave in return by making it a market leader with 60% of the market share.

4. Gradually years went by they had expanded which added more to expenses. The company was doing very well in it's sector. But as time passed, the cashflows and the profit margin kept on declining.

5. Between 1990 - 2000 the company lost it's market share from 35% to 28%. This downfall pushed the company more into debt and losses.

6. Having large workforce; plenty of factories were not the main reasons why they had incurred losses.

7. The main and the most important reason which led to the downfall was it's poor management which was not effective to figure out and time the market. The management was quite inefficient to find out and reconsider the mistakes.

8. As they were not able to recognize their mistakes and improve, the sales went down exponentially. The company had to increase the price of the products as most of their expenses were fixed and could not be cut down.

9. In general when sales go down some of the bigger cost go down as well but this did not happen with GM.

10. During their fall b/w 1998-2000 they came out with incentives and gave cashbacks. Even though this technique proved profitable and helped them regaining some market share but in long term the situation became more worse.

11. But in contrast giving such incentives led/pushed them more into losses as operating costs kept on increasing and the price of cars too. Due to this practice of GM people got habituated to more and more cashbacks.

12. This again served as an obstacle in the path of GM to rebecome a monopoly. When GM realized that this model of providing incentives made the situation more worse, they officially announced to reduce the value of incentives they provided so as to meet their expenses.

13. This along with few other unplanned and unorganized steps led to huge decline in market share of the company. Finally the company had incurred such high losses that it declared itself as bankrupt in 2009.

14. Therefore poor management served as the major reason for the downfall of General Motor.

15. Important lessons to take away are: a) No matter how small organization is, always have a good management. b) Analyze your mistakes and improve them. c) It always takes a single wrong step to take your organization tumble down. So, take every step with a planned decision.

Do reply what important learnings you got from this thread.



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