1.Find evidence on how changes in the macroeconomic environment and the financial crises in 2007 and 2008 impacted General Motors' operations. Discuss the role of these factors versus the consumer demand issues described in the opening new article of this chapter.
Behind GM's Slide: Bosses Misjudged New Urban Tastes by Lee Hawkins Jr. Wall Street Journal, March 8, 2006 Copyright 0 2008 Dow Jones & Co. Reprinted by permission of Dow Jones & Co. via Copyright Clearance Center. In December, General Motors Corp, ran a series of ads across reported a loss of 38,6 billion, the bulk of which stems from its the U.S. showing Cadillacs being driven in snow. The decision U.S. auto business. The company has said it plans to slash to do so was made by the giant car maker's executives in costs, including cutting 30,000 jobs in the next couple of Detroit, where on Christmas Day, temperatures hovered just years, and has sliced benefits for both union and nonunion above freezing. employees. The ads also ran in Miami, a vibrant car market where In Miami, GM is in third place behind Toyota Motor Corp. GM has bombed for the past 15 years. As Christmas dawned, and Ford Motor Co. Toyota began tailoring marketing temperatures there started climbing into the high 70s. to Hispanics in the 1980s. Ford started similar efforts in GM is struggling under a financial burden created by mon- Florida and California about 15 years ago. None of GM's vehi- umental pension and health-care obligations, But it's also cles are among the top 15 vehicles registered in the greater having a hard time persuading Americans to buy its cars. One Miami area. . .. reason: GM's cumbersome and unresponsive bureaucracy, the It wasn't until 1995 that any of GM's divisions thought one that ran the show ads in Miami, has for years failed to con- about advertising directly to Hispanics, Their early efforts nect with the tastes and expectations of consumers outside the were clumsy-such as the Saturn ad set at the Alamo. The ad company's Midwestern base. missed the mark because Mexicans comprise only about 4% of In Miami, where no GM car is a top seller, GM started Miami's Hispanic population. . .. bilingual advertising much later than its rivals, Some of the ads Feeling shut off from the GM executives in Detroit, some it did run were duds. One wooed Miami's mostly Cuban- Miami dealers started pooling their advertising dollars to buy Hispanic population by showing a woman in a Mexican dress bilingual ads tailored to the Miami market. But a 1999 reorga- standing in front of the Alamo as GM Saturns raced around nization designed to centralize the company's sales and her. Another was built on the theme "Breakthrough"-a word marketing operations killed this local dealer spending and pro- that doesn't have a direct Spanish translation. voked a firestorm. GM executives in Detroit quickly recog- In the late 1990s, years before GM's Cadillac Escalade nized the mistake, but it took two years for them to reinstate became a hit, dealers in Miami suggested GM build such a lux- the groups. ... ury sport-utility vehicle. They were shot down by executives in GM has charged Ms. Green, the marketing executive, with Detroit who said it would never work. GM later went on to sell rebuilding the company's image and sales among South more than 400,000 of the luxury SUVs. Florida's Hispanic population. . . . As a result, GM has a paltry 13.8% of the retail market in At GM, one of Ms. Green's first jobs was persuading the South Florida, a slide it is now trying to reverse. The problem company to use in Miami something trendier than Cadillac's is repeated in the U.S.'s rich, coastal metropolises where advertising theme song. Led Zeppelin's "Rock and Roll," Japanese and European auto makers first set up dealerships in which was a hit in the early 1970s. .. . the 1970s and 1980s. There, overseas car makers exploited Instead, Ms. Green lined up Daddy Yankee, a Puerto Rican consumers' memories of GM's unreliable and unattractive recording artist known as "The King of Reggaeton," to do a mass-market vehicles. ... series of bilingual commercials for the launch of the Chevrolet GM employs 325,000 people, almost as many as the popu- Cobalt, a trendy compact. Reggaeton, a hot phenomenon, is a lation of Miami itself. At various times there have been as fusion of Caribbean and dance music. . . . many as six layers of management between top executives in GM encourages dealers to attend seminars designed to Detroit and those in the field. GM's general manager for the make them more effective selling to Hispanic and black con- Southeast has 38 teams reporting to him, overseeing relations sumers. Because many immigrant Hispanic families like to with the region's 1,400 dealers, among other things. bring their entire family to the showroom, dealers are urged to In addition to these geographic units, the company is keep multiple chairs in offices that are used to finalize vehicle divided along functional lines, with global groups overseeing sales. . . . areas such as marketing, product development, and human David Borchelt, general manager of the Southeast region, says GM's retail sales volume in South Florida rose 8.4% in resources. . .. 2005, compared with the year earlier, mostly due to newly Since the mid-1980s, GM's overall U.S. market share has fallen by about 15 percentage points. Last year, the company launched GM vehicles. 109
