4.

Information Systems
The following AUPs apply specifically to providers and owners of GM Information Systems,
other than email, the web, and information systems included with desktop, laptop, and other
computing equipment:

 Developers of GM Information Systems Must Comply with ILM Policy

Requirements. System, applications, infrastructure, and other information technology
components must be created or acquired using a development methodology that ensures
that GM Records are created, maintained and disposed of in accordance with the ILM
Policies.

 Retention of Information. All Information System content must be retained in

accordance with the Record Retention Policy and Schedule. Each Information System
must have a process to ensure the regular and systematic review and compliance with
applicable retention requirements.

 GM Information Systems Must Also Meet ISP&P Requirements. GM Information

Systems must also meet the following information security requirements set forth in the
GM ISP&P:

o Availability ensures that GM Information is accessible when and where it is

needed.

o Integrity ensures that GM Information is correct or accurate to the degree

anticipated by those who use it. It also ensures that GM Information has not been
changed and has not been exposed to unauthorized modification, or disposal.

o Confidentiality ensures that GM Information is not disclosed to anyone who is

not authorized to access it. In support of this is the idea of need-to-know,
authorizing the sharing of GM Information only among those who can
demonstrate a legitimate business need.

 Retained Records Must Be Accessible. GM Information Systems Providers and Owners

must maintain the necessary GM computing and communications resources to access and
retrieve GM Business Records throughout the total retention period. These resources may
include required operating systems, applications, retrieval tools and retention media.

 Acceptable Retention Media. Media used by GM Information Systems for the retention
of GM Business Records identified in the Retention Schedule must be acceptable to all
persons who may need to access the records during the Retention Period. The preferred
medium is electronic. Conversion from one medium to another must include adequate
controls to assure integrity, authenticity, reliability, validity under reasonable scrutiny
and the ability to be searched by defined attributes.
 http://gre.academia.edu/MJReid/Papers/252199/An_analysis_of_General_Motors_information_
systems_and_their_usage_for_the_firms_wider_strategic_objectives

SWOT Analysis General Motors

Introduction
General Motors is an omnipresent company in the United States, a company so essential to the
overall health of the U.S economy that it spawned the phrase “as GM goes, so goes the nation”.
Long known for the manufacturing of cars, trucks and automobiles, General Motors has also
engaged in finance and insurance.

However, most recently the global recession has had a devastating impact on its, cash flows,
financial condition and operations. To survive, the company has had to accept a government
bailout plan and its employees the United Autoworkers of America, has also made concessions.
This SWOT analysis is about General Motors.

Strengths
 Branding - Born in Detroit Michigan in 1910 General motors has produced a stable of
automobiles such as Chevrolet, Pontiac Cadillac and Buick which have become
household names in the U.S. As such, the General Motors Brand is well rooted not only
in America but throughout the world.

 Worldwide Presence - General Motors truly has an international presence with factories
in Poland, Russia, South Africa Ecuador, Egypt, Germany, Argentina, Australia,
Belgium, Brazil, China, Colombia, South Korea, Spain, Sweden, and Thailand. The
company is even in Viet Nam. In addition, it also has assembly, manufacturing,
distribution, office and warehousing operations in 55 other countries.

Weaknesses
 Diminishing Dealer Network - General Motors has compiled a list of more than 1,000
dealerships market for closure. The company has announced that it will not renew its
franchise agreements with nearly one quarter of its U.S. dealerships. As of December 31,
2008, GM had 715 dealerships in Canada, as recent as May of 2009 plans called for a
anywhere from 40 to 200 closures.

 Insufficient Liquidity - General Motors has experienced a reduction in liquidity to $14

billion in FY2008 from $27.3 billion in 2007. Losses are attributed to lower sales
volumes and a reduction in working capital. Both research and development, as well as
relationships with suppliers are negatively affected by the reduced liquidity.
  Inadequate Performance among Some Business Segments - In 2008 the GME
segment accounted to 21.8% of the total revenues and its revenues decreased 8.8% to
$32,440 million. Other business segments experiencing declines include GMNA which
fell 23.9% to $82,938 million, and GMAP which stood at $12,477 million for FY 2008, a
decline of 15%.

 Low Debt Ratings - Four independent credit rating agencies assess GMs debt ratings and
ability to pay interest, dividends and principal on securities. Moodys Investor Service,
Fitch Ratings DBRS and Standard & Poors evaluate GM. As of 2008, all four had
downgraded their assessment ratings for GM.

Opportunities
 Growth Potential in India and China - There are positive projects for GM business in
China and India. In China the market for new cars is in the midst of a 14% growth rate
projected to reach over $97 billion in 2008. Meanwhile in India, the market for new cars
grew by 15.5% in 2008 to a dollar value of $28 billion. A sign that India will play an
even bigger is the projected increase to 2.5 million units by the end of 2013.

 Increased Global Truck Market - Steady growth rates are projected in the next few
years. The market's volume is expected to rise to 21.5 million units by the end of 2013.
The light commercial vehicles segment was the market’s largest in 2008, generating total
volumes of 9.8 million units, equivalent to 58.1% of overall value.

 Rising Demand for Hybrid Vehicles - General Motors produces six hybrid models in
the US including the Saturn Vue and Aura Hybrids, Chevrolet Malibu and Tahoe
Hybrids, GMC Yukon Hybrid as well as a Cadillac Escalade Hybrid. The company is
also investing in hybrid and plug-in vehicles, for both cars and trucks. It is anticipated
that GM will produce up to nine hybrid models following the introduction of the
Chevrolet Silverado Hybrid and GMC Sierra Hybrid. International demand for light
hybrid electric vehicles (HEVs) is expected to increase. It is expected to rise to 800,000
units in 2009 and estimated to reach 4.5 million units in 2013. Therefore, a positive
outlook for light hybrid electric vehicles and plug-in vehicles market would boost the
demand for GM’s products.

Threats
 The Continuing Global Recession - Dire predictions for the global economy were
realized in 2009 and stalled economic growth continued into 2010. The economic decline
reduced consumer demand for less fuel efficient vehicles, including full size pick-up
trucks and sport utility vehicles, which had been GM’s most profitable products. In
addition, the economic climate has resulted in tighter credit markets making it harder for
consumers to finance automobile purchases.
  Weakness in Global Automobile Industry - Consumer Requirements for commercial
vehicles declined in the NAFTA region, Western Europe and Japan. The Western
European automobile markets suffered as well particularly the volume markets of Spain
down 28.1%, Italy down 13.4% and the UK down 11.3%. Germany declined 1.8%) and
France 0.7% also experienced downward trend in the second half of 2008. In total, 8.4%
fewer automobiles were sold in Western Europe. The Japanese car market also declined,
with a drop in sales of nearly 4% in 2008.

 Intense competition - GMs financial status makes it vulnerable to fierce competition

from fits such as AB Volvo, Bayerische Motoren Werke, Daimler, Fiat Group
Automobiles, Ford Motor, Honda Motor, Hyundai Motor, Isuzu Motors, Mazda Motor,
Nissan Motor, PACCAR, PSA Peugeot Citroen, Renault, Toyota Motor and Volkswagen.
Many have responded to the crises by adding vehicle enhancements, providing subsidized
financing or leasing programs in order to sell more vehicles. They are also offering
option package discounts, other marketing incentives and are reducing vehicle prices in
certain markets. These actions are expected to have a negative effect on GM’s vehicle
pricing, market share and operating results particularly on the low end of the market.

General Motors, one of the world's largest automakers, traces its roots back to 1908. With its
global headquarters in Detroit, GM employs 204,000 people in every major region of the world
and does business in some 140 countries. Read more...

Disclaimer:
This case study has been compiled from information freely available from public sources. It is
merely intended to be used for educational purposes only.

Automotive Industry Analysis - GM, DaimlerChrysler, Toyota, Ford,

Honda
Overview of Automotive Industry Analysis

The development of the automobile came from many different people from different countries.
The development stated in 1769 in France, with the invention of a three-wheeler that was
powered by steam (Gale, 2003). Then in 1800's the first internal combustion engine was created
in Belgian and the first gasoline powered vehicle was constructed in 1885 in Germany (Gale,
2003). Henry Ford built the first car in 1896 (Gale, 2003). He then revolutionized the industry
with the invention of the assembly line. The assembly line allowed him to mass produce the cars
making them more affordable to the consumers.

Political
Laws and government regulations have affected this industry since the 1960's. Almost all of the
regulations come from consumers increasing concerns for the environment and the concern for
safer automobiles. The first safety act passed by Congress was in 1966 and was called the
National Traffic and Motor Vehicle Safety Act (Gale, 2004). This act forced manufacturers to
improve the safety for the passengers, the driver visibility, and the braking of the car. It also
stated that manufacturers had to inform the public when it had a recall on the cars. The
motivation for the passing of this safety act was Ralph Nadar's 1965 novel Unsafe at Any Speed:
The Designed-in Dangers of the American Automobile. (Gale, 2004) Safety concerns were not
the only concerns during this period. There was also growing concern for the environment even
before the oil crisis. According to the article "Motor Vehicles and Passenger Car Bodies",
Congress passed acts in 1965 and in the 1970's. The Vehicle Air Pollution and Control Act was
passed in 1965. This was the first act to set standards for automobile pollution. Then in the
1970's, Congress passed the Clean Air Act that demanded a 90% decrease in automobile
emission within the next six years (Gale, 2004).

In the 1970's the oil crisis caused another act to be passed. The Energy Policy and Conservation
Act of 1975 stated that all automobiles must meet a certain mileage per gallon. The act
demanded that all automobiles had to meet a standard of 20mpg by the 1980 model and then 27.5
mpg for the 1985 model. Then in 1992, the Intermodal Surface Transportation Act required the
installation of front airbags. (Motor Vehicles and Passenger Car Bodies, 2004)

Demographics

For many years now, the baby boomers generation has been the main target market for just about
every product. As their generation is getting ready to retire and spend less money, the
automakers are looking at the younger generations. Right now, the focus is starting to turn
towards the baby boomers children (Generation X) who are in their mid 20's and 30's and
Generation Y(Winter, 2002). GenYer's are now hitting the age where they are able to buy cars.
According to Drew Winter, "Analysts say that five years from now Gen X and Gen Y combined
will account for at least 40% of vehicle sales."

Americans today are choosing to purchase larger vehicles over passenger size vehicles. Today's
generations are still buying the trucks, minivan and especially the SUV's, even with the
ridiculous gas prices. It is not only the younger generations either; the boomers who are all
reaching the retirement age are more interested in the bigger vehicles (Fetto, 2001). There
activities after retirement are way more active then their parents. They are not just sitting around
and playing golf or going on vacations. They are still working in some ways and being more
active in their grandchildren's lives. Since the boomers are still active, they want to drive the
same vehicles that their children drive in order to make life that much easier. Studies show that
trucks, minivans and SUV's report increased sales nearly every year (Fetto, 2001).
The manufactures target the sales of their cars to certain people and their geographic location.
Convertibles are not marketed toward people who live in parts of the world that are cold all year
round. A good example of targeting markets is in Paris. A new is trying to be passed that SUVs
are not allowed inside the city. They are taking up to much room and the vehicles use a lot of
fuel. If this law is passed then SUV's will not be marketed toward people who live in Paris.
Another example is that minivans are mainly marketed toward "soccer moms". They are
marketed toward the moms because they are perceived, as needed a lot of room to haul kids
around and the easy access the minivans provide.

Economic

The automobile industry has a huge impact on the U.S. economy. The University of Michigan
and the Center for Automotive Research stated that this industry is the major user of computer
chips, textiles, aluminum, copper, steel, iron, lead, plastics, vinyl, and rubber. (Gale, 2004) The
study also showed that for every autoworker there are seven other jobs created in other industries
(Gale, 2004). These industries include anything from the aluminums to lead to vinyl. In 2001, the
total sales of automobiles were 3.7% of the nation's gross domestic product. This percentage
works out to be $375 billion dollars in sales.

Technology

The internet has affected just about every industry in the world and has also had a huge impact
on the automobile industry. A study was conducted by J.D. Power and Associates in 2002 and
involved more 27,000 new vehicle buyers. The study showed that 60% of the buyers referred to
the internet before making their purchases and out of that 60%, 88% went to the auto websites
before going and taking a test drive. Business-to-business marketplaces have given the industry
many opportunities because of the internet, such as more efficiency and lower cost. Ford, GM,
and Daimler Chrysler announced in 2000 their plans to create a global online exchange for
suppliers and the original equipment manufacturers. The exchange was originally called NewCo,
and then it was changed to Convisint. According to Motor Vehicles and Passenger Car bodies,
"In August 2002 General Motors announced it was about to begin sending requests for quotes to
suppliers through Covisint using a tool called Quote Manager."

Concerns for the economy and global warming have caused the automobile industry to develop
alternate fuel vehicles. In the beginning, automakers did not want to look into the development
because of the high cost and the many risks involved. Because of new legislation, they had no
choice but to come up with the technology to make the fuel-efficient cars. The automakers
decided that electric cars would be the best way to meet the legislation demands. "Early models
were unpopular because of slow cruising speeds and lack of performance, but by the end of the
century, electric car production began to be practical."(Motor Vehicles) At the end of the 1990's
manufacturers was coming up with the technology to produce internal combustion engine with
an electric motor. Toyota and Honda were both selling the hybrid vehicles at retail value in 2001.

Global

General Motors, Ford Motor Company, Daimler Chrysler, BMW, Volkswagen, Volvo, Toyota,
Mazda, and Nissan Motor Company come together to create a new trade association created the
Alliance of Automobile Manufacturers (Gale, 2004). The organization was to replace the
American Automobile Manufactures Association that only consisted of American manufacturers,
the goals of the associations "were to work together on public policy matters of common interest
to provide credible industry information and data, and seek consistent global regulatory
standards (Gale, 2004). The manufacturers also started merging in the late 1990's. American
companies started buying foreign manufacturers created some of the largest foreign takeovers. In
19998 Daimler-Benz A.G. merged with Chrysler Cooperation to form DaimlerChryler A.G
(Gale, 2004). Some other big mergers were Ford with Volvo, and General Motors and Saab
(Gale, 2004).

Sociocultural

Today's society judges people on the type of car you drive. Society does not like to admit to this
but it is very true. Manufactures know this happens and targets their markets by these thoughts.
For example, anyone who drives a mini van is perceived as a soccer mom. This is because the
manufactures target mini vans to mothers. Anyone who drives a nice vehicle is thought to be
wealthy. No one wants to be seen driving an unattractive piece of junk because of what other
people will think of him or her. Consumers also just feel better when they are driving a nice or
new car, if makes them feel better about themselves.

Another aspect of the sociocultural is the environmental concerns for the need of fuel-efficient
vehicles. Many environmentalists are worried about the impact that the gas cars have on the
environment. There is even legislation that requires cars to average a certain miles per gallon.

Automotive Industry Five Forces of Competition Model

Threat of New Entrants

The threat of new entrants is very low in the automobile industry. The industry is very mature
and it has successfully reached economies of scale. In order to compete in this industry a
manufacture must be able to achieve economies of scale. For this to occur, manufacturers must
mass-produce the automobiles so that they are affordable to the consumer. Another barrier to
entry is that it takes an incredible amount of capital to manufacture the automobiles. It takes an
extreme amount of capital not only to be able to manufacture the products but also to keep up
with the research and development that is necessary for the innovation requirements. Access to
distribution channels is another high barrier to entry. A company must find a dealership to sell
their automobiles or have their own dealership. Space in the dealerships lots is very limited
making it difficult to have a wider variety of inventory.

Bargaining Power of Suppliers

The bargaining power of suppliers is very low in the automobile industry. There are so many
parts that are used to produce an automobile, that it takes many suppliers to accomplish this.
When there are many suppliers in an industry, they do not have much power. There are so many
suppliers to this industry; manufactures can easily switch to another supplier if it is necessary.

Bargaining Power of Buyers

The bargaining power of the buyers is moderately high. The buyers being consumers purchase
almost all of the industries output. The manufacturers depend on them to stay in business. The
buyers also are a significant portion of the industries revenue. If they can not keep their buyers
happy then they risk losing them to their competitors. The buyers have low switching cost if they
are not happy. All the buyer has to do is sell the car they own and purchase a new one. The
reasons why the power is not completely high is that the buyers are not large and few in number.
The buyers do not have the ability to integrate backwards into the industry. If they want a car
then they have to purchase it from a dealership.

Threat of Substitute Products

There are not many substitute products for automobiles. Some of the substitutes are walking,
riding bike or taking a train. Substitutes products all depend on the geographic location of the
consumer. In some cities such as New York or Chicago, a car is not as necessary. In cities such
as those, the subway is the most effective means of transportation. However, in most places a
person must have access to an automobile in order to get around.

Intensity of Rivalry among Competitors

Rivalry among the competitors is very strong is this industry. The major competitors are so
closely balanced that it increases the rivalry. In order to gain market share in the automobile
must gain market share by taking it from their competitors. One of the other reasons there is such
high rivalry is that there is a lack of differentiation opportunities. All the companies make cars,
trucks or SUV's. The competitors are compared to one another constantly. The price, quality,
durability, and many other aspects of different manufacturers are greatly taken into consideration
when deciding what type of vehicle to purchase. When the different manufacturers advertise they
even compare their products to their competitors. For example, the commercials will focus on
areas where the company outperforms its competitors.
General Motors SWOT Analysis

The strengths, weaknesses, opportunities, and threats, are quite dynamic for General Motors and
each can be integrated into another. For example, what might be a threat in one category for
General Motors, can turn into an opportunity or become a new strategy for General Motors in the
future. One of the major strengths that General Motors possess is the global awareness and
presence it holds in today's market. General Motors today has manufacturing operations in 32
countries and its vehicles are sold in 192 countries (www.gm.com). To gain a better idea of
General Motors position in today's market, refer to table 1. By having such a strong presence
globally, General Motors can integrate its operations so each manufacturer can concentrate on its
core competencies. For example, automakers are trying to drive down costs by sharing costs
through their own global alliances, or in joint ventures or partnerships with other companies
(Harbour, 2001). This has become one of Europe's strategies for the problem where small vehicle
continue to dominate the market and provide only small profit margins for General Motors.
Through global alliances, General Motors can stay in business in Europe and continue to satisfy
its' customers.

Another strength for General Motors is having the largest amount of annual sales at $185,524.00
million, reaching about 15 percent of the global market (Company Press Release). Leading the
industry in sales enables General Motors to spend time and money in its' R&D department. One
of General Motors' current projects is releasing two Hybrid cars in China and hopefully more in
the United States in the year 2007 (Stein, 2004). Troy Clarke, president of Asian-Pacific, claims
that developing Hybrid cars is the new strategy for General Motors (Stein, 2004). One reason
that General Motors is sitting at the top of the industry could be due to the fact that it also lead
the industry in ad spending. Last year, General Motors spent close to $2.12 billion on advertising
in the United States alone. This large amount of spending has reached customers through the first
internet coupons worth $500 towards a Buick Regal (Halliday, 1999), and is another method of
how General Motors' innovation strategies enables them to remain at the top of the industry.

The opportunities for General Motors globally are almost endless and the ways in which General
Motors turns threats into opportunities proves why they are number one in the industry. With
sales growing at 60 percent in the Middle East last year, General Motors would like to institute a
dealership network in Iraq (Ridder, 2004), which would help Iraq's economy recover from the
war. Another threat of losing "safety professionals" due to retirement at General Motors has been
turned into an opportunity of developing the recruiting and training program at General Motors
(Minter, 2002).

In terms of taking a threat, such as losing any global market share, General Motors has made
advances in the E-Business strategy and technology for the Asian automotive industry, and
turned this threat into an opportunity. It is crucial for every company to try and turn threats into
opportunities for improvement and development.

However, not all threats can be turned into a positive. General Motors CEO never thought that
the price war he launched three years ago would still be going on. This has caused General
Motor's market share to fall in the past year (Welch, 2004). The main problem with General
Motor's plants in the United States is that they have too much capacity, which in turns causes
them to make bad long-term business decisions. Other major threats have to deal with worker
dissatisfaction. The dissatisfaction of the workers is not only in America, but is occurring
globally. A strike in Germany has squeezed some of European production due to lack of two
essential parts that are usually provided by the German plants (Three, 2004). As one can see, a
strike at one plant or factory can have a domino affect on other plants or factories. In this
particular case, the strikes of one plant in Germany, causes other plants in Europe to lay-off close
to 12,000 jobs across the continent. This demonstrates the importance of keeping each plant
happy. Nationally, General Motors has plans to make 10,000 temporary layoffs (G.M., 2004).
What General Motors needs to do is make sure that the people who are laid off are treated with
respect. This entails helping them find other jobs, or promising them the opportunity to come
back work when it is available, and keeping this promise. This is crucial to keep employee
morale high for those workers who still have a job.

The main weakness that General Motors has been battling for the last century is employee
satisfaction which leads to constant strikes throughout the corporation. Managers have been
battling with employees and unions on keeping wages, hours, and retirement plans fair. General
Motors is currently spending a large proportion of their earnings on health care for their retirees
as compared with newer automakers. In the past, General Motors has offered generous plans to
attract workers to its plants (Hakim, 2004), but no one thought about what would happen when
these workers got to the age of retirement. Well, that time has arrived and General Motors is
facing a difficult future as these costs of retirement continue to rise.

Critics have been criticizing General Motors for waiting so long to develop what is now the new
wave of vehicles, the Hybrid cars. However, General Motors is first in line when it comes to the
HydroGen3 fuel cell prototype. Recently, General Motors has sped up the pace of innovation
with the successful completion of a trans-Europe endurance run for its HydroGen3 fuel cell
prototype (Kisiel, 2004). Although General Motors is just now releasing a Hybrid car in China, it
hopes to be the leader in the future with hydrogen fuel.

As dynamic as General Motors is, it must have multiple strategies being implemented at the
same time to keep up with the fast, changing pace of the industry. One of the major strategies
which General Motors is changing is the switch from producing seventy percent light trucks to
producing seventy percent cars. General Motors does not plan on letting the production of light
trucks slip away however. Gary Cowger, president of GM North America, still believes there is a
strong market for trucks, but America is switching to a more economic commercial car
(Guilford, 2003). General Motors also plans on implementing a line of compact pickups which
include more car-like creature comforts and style. This change has come about to match what the
customers want with one of General Motors' slogans: 'A car for every purse and purpose'
(Greensberg, 2003). General Motors has realized that it can make the add-ons, such as CD and
DVD players, affordable for those who desire them. Another add-on which has become the most
popular add-on and almost a standard for General Motors vehicles is the OnStar feature. OnStar
has expanded its premium services to let the customer check his or her E-mail as well as trade
stock via different voice commands (Galvin, 2001). General Motors has started licensing the
technology of OnStar to other companies which might erode its brand name.

With everything that General Motors is doing right and with what little it is doing wrong, there is
still room for improvement. Recommendations can be given in the fields of employee
satisfaction, innovation, and new markets. Being one of General Motors' main weaknesses, it is
imperative that the managers and executives review the policies and procedures which the lower
employees must abide by and determine if these rules are fair or not. With every strike that
General Motors goes through, the competition gains a little bit of ground on the leading
corporation. Open communication and open minds between the managers and the unions' needs
to become a must in the General Motors Corporation. If the money to pay for the rising health
care costs cannot be found by cutting costs, then management needs to find other ways to give
benefits and incentives to the employee staff that will keep everyone happy. Implementing the
process of improving customer satisfaction is a timely and excruciating process. The major
advantages of improving employee satisfaction are higher worker morale, higher productivity,
and an overall sense of corporate loyalty both internally and externally. Employee satisfaction
has a domino effect on the corporation. As the morale of the worker increases, workers tend to
be more efficient and profit margins rise, which increases stakeholders' satisfaction and
everyone, becomes more loyal to General Motors. The disadvantages of trying to improve
employee satisfaction are that it cost a lot of money to have external consultants work with the
corporation to figure out what exactly is wrong, and it takes a lot of time. However, in the long
run scheme of things, increasing worker satisfaction will have an overall positive effect on the
corporation.

Innovation is the backbone for any corporation these days, and it is crucial that General Motors
stays a leader in innovation as well as sales. Although General Motors might be the leader in
hydrogen fuel in the future, currently the competition is way behind the rest if its competitors in
Hybrid automobiles. It has been recommended by critics across the globe that General Motors
should pick up the pace and not let the competition gain an edge in the next few years with the
Hybrid cars. General Motors needs to be extremely careful on how far in the future it is looking
ahead. It would only seem wise to be at the same level, if not ahead of the competition with what
is going to be the new fad in the years to come. If General Motors does not see the customers
adapting to Hybrid cars then it might be making a good decision on jumping ahead to the next
level of fuel efficiency. It would be extremely difficult for General Motors to catch up with
Honda, Toyota, and Accura, and their manufacturing of Hybrid cars. The advantage of doing so
however is that in case Hybrid cars are the future of the automobile industry and not hydrogen
fuel, General Motors will still be able to contend with the rest of the industry. Hopefully, the
technology on how to produce Hybrid cars with economy of scale will be shared throughout the
industry, enabling General Motors to compete at the same level as its competitors. The
disadvantage of waiting for the improvement of technology and for it to be shared is of course
the waste of time not improving the corporation. And as has been discussed before, time is
money, and no one can compete with out money.

General Motors has recently entered into the retail industry with its first ever General Motors
Collection store in Detroit's McNamara Terminal. General Motors Collection store was the third
highest in net sales at the McNamara Terminal in August, 2002 (Geist, 2002). The retail stores
sells merchandise from miniature models of General Motors manufactured cars and racing cars,
to hats and t-shirts with its most popular automobiles on them. With sales on average of $2,000 a
day, this retail store is a perfect template for General Motors to use in other cities where General
Motors manufacturing is a large part of the community. By targeting cities that have large
manufacturing plants, General Motors will continue to sell to its employees who take pride in
where they work. Also, large cities with high tourist rates will have more flow in the shops and
will in turn have higher sales. It would also be interesting to see if such retail stores could do as
well in foreign markets who might not as ego-savvy as Americans and their possessions. Before
General Motors starts putting these collection stores all over the world, it is essential that much
research be put into the location selection. If a store enters into a market place and fails
miserably, the consumers in the market may in turn form a negative view about General Motors.
This would come about through the association of the store failing to survive and the lack of
quality decision General Motors produces. The opposite effects however is what General Motors
would like to see. General Motors already leads the industry in advertising and by offering the
public the choice of supporting their favorite sports car or any General Motors product, General
Motors gains free advertising. Not only will free advertising be gained, but customer's brand
loyalty will be increased and more cash flow will be available for General Motors.

DamilerChrysler SWOT Analysis

As the number two auto manufacturer in total revenues DaimlerChrysler has positioned itself as
an industry leader, with this come many strengths. The DaimlerChrysler umbrella covers many
well-known brands such as Dodge, Chrysler, Mercedes Benz, and Jeep. This means
DaimlerChrysler has strong brands that are recognizable in almost every part of the world.
Within these brands DaimlerChrysler also has wide variety of automobile products that span all
price ranges and model types, from economy cars to luxury models. Brands such as Jeep are
recognized worldwide for off-road and SUV vehicles, while Mercedes Benz is one of the highest
quality luxury car makers in the industry. DaimlerChrysler is even represented in the realm of
ultra luxury with its Maybach brand which competes directly with manufacturers such as Bentley
and Rolls Royce.

In the arena of American car makers the Chrysler brand stands out as a leading innovator in
vehicle design. Chrysler is well known for category breaking models such as the PT Cruiser and
Plymouth Prowler. The Dodge Viper is a vehicle that broke away from the mold of other
American sports cars to drive the imagination of car buyers, and increase the connection of style
and image with DaimlerChrysler vehicles.

The merger of Chrysler and Daimler Benz which created DaimlerChrysler gave the company a
large worldwide presence. This presence is a quality one because DaimlerChrysler is considered
to be one of most respected companies worldwide according to a Financial Times survey of
world corporate leaders. This presence is further increased by DaimlerChrysler's strategic
partnership with Japanese car maker Mitsubishi. This partnership gives DaimlerChrysler
presence in the Asian regions which is does not currently enjoy with its current stable of brands.
This partnership will not only allow for greater product visibility for DaimlerChrysler in one of
the largest automobile markets, but will also allow for sharing of technology between
DaimlerChrysler and Mitsubishi.

DaimlerChrysler is currently a leader in hydrogen fuel cell technology. Hydrogen, considered to

be the next big breakthrough in automobile engines, has the ability to revolutionize the industry.
If or when this is the case DaimlerChrysler's commitment to research and development of the
technology will help ensure the company remains on the top of the automotive world.

With all of the strengths that come with being a top auto manufacturer every company must also
face weaknesses that can arise from the current business landscape and DaimlerChrysler is not
immune to these shortcomings. As the automotive industry continues to move in the direction of
globalization it is important for manufacturers to be strongly represented in all large and
emerging world markets. Although DaimlerChrysler is well represented in the American and
European markets they are not strongly represented in the Asian markets. DaimlerChrysler has
no brands of its own that command significant market share in either the Japanese or emerging
Chinese markets. DaimlerChrysler's partial stake in Mitsubishi was supposed to be an answer to
this problem but current drops in Mitsubishi's market share accompanied by other problems has
left DaimlerChrysler's future investments in Mitsubishi uncertain, and more importantly with no
strong plan to compete in Asian markets.

Related to the problem of Asian representation is the reality that none of DaimlerChrysler's
brands are truly marketable to worldwide consumers. Brands such as Dodge and Chrysler are
strong in the US, but have had limited success in other markets. The Mercedes Benz brand is the
most recognizable world wide, but as a luxury car maker it is harder to market to a majority of
consumers in different markets. The Jeep brand is well known and respected throughout most
markets, but its appeal is limited to the specialized group of SUV and off-road buyers.

The growing use of hybrid engines could also cause problems for DaimlerChrysler. There
strategy to focus on the entirely new hydrogen technology has left them behind many other
major manufacturers in the development of hybrid technology. As other major car companies are
preparing to roll out hybrid options for many of there most popular models DaimlerChrysler does
not plan to do the same anytime soon. By hitching there wagon to hydrogen power and not trying
to capitalize on rising hybrid trends DaimlerChrysler could be missing out.

What has been billed as a merger between America's Chrysler and Germany's Daimler Benz has
turned out to be more of an acquisition of Chrysler by Daimler Benz. The result is that most top
managers of DaimlerChrysler are from Daimler Benz and many of the leaders of Chrysler choose
to leave or retire. Many have speculated this "brain-drain" of Chrysler executives could hurt the
innovative reputation of the American brands in DaimlerChrysler's portfolio of manufacturers.
Much of the operations of DaimlerChrysler have also been moved to Germany where current
wage rates and labor laws have made it hard for DaimlerChrysler to cut costs and bolster its
bottom line.

With the evolution and changing environment of the Automotive industry DaimlerChrysler has
many opportunities to increase its strengths and fix some weaknesses. With DaimlerChrysler's
current shortage of Asian market share there Jeep brand could be a bright spot. With the growing
trend of consumerism in China it is currently the fastest growing auto market in the world, and
the Chinese desire for all things American could provide DaimlerChrysler with a golden
opportunity. In Chinese surveys of the most sought after American brands in China, Jeep is in the
top 5. DaimlerChrysler has also recently inked deals to build manufacturing plants for Mercedes
Benz in Beijing, China. These recent developments provide DaimlerChrysler with more chances
to push its products into a hugely coveted consumer market.

The decision to focus on hydrogen power research and development could also bode well for
DaimlerChrysler if the current prices of oil and gas become a future standard. The high prices
will help to put more focus and energy into viable fuel alternatives which could push the demand
for hydrogen powered vehicles, as well as provide opportunities for government subsidies for
continuing advancement of the technology. As a leader in hydrogen power DaimlerChrysler is
poised to be a large benefactor of any of these scenarios.

Along with new opportunities come the inevitable threats and opportunity costs associated with
any course of action which have the ability to affect DaimlerChrysler.

A current major threat is the shaky alliance between DaimlerChrysler and Mitsubishi. The
current downturn of Mitsubishi has left DaimlerChrysler in a very vulnerable condition. If they
continue in the partnership and hope Mitsubishi can pull out of its slump DaimlerChrysler could
still face the consequences of not finding other ways to bolster presence in Asian markets even is
Mitsubishi does right the ship. Even worse if Mitsubishi continues to flounder DaimlerChrysler
may have to cut its losses and find itself even further behind other manufacturers in the race to
sure up some of the largest auto markets in the world.

Another great threat is due to DaimlerChrysler's decision to put all its eggs into the hydrogen
fuel basket. If the current trend of hybrid engines continues to catch on and grow throughout
world markets DaimlerChrysler's reluctance to follow suit could cause loss of market share to
rivals who offer better hybrid engines in more vehicle models. Even worse, if hydrogen proves
not to be a viable energy source in the near future than DaimlerChrysler would not be able to
profit from recent heavy investments in the technology and be faced with huge sunk and
opportunity costs.

DaimlerChrysler has embarked upon a strategy of becoming a world wide leader in the
automobile industry, representing all vehicle types across all world markets. This is summed up
by DaimlerChrysler's four-pillar strategy. The four pillars include: Global presence, Strong
Brands, Broad product range, and Technology leadership.

DaimlerChrysler, formed by a merger of the American Company Chrysler and the German
Daimler Benz in 1998, was instrumental in the achievement of many of these pillars.
DaimlerChrysler currently sells products in over 200 countries and manufacturing plants in 17.
DaimlerChrysler also has headquarters covering all major geographic regions on every continent
except Antarctica. After the merger DaimlerChrysler had ownership of several major car
manufacturers with certain geographic presence. Daimler Benz was one of Europe's largest car
manufacturers, while Chrysler was a leading American country. This gives DaimlerChrysler a
large presence in two of the largest auto markets in the world. They also choose to purchase a 30
percent stake in the Japanese Mitsubishi Motors as a way to penetrate the Japanese markets.
These three markets are the largest in the world and gives DaimlerChrysler a strong global
presence.

DaimlerChrysler also wished to produce strong brands of automobiles with broad product ranges
to be offered in these markets. DaimlerChrysler currently lays claim to passenger vehicle brands
such as Chrysler, Dodge, Jeep, Mercedes, Maybach, and Smart. They also have ownership of
Freightliner, which is one of the largest commercial truck producers in the world.

These brand names represent all vehicle types currently offered to consumers. From Dodge and
Chryslers cars and trucks covering all price ranges and styles to Mercedes' and Maybach's
representation in the luxury market. Even specialized vehicles are represented; Jeep is a top
producer of off-road and SUV vehicles, while the smaller Smart brand produces economical
urban vehicles for sale in Europe and the Freightliner brand gives DaimlerChrysler a strong share
of the market in the commercial shipping and transportation.
In the arena of Technology leadership DaimlerChrysler boasts that it is a world leader in the
development of hydrogen fuel cell powered automobiles. DaimlerChrysler hopes that its research
into the new power technology will result in affordable vehicles powered by the alternative fuel
source in the neat future. This Technology has the potential to be the next industry standard for
engines and DaimlerChrysler is heavily invested in assuring that if or when it is they will be
positioned to offer the best hydrogen engines available. They are also looking in the direction of
cleaner, more efficient diesel engines as an alternative to hybrid technology. DaimlerChrysler
believes that advances in diesel engines are superior to the improvements made by gas/electric
hybrids currently offered by many competitors. DaimlerChrysler that strong research into these
alternative power sources will facilitate their desire to be a technological leader in innovation
among other companies in the automobile manufacturing industry.

Not all strategies are implemented seamlessly and DaimlerChryser is no exception to this. One of
DaimlerChrysler's biggest current problems is its weak market penetration in Asia. While they
do have a strategic partnership with Mitsubishi motors it is apparent that Mitsubishi isn't
fulfilling the high expectations DaimlerChrysler expected. DaimlerChrysler is already on the
right track with its plans to open manufacturing facilities in China, but a more immediate impact
might be needed to ensure DaimlerChrysler doesn't fall behind in the region. A more immediate
presence could be achieved through another strategic partner, specifically with one of the Korean
builders Daewoo or Hyundai. Both companies have successful small car divisions, which are a
need for DaimlerChrysler, and more importantly they come with distribution centers throughout
the Asian market. Both companies have been recently seeking a large partner which provides an
opportunity for DaimlerChrysler. The addition of a new Asian partner to the DaimlerChrysler
stable can prove to be a great advantage through the immediate presence DaimlerChrysler could
gain presence in the underrepresented Asian market, but it could also turn out to be a drawback.
By taking on another acquisition or strategic partner DaimlerChrysler could face the same
problems it is currently experiencing with Mitsubishi. By only being partners with another Asian
firm DaimlerChrysler would not have ultimate control of the partner firm leaving more of a
liability than if DaimlerChrysler opted to simply acquire of the company.

DaimlerChrysler could also hedge its bets on hydrogen engines by investing more in hybrid
technology to provide more immediate returns. DaimlerChrysler's resistance to go ahead with
full scale implementation of hybrid engines has come from a number of sources, most notably
their focus on hydrogen and a belief that other fuels, such as diesel, may hold greater promise
than hybrids. DaimlerChrysler believes that hybrid power is only an interim step until the before
mentioned technologies are realized. Nevertheless, if DaimlerChrysler's assertions about the
future of hydrogen power are incorrect they could face large consequences of not embracing
hybrid engines. To fill this gap DaimlerChrysler could purchase plans for hybrid engines to
hedge their bets of the upcoming market for more efficient fuels. Many manufacturers have
begun licensing their hybrid technologies to other manufacturers, and while this isn't as good as
DaimlerChrysler producing there own technology, it will allow them to introduce hybrid engines
in there own models quicker and not lose precious market share to rivals. This would be an
advantage for DaimlerChrysler because the promises of hydrogen power, while great, are still
many years away and the use of hybrid engines and technology is growing exponentially in the
present. However, DaimlerChrysler believes that more efficient Diesel technology is the better
near-term solution t increase fuel economy. If Daimler were to follow the crowd into hybrid
technology they could face a loss of investment in new diesel technologies that may well be a
better answer than current hybrid technologies.

Toyota Motor Corporation SWOT Analysis

The Toyota Motor Corporation was incorporated in 1937 and has many strengths being one of
the industry leaders in the automotive industry. Toyota has three major brands underneath the
company umbrella; Toyota, Lexus, and Scion. By having these three distinct brands, it lets the
company reach many sectors of the globe in a choice of vehicle for customers. They produce
their vehicles and target specific global regions, such as the Carina E for the European segment
(Amherst). Toyota has traditionally also been the leader in Total Quality Management or TQM.
The belief that no process could ever be declared perfect, and that therefore there was always
room for improvement was introduced by Toyota Sakichi (Financial Times). This brought about
the Japanese word, Kaizen meaning continuous improvement (Financial Times). By using the
Kaizen theory of continuous improvement, Japan caught up the U.S. auto makers during the
1980's (Financial Times). Toyota has also introduced it's newest hybrid power car, Toyota Pirus,
at the 2003 New York Auto Show and hit the dealerships in the fall of 2004 (Toyota). In
September of 2003, orders for the new and improved Pirus totaled 17,500 which is five times
more then the company target of 3000 (MSNBC). With the price of gasoline and oil ever rising,
this is a great market for Toyota to exploit.

Toyota does have some company traits that are portrayed as a weakness in the industry. The
brand Toyota is not perceived as many to be prestigious (Amherst). Another perceived weakness
is that it is in the top five of sales but not in the top five in dividend payouts or stock
performance (Yahoo Finance). This may put up a red flag to investors around the globe that
Toyota is not paying dividends as frequent or as efficiently as they should to their shareholder of
the company. In Europe, the Lexus brand sold 18,206 vehicles last year compared with 509,720
BMW's. The reason for this is the Lexus brand lacks the diesel V-8 engine (Bloomberg). In
certain European countries such as Belgium and Greece, diesels make up 90 percent of BMW
sales in part to the tax subsidies the consumer receives (Bloomberg).

The opportunities for the Toyota Motor Company seem to be endless. Today, Toyota has passed
the Ford Motor Company to become the world's second largest automaker in the world trailing
only GM (Forbes). Toyota has also rounded out it's product line to suit the U.S. market with the
redesigned passenger trucks and SUV, but they have also hit the market hard with eco-crazed
society with the introduction of the second generation hybrid car, the Prius (Business week). The
company is also being pushed in the right direction for opportunity with the strengthening of the
Japanese Yen (Bloomberg). With the yen gaining strength and shifts in other world currency, the
operating profits dropped during the April-June quarter by fifteen percent or seventy billion yen
(Bloomberg). Because of the saving the company acquired in currency shifts, Toyota has extra
money on hand to use possibly in R&D to improve on their vehicles or in several other areas
causing great opportunities for the company. Toyota has doubled its market share in Europe in
the past four years to 5.1 percent due to import restrictions being dropped in the 1990's
(Bloomberg). The opening up of imports in the European market is a great opportunity for
Toyota because that enables them to put their luxury line of automobiles Lexus, up against the
European BMW and Mercedes Benz. Toyota is considering the idea of introducing a beefy three-
quarter-ton pickup truck into the U.S. Market (Big News). This model would combat the Ford F-
250 and the heavy-duty Chevy Silverado and these two pickups typically sell for more than
$30,000 (Big News). If Toyota will decide to enter the heavy-duty truck market now it could be
very profitable with construction, where the use of heavy-duty trucks are needed, booming all
over the United States.

Threats to the Toyota Motor Company are an everyday occurrence. A major threat to Toyota is
the Hyundai motor company. On average, Hyundai usually has thirty more horsepower in their
vehicles, and costs around 3000 dollars less than a comparably segmented Toyota vehicle
(Amherst). In the luxury line of Lexus, they are still losing ground to BMW in sedan sales and in
SUV sales (Business week). Technology increases in cars today is a major driving force in the
automobile industry, and if Toyota can't keep up with its other competitors, they could quickly
lose market share in sectors they are involved in. The latest trend in the U.S. market is the eco-
friendly vehicle that uses less gas and even more use of electronic power (MSNBC). Toyota has
introduced the Prius hybrid vehicle, but Honda also is selling a hybrid car right now and Ford,
GM and DaimlerChrlsyer have all announced plans for a soon release of their hybrid vehicles
(MSNBC). If the Toyota Company can gain market share before the other big three release their
hybrid, this won't become much of a threat, but if the Pirus does not fit consumer's needs in the
hybrid sector, they will quickly switch and try the other products on the market.

The Toyota Motor Company has a slogan that is plastered across one of its assembly plant; Yoi
kangae, yoi shina (Business week). That slogan translates to "Good thinking means good
products", and that sums up what Toyota is all about as a company (Business week). There
combination of speed and flexibility is world class with the 30 plants they have worldwide with
some of them able to produce up to eight models of on the same line (Business week). Toyota
also lives by the word Kaizen which translate into continuous improvement (Financial Times).
Toyota introduced TQM and Kaizen to the world with the help of Edwards Demming to take the
world by surprise and focus on quality and improvement constantly instead of just the bottom
line and this focus has helped the Japanese company to become one of the leaders in the auto
manufacturing industry (Financial Times).
Toyota, to be as profitable in the future as they are right now needs to keep their focus on the
hybrid sector when selling in the U.S. market. Toyota has also launched a joint program with it's
suppliers to drastically cut the number of steps it needs to make cars and car parts. Over the past
year, the company chopped out 2.6 billion dollars out of its 113 billion dollar manufacturing
costs without any plant closure of layoffs (Business week). They are also putting the finishing
touches on a plan to create a more flexible manufacturing system. In this new plan, plants
Indonesia to Argentina will be designed to make more customized cars that fit the demand in the
local markets and Toyota believes that by doing this at their plants the can save 1 billion dollars
normally needed to build a new factory (Business week). These are the recommendations that the
Toyota Motor Company needs to take into consideration to keep their company moving in the
right direction globally.

The advantage that Toyota would have by being the leader in the hybrid car sector is unknown
right now. Nobody knows for a certain fact if the "green trend" will be a large factor in the
future. In the U.S. market, it appears that having a marketable hybrid car in their line up of
automobiles will be a good plan for Toyota in the future. The advantage of producing
automobiles customized to a certain market is a good plan to keep a competitive advantage over
the competitors in the same geographic region.

The hybrid car market could be a failure in the U.S. market and others in better technology
increases before Toyota's Pirus begins to turn profits for the company. If this happens, Toyota
could have a huge failure with all of the R&D and advertisement they have put into their new
hybrid vehicle. Toyota also has an advantage over their customers today using the TQM model
of operations. If the rest of the industry begins to implement this also, and Toyota fails to keep
improving, this could prove to become a disadvantage for the company.

Ford Motor Company SWOT Analysis

"Ford Motor Company is a global company with two core businesses: Automotive and Financial
Services. The Automotive business consists of the design, development, manufacture, sale and
service of cars, trucks and service parts. In 2003, the Company organized its Automotive
business as two primary segments, Americas and International. The Americas segment includes
primarily the sale of Ford, Lincoln and Mercury brand vehicles and related service parts in North
America and Ford-brand vehicles and related service parts in South America. The International
segment includes the sale of Ford-brand vehicles and related service parts outside of North and
South America and the sale of Premier Automotive Group brand vehicles and related service
parts throughout the world" (Yahoo Finance).

Ford's chairman and CEO, Bill Ford has a simple strategy, "Our vision for the future is simple:
We want to build great products, a strong business, and a better world." Ford's vision is, "To
become the world's leading consumer company for automotive products and services"
(Ford.com).

Ford has been focusing on cutting costs to increase margins more than its competitors. In 1997,
Ford cut $1 billion in costs as a result of work suggestions and using standardized parts for
different Ford models. As a result of using standardized parts, Ford was able to decrease the
number of inventory parts, which decreased the chance of inventory parts not in stock. This
meant the assembly plant would be shut down less for out of stock parts, saving Ford money
(Stevenson 548).

Ford has used reverse engineering in the development of their products. The Taurus is one
example of this tactic. Ford examined the close competitors of the Taurus to see which parts on
each car were the best of the group. Ford then designed the same parts as well or even better than
the competitions. Since the Taurus had the best parts when compared with its competitors, the
Taurus was viewed as the best-in-class car. This tactic allowed Ford to "leapfrog" ahead of the
competition in the family sedan category (Stevenson 130).

Ford has been an innovator in the auto industry when it comes to technology. "Ford Motor
Company has aggressively adopted videoconferencing and computer-assisted design and
manufacturing technologies." These innovations have led Ford to staying successful and efficient
in the auto industry. Another technology innovation is the "use an online computer network to
share ideas, create the actual designs, integrate the designs for the various parts and components,
and build and test prototypes via computer simulations" (Thompson and Strickland 157). Ford
has recently added Voice over IP phones to help control costs. Ford paid SBC $100 million to
install and manage a network of 50,000 VoIP phones. "The immediate benefit is going to be
efficiencies in cost and operations related to moves, adds and changes" (Pappalardo 14). Ford is
hoping that VoIP phones will become a long term cost saver and help the company save their
profit margins. "Ford Motor Co's state-of-the-art F-150 truck-assembly facility, expected to be
operational by summer and running at full capacity by year's end, is a body shop and final
staging area where trucks are assembled and prepped before being shipped to dealers. It's also
Ford's first completely wireless assembly factory." The factory utilizes a flexible body shop,
automated-materials-replenishment system, "self-adjusting platforms at each bay station, and
software-driven systems that monitor maintenance for tooling, conveyers, robots, and other
machines. The wireless infrastructure Ford is deploying for parts replenishment and vehicle
tracking comes from WhereNet Corp Inventory replenishment is driven by Ford's Auto Call, part
of its synchronous material-replenishment trigger system, with assistance from about 58 antennas
around the compound" (InformationWeek 26). This wireless technology will allow Ford to be
more effective and efficient in all operations of manufacturing vehicles at this facility.

Bill Ford said, "We've made solid progress in the last two and a half years and we're building
momentum. We're not going to let up on our efforts to raise our quality, lower our costs, or
improve on the fundamentals of our business, and we'll continue the biggest product roll-out in
our company's history" (Company News). Ford has been introducing new products to the market
which include the all-new Ford Mustang, Ford GT, Ford Five Hundred, Ford Freestyle, and the
redesigned F-Series Super Duty; the all-new Mercury Montego and Mercury Mariner; the all-
new Ford Escape Hybrid - the world's only hybrid SUV; the redesigned Ford Focus in Europe
and Asia; the Land Rover LR3; the Volvo S40 and V50; and the long wheelbase Jaguar XJ"
(Company News).

The first quarter of 2004 was a great quarter for Ford Motor Company. Ford reported earning of
$1.9 billion. This was "twice as much as the company had told Wall Street to expect and far
more than historical rival General Motors, which made only $ 1.3 billion." Ford's management
says that "Rather than relying on windfall profits from a couple of hot-selling models that might
cool off later, the company showed a mastery of the myriad small but important details that
bolster the bottom line. It reduced overheads, cut product expenditures and slashed warranty
costs. At the same time, it boosted revenues by targeting incentives and increasing the mix of
high-profit vehicles, such as sports utility vehicles (SUVs) with four-wheel-drive packages"
(Taylor 10).

"Behind the earnings hoopla, something even more interesting is beginning to emerge: Bill
Ford's strategy for the company. It is uncharacteristically audacious and sweet in its apparent
simplicity. Ford wants to make more money selling fewer cars. In Detroit that makes him a
virtual heretic and threatens to turn accepted industry practice on its head. This is a business
where the fixed costs are so enormous that bosses like DaimlerChrysler's Juergen Schrempp
have staked their company's future on selling more cars, whatever the immediate impact on
profits. Pushing fewer cars out of the factory also means accepting lower market share,
blasphemous to some ears, particularly since Ford has been losing share since 1995. And
prioritizing profits might also threaten brand loyalty, a fragile commodity. Customers who shop
elsewhere because Ford's prices are a few dollars higher could be lost forever" (Taylor 10).

Bill Ford is taking a very new outlook on the automobile industry. While economies of scale
always determined if an automobile was successful or not, Bill Ford wants to make money by
selling fewer cars. This viewpoint is an unbelievable stance from the CEO of an automobile
manufacturer.

Ford has been struggling to maintain consistent sales numbers. Its first quarter numbers were
twice what was expected, but the rest of the quarters have been lagging. Ford hopes that the
release of the many different new vehicles will revitalize Ford. The financial numbers will turn
out decent for the year due to the money made on the financing side. Some critics say that the
financing side of Ford is what makes the money. Ford counters with saying that they must sell
vehicles before the financing side can make the money.
Some recommendations are needed for Ford to maximize profits. Ford needs to capitalize on all
the new vehicles coming on to the market. Aggressive advertising campaigns might entice
consumers to go to a Ford dealer and look at the new products. The only way Ford can make
money from theses new vehicles is to sell a lot of them. Costs need to be reasonable for the
appropriate class of vehicles.

Along with selling all the new vehicles, Ford must make sure that the new vehicles are what the
consumer wants. The consumer won't buy the car if he or she doesn't like its appearance,
performance, and price. If Ford can meet these three needs better than its competitors can, Ford
will gain market share. Extensive testing is needed before a new vehicle is launched onto the
market. If Ford has not done enough testing and surveys of potential customers, sales might lag
causing Ford not to get much return on its investment.

Ford needs to stop using reverse engineering on the development of their automobiles. If reverse
engineering is used, then Ford is behind its competitors. Ford must stay on the cutting edge for
developing new ideas. Stealing its competitor's ideas does not make Ford first to the market with
a new concept. Ford appears that it wants to be seen as an innovator. This is seen with the first
wireless truck manufacturer facility and using VoIP phones. Ford needs to find ways to cut costs
while maintaining or improving efficiency. To be viewed as an innovator, Ford must continue to
be the pacesetter for anything new related to the auto manufacturer sector.

An advantage for releasing new products by Ford would be the potential profit making
opportunity. Humans have a natural tendency to be competitive. This competitive nature carries
over to automobiles. One person will usually want a better car or truck than his or her neighbor.
If a new car or truck is released on the market, the neighbor with the new car or truck that very
few others have will have bragging rights. This explains why brand new vehicle sales are very
large immediately after the release date. People want what others don't have. Ford is playing this
game. Releasing several new cars and trucks will hopefully entice the masses to purchase a new
automobile. The down side of this is the cost to create the new vehicle. Millions and even
billions of dollars are put into designing, developing, testing, and producing a new vehicle. In
order to make a profit on the specific car or truck, thousands of that type of vehicle must be sold
in order to cover the development costs. If that number of sales is not met, the car or truck was
not a success. Ford would not make a profit on it and would end up losing money on the project.

There are many advantages for Ford to be an innovator in its industry. Costs can usually be saved
in the long run. The publicity of the new innovation will help sales. Newer efficient ways of
running the company can be found. The major disadvantage of innovation is the initial cost of
the innovation. Savings in the long run might be large, but the costs to switch from the old way
of doing something to a new way are usually a sizeable amount. If the innovation doesn't work,
the company will lose lots of money. They would lose the initial investment to switch and create
new costs to switch back to the old way of doing something.
Honda Motor Company SWOT Analysis

Honda motor company is not your average Japanese car manufacturer. Originally know for
motorcycles, Honda has managed to elude the dominate keiretsu system in Japan and become
one of the dominant automobile manufactures in the world.

There are many strengths to Honda. Honda has a reputation for producing high quality products
from cars to motorcycles to lawn mowers. In fact they are the largest manufacturer of
motorcycles in the world. Honda has won many awards for initial quality and customer
satisfaction. Their automobiles are reliable and generally fuel efficient. Their research has
afforded them competitiveness in innovative products. The cutting edge Asimo robot and a
successful motor sports programs provide innovations that are passed to consumers as well as
press recognition. Honda won the MotoGP manufacturers title and came in second in the F1
constructors' championship. While these race cars and motorcycles are much different than
production vehicles, the lessons learned on the track transfer to better performance and
engineering of future consumer vehicles. They were a pioneer in engineering low emissions
internal combustion and hybrid technology. Honda is the only other manufacturer outside of
Mitsubishi to branch out into many other areas outside of automobiles.

However there are weaknesses, Hondas products are fairly bland and inoffensive in terms of
styling. Their prices are higher for non-luxury vehicles than comparable modes by other
manufactures. They do not have a strong offering in a truck line. Their vehicles also have a
reputation for being underpowered or pokey econo-boxes. Even for a broadly diversified
company like Honda, there exist opportunities. An offering in a pickup type truck would be
profitable, even if priced under competitors. These are types of vehicles have among the highest
profit margins. Another opportunity would be to continue progressing low emission vehicles and
alternative power sources. While they have made progress in this area, the technology is still
overpriced for the consumer, and the infrastructure does not exist. Another area of opportunity
would be developing nations like china and India. These are large markets, and cheap
dependable transportation would be a hot seller.

Honda's success has not gone unnoticed by its competitors. Like racing, if you don't come up
with something new this year, competitors will beat you with last year's technology. Not that
other companies are taking Honda's technology, but for others to catch up is for Honda to fall
behind. While once upon a time Honda cut the low emissions trail, now they are no longer at the
vanguard.

Honda's strategy is to create value through expanded sales via innovation in research and
manufacturing. Instead of having one large manufacturing plant Honda uses an idea of
"manufacturing products where they are sold". In this way manufacture is increased in areas
where sales increase. This practice has led to over one hundred manufacturing plants in over
thirty countries, a process they call "globalization". They also are guided by a commitment to the
future. This ideal is reflected in several ways. Low emissions vehicles are one example, anther
are manufacturing plants that are focused on environmental friendliness as well as efficiency and
quality.

Honda needs to come out with a truck, which evidently is in the making (the "Ridgeline" coming
spring 2005) and progress with efficient low emissions vehicles. It also wouldn't hurt if they
were to come up with some sort of distinctive styling. Research should be continued because that
has provided the innovative and competitive products, and Honda's diversification into areas
other than automobiles should also be continued as this has been historically and asset by
providing synergies in technology and distribution as well as name recognition. Also as
mentioned earlier, a simplified inexpensive transportation is it motorcycle or car would sell like
hotcakes in China and India.

After further review Honda's extensive web site, it appears that they are expanding into India and
China. China expansion includes a new plan that will quadruple production by 2006. Meanwhile
in India production has started on a motorcycle that will cost less than two thousand US dollars.
This appears to be the right move and is in line with Honda's production in the location of sales.
These actions should put Honda in a position for much more sales.

As far as new low emissions vehicles, they need to put something on the market soon to
recapture their image as the green leader. The new hybrid Accord looks to fill that gap on paper.
However even higher performance than the regular Accord; the hybrid is well just uninspiring.
Yes is quicker and gets better mileage and has more power, but it looks the same, a car your
parents would drive.

The expansion into China an India will provide increased sales and spread the image of Honda.
However caution should be taken. If Honda can put a affordable transportation in the hands of
the masses then great, but if instead of affordable they opt for cheap, then the two largest
concentrations of people on the planet will know Honda as crap.

Regaining the lead of low emissions is a risky proposition. If Honda goes fuel cell and every one
else goes electric, then they just rolled craps. But to be the leader, they need to put something out
to be recognized. Even though the Accord hybrid has better performance, it still looks the same
to the guy on the street.

Financial Comparisons of Major Competitors

Our competitors' financial ratios from three areas were compared. Ratios in liquidity, asset
management, debt management, and profitability were compared. Data for the years 1999
through 2003 was obtained from research insight. While data for the year 2004 is available from
various sources, it was not used in comparison because the methods of computation would have
been various as well, thus rendering the comparison meaningless.

The first area of comparison is liquidity. Historical data for Ford and GM was not available as
well as two years of data for Daimler Chrysler. DCX had the highest current ratios and managed
to raise them by over thirty percent over 5 years. Likewise DCX also improved their quick ratios
to lead the comparison group, but not by a decisive margin. Toyota had the highest cash to
current liabilities, and with all 3 companies with marginal change in this area, TM decreased by
almost twenty percent. And lastly DCX led net working capital to total assets, doubling this ratio
over 5 years. Generally DCX had the most liquidity of the three firms that were compared in this
area, and for the most part their ratios changed in a scale larger than the group (caveat n=3).

The second area of comparison is asset management. All companies had data for asset
management ratios, so the whole group can be compared in this area. Ford strongly led the group
in days to sell inventory in the high teens. After the closest rival TM, other competitors had
numbers around the forties. Poor GM had increased its days to sell inventory by nearly eighty
percent over five years to seventy one days while Honda had the only improvement decreasing
by nearly ten percent. Honda led fixed asset turnover, while Toyota was most improved. DCX
made negative progress in this area. None of the companies manage an improvement in total
asset turnover with GM doing the worst over all and in change, while HMC kept their turnover
higher than competitors. So while Ford had the lowest days to sell inventory, HMC pulled better
turnovers to be the winning asset manager.

The third area is debt management. GM and Ford lead total debt to total assets by a wide margin.
They also lead long term debt to total capital decisively by a wide margin. Toyota and Honda
had interest coverage, while the big three had interest coverage between one and one and a half,
the two Japanese companies had almost doubled their already high interest coverage to 56 for
Honda and 43 for Toyota. So GM and Ford use much more debt. This could be good or bad.
They assume more business risk, while the Japanese companies could in theory take more debt to
exploit opportunities.

The last and arguable most important area of comparison is profitability. Data was incomplete
for price to book comparisons, so those will not be used. Toyota holds a whopping fourteen
percent, while the big three barely have any margin. The two Japanese companies also have very
strong return on assets compared to domestics. Surprisingly GM has double the ROE of Toyota
or Honda, with the others in the middle, with all facing declines since 1999. Return on
investment has slid for all except GM, who nearly doubles the Japanese returns. Price to earnings
run around 15 with the exception of GM at 10 and Toyota at 17, this is the markets reward to
Toyota for producing a superior product, and punishment for GM for turning out unexceptional
products.
Even though efforts were taken to keep these numbers accurate and meaningful, it should be
understood that there are several factors working against this effort. The two Japanese companies
operate in a different business environment and face different regulations than the domestic
firms. Also the effects of Daimler's merger/takeover of Chrysler should have affected numbers in
ways that would make data not as suitable for comparison. With companies on three continents
doing business in dozens of countries, currency translation also becomes an issue. The five
companies have different business models and search out different parts of the market (even
though they compete in areas). They have different regulations to face and varied access to
capital. These differences are reflected in the difference in the ratios, as much as management
effectiveness is shown.