General Motors & Eds Case Study

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What is the current financial position of GM?

General Motors Co. (NYSE: GM) announced a record third-quarter earnings and revenue, driven by robust retail sales in the United States, strong performance in China, growth in wholesale volume and effective cost performance ("GENERAL MOTORS," 2016).

Records:

- Net revenue of $42.8 billion, up 10.3 percent

- ROIC-adjusted of 30.6 percent, up 4.6 points

Third-quarter records:

- Net Income of $2.8 billion, up 104 percent

- EBIT-adjusted of $3.5 billion, up 14.4 percent

- EBIT-adjusted margin of 8.3 percent

- EPS diluted of $1.76, up 110 percent

- EPS diluted-adjusted of $1.72, up 14.7 percent

- North America EBIT-adjusted of $3.5 billion

- Adjusted automotive free-cash-flow of $3.5 billion, up $2.7 billion ("GENERAL MOTORS," 2016).

What is the current financial position of EDS?

EDS sold in 2009 to Dell Inc. and is now called Hewlett-Packard Enterprise. HP Enterprise generated $50.1 billion in total revenue for fiscal 2016, good for a 2% year-over-year improvement excluding one-time charges. Better still, the $1.92 earnings-per-share (EPS) in 2016 was a more than 4% jump over last year, a testament to HP Enterprise CEO Meg Whitman's promise to deliver on the bottom line and strengthen the company's overall financial position.

Roger and Me

What has happened to Roger Smith?

Roger Smith, GM's chairman and chief executive from Jan. 1, 1981 to July 31, 1990, died Thursday in the Detroit area at the age of 82 after a brief but unspecified illness ("Mixed Legacy For GM's Roger Smith - CBS News," 2007). CNBC has called Smith one of the "Worst American CEOs of All Time", stating, "Smith had the right idea but may have lacked the intuition to understand how his rip-up-the-carpet redo would affect the delicate web of informal communication that GM relied upon." In 2013, he was included on Fortune's list of the "10 Worst Auto Chiefs", with writer Alex Taylor III stating, "He wasted billions trying to revive the sagging giant through diversification (EDS and Hughes), automation (robotized factories), reorganization (two super divisions B-O-C and C-P-C), communization (GM-10 cars) and experimentation (Saturn). Smith's legacy was a fleet of low-quality, lookalike autos, an unqualified successor, and a mountain of debt that pushed the company close to bankruptcy in 1992." Smith and his legacy remain subjects of considerable interest and debate among automotive writers and historians ("Mixed Legacy For GM's Roger Smith - CBS News," 2007). Ultimately, Rogers is not remembered for anything great but only the negative actions in his career.

Why did Roger Smith refuse to go to Flint?

After Roger Smith gives a speech Moore talks to Smith from a distance. But a face to face encounter leads to Moore asking Smith to go to Flint with him only to have Smith state “I cannot come to Flint, I'm sorry” (Kelley, 1999). Smith is not ready to face the people he put out of work and their homes.

What/How/Does GM (or any corporation) have a social responsibility to the town they are in (Flint, Michigan)?

GM or any large company has a responsibility to the economy. GM literally killed a town and left people homeless. Taking a ride through Flint today is a devastating to see the destruction the automaker ultimately caused. They laid employees off with promises, they called some employees back and laid them off again, and they moved other employees to different states only to lay them off in the other state. My office partner was offered a buy-out and promised a rehire date in five years or to be hired at a different facility. When he applied to the other facility he was told only a percentage of employees were being hired there and they had already been hired. The economy being what it is and corporate downsizing refusing to slow down, makes the movie a great teaching tool for issues related to globalization, the impact of layoffs, the role of big business, the automobile industry, competition, top management decision-making, business leadership, public policy, and many others.

Has the corporate philosophy of GM changed since Alfred P. Sloan was CEO?

The culture and vision of GM today talks about being dedicated to the customer and states GM works together as a team. Alfred P. Sloan was known as being a rational, shrewd, and very successful manager, who led GM to become the world's largest corporation, a position it held for many years after his death. Today GM’s purpose begins with a few simple but incredibly powerful words: We are here to earn customers for life.

References

Brown, W. (1986, December 4). GM's Big Mistake Rooted in Perot's Grant of Freedom - The Washington Post. Retrieved from https://www.washingtonpost.com/archive/business/1986/12/04/gms-big-mistake-rooted-in-perots-grant-of-freedom/7afacec9-8eeb-40a1-8380-9861eed870f6/?utm_term=.fd489fb12a63

CNN. (2016, July 4). Ross Perot Fast Facts - CNN.com. Retrieved from http://www.cnn.com/2013/06/10/us/ross-perot-fast-facts/

GENERAL MOTORS. (2016, October 25). Retrieved from https://www.gm.com/investors/earnings-releases.html

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2008). Strategic management: Competitiveness & globalization : concepts and cases (8th ed.). Mason, OH: South-Western Cengage Learning.

Jacobson, G. (2012, December). EDS sees success after purchase by GM — but at a cost | Business | Dallas News. Retrieved from http://www.dallasnews.com/business/business/2012/12/09/eds-sees-success-after-purchase-by-gm--but-at-a-cost

Kelley, L. (1999, December 8). "Roger & Me" examines how Moore's hometown of Flint, Michigan is affected. Retrieved from https://www.mtholyoke.edu/courses/sgabriel/filmcourse_files/leslie_kelley.htm

Levin, D. (1989, March 26). G.M. vs. ROSS PEROT - BREAKING UP IS HARD TO