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General Motors Corporation (Performance Assessment)

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EXECUTIVE SUMMARY This paper will explain GM’s most pressing challenges. Overcapacity is negatively impacted their financial results, brutal international competition is causing GM to react with target costing strategies, rising fuel prices directly impacts their cash flows and complicates capital budgeting strategies and tactics and their ongoing health care and pension costs continue to color their future earning potential. These challenges will be addressed by using performance assessment measures. The financial assessment measures include net income and their market share value, liabilities of health care and pension benefits, revenues, target costing and capital budgeting. Non-financial measures include customer satisfaction and …show more content…

General Motors North America market share in 2005 fell to 25.5% compared to 26.7 in 2004. Decreased in market share also due to sales declines in segment where GM has high volume such as large sport utilities, mid-sized utilities, and mid-sized cars. The unfavorable results of GM’s consolidate net loss in 2005 were driven primarily by losses at GMNA due largely to unfavorable volume and product mix. Health Care Health Care in the United States becomes one of the biggest competitive challenges for General Motor Corporation. In 2005, GM was challenged with the compound impact of escalating health-care cost rates and falling discount rates used to determine future health-care liabilities. As a result of these factors, most of the expenses increased to one billion from 2004. Since the legacy cost are primarily related to the cost of benefits provided to retired employees and their dependents, this becomes one of the cause a sharp decline in sales. According to the article, GM’s health care spending alone is expected to rise to $ 5.6 billion in 2005, up from $ 5.2 billion last year. Over 1.1 million Americans- including current workers, retires and their families are presently covered by GM health care obligations which making the company the largest private health care provider in the country. In addition to its benefits, GM workers have won the right to continue to receive compensation at least 75 percent of their pay after being laid off.

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