After many stumbles, fall of an American giant

It is a company that helped lift hundreds of thousands of American workers into middle class. It transformed Detroit in to main spot in the world economy, as symbol of American talent for innovation. It built luxury cars and car for every purse & purpose; which led to a saying “What is good for GM, is good for America”.
And now it is filing for bankruptcy, something that would have been unthinkable few years back.

It is the story of GM.

Rarely has a company fallen so far and so fast as General Motors. And while its bankruptcy appeared increasingly likely in recent weeks, the arrival of that very moment still is a staggering blow.

Analysts say, GM began along and slow process of undermining itself long back. It’s strengths like rigid structure that provided discipline earlier on, became the weakness and it lost its feel for reading the American car market it helped create as Japanese car makers took away its most loyal customers as GM was going through serious of strategic and cultural missteps starting from 1960s.

GM gave in to union demands in 1990 and created a program that paid workers even if plants were not running; forcing it to build the cars and trucks it could never able to sell. Thus GM often resorted to a practice called “launch and leave”, spending billions upfront to bring vehicles to market, but then fail to keep supporting them with sustained advertising. With market share shrinking, GM could not give its multiple brands and car models the individual attention which eventually helped Honda attract customers to Accord and Toyota to its Camry. It also lost interest and the patience and effort required to position the brands in the correct market.
During all these years, GM didn’t notice the change in the market place, where Japanese and Korean automakers are bringing- in more fuel efficient, less maintenance vehicles by focusing on innovation; but kept on building its gas guzzlers. Consumers started blaming GM for sub-par vehicles. They might have given them second, perhaps third chance, but eventually shifted the loyalty. Result of this? Through April of this year, GM’s market share was 19%, a steep drop from its peak of 54% in 1954.

This moment would reverberate beyond GM’s headquarters in Detroit, to its factory towns in Indiana, Michigan, Louisiana and rest of the world, as GM was truly a global company having presence in lot of countries.

Ultimately GM would come out of chapter 11, might form a new company which is sleek and might focus on fewer and better brands, but the bankruptcy filing is a fall of true giant, which created and ruled the industry for several years.