Mary Barra bets GM’s future on new models, sales in China
Stock up 2% after CEO outlines plan to boost profits
“CEO Mary Barra is relying on growing the Cadillac brand and building in China to help GM achieve better results”
“General Motors CEO Mary Barra told investors Wednesday that GM will rely on new models and a big push to sell more cars in China to boost profits in coming years, as the company tries to shift the spotlight from a mishandled recall of older small cars.”
General Motors had made a mistake on the ignition switches and caused at least 23 deaths worldwide. GM was blamed about that and they tried to recall all the faulty cars back and fix all of the ignition switches. This is a really serious problem, and the stock of GM has dropped a lot. GM tried to recall all of the small cars that have such problems all over the world, but the reputation of GM has already ruined. Because of that, GM wanted to make new models of the vehicles and enter Chinese car market to boost its profits. The Cadillac luxury brands in China have very high reputation, and GM wanted to take this opportunity and enter Chinese car market to sell more cars and get its reputation back. GM will introduce nine new models in China, and they assume that China will be the largest luxury car market in the world over the next decade.
From my perspective, General Motors changed its operation and management strategies and tried to enter Chinese car market for financial reasons. I think they got managerial accounting information from analysis about their company, and tried to make a good plan and a right decision that are the best for them to continue to developing in the car industry. From the managerial information, they knew what they did could get more profits and what they should not have done since they had bad reputation in Europe, and even in the world. According to the concept of the managerial accounting, managerial accounting information is based on the internal specification for data accumulation and presentation. Good decision making should be made based on the information that managerial accounting provides. GM knew that the Cadillac luxury brands in China had very high repututaion, and the company sold around three million vehicles in China in 2013. Also, GM also knew that people would not trust the old vehicle models that they produced anymore. In this case, they made a plan to produce new models and sale in China to try to achieve better results.
I think when a company makes a mistake, the first thing that they should do is to fix the mistake and analyze the reasons why they make this mistake. After the analysis, they would know what they should do to improve their company and make more profits. Then they should adjust their operation and management strategies, and make a plan for their future development.
Reference:
Mary Barra bets GM’s future on new models, sales in China. CBC News. Oct. 01, 2014. Web.
http://www.cbc.ca/news/business/mary-barra-bets-gm-s-future-on-new-models-sales-in-china-1.2784291
Read more information about managerial accounting here:
http://www.principlesofaccounting.com/chapter17/chapter17.html