GM Strategy, Scope, and the Question of Captive Finance for the New General Motors

Should GM structure its financial services operations as a wholly controlled subsidiary or adapt an arm’s length relationship?
Trevor Harris, Bruce Kogut  | Fall 2011
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By the end of 2010, GM had exited from bankruptcy and launched as a newly reconstituted company. It now confronted the strategic challenges of paving a profitable future for its car divisions, its global activities, and financing subsidiary. As it addressed branding, design, and manufacturing, among other operational concerns, the issue of whether or not to have a captive financing arm moved back to center stage. To many observers the financing operation, General Motors Acceptance Corporation (GMAC), 51% of which GM had sold to Cerberus in 2006, represented an unrelated diversification that drained corporate attention. However, financing was an integral part of GM’s operations, ranging from the financial relationships with its dealers and suppliers to the packages of financing and incentives that it offered to customers. This case asks students to consider what role GM's financial services organization should play in its corporate strategy. This is one of a collection of cases that comprise the General Motors Integrated Case, viewing GM’s business issues from multiple perspectives, devised specifically to be taught in Columbia Business School’s Core curriculum.

Case ID: 112106

This case is used in core curriculum

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