GM - Keep it Up With More Investments!

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Barney divided the resources of a firm into four main categories which are financial capital, physical capital, human capital, and organizational capital. From the GM article I read, I found three resource categories out of the four which are worthwhile to be mentioned. Before that, it’s evident to note that General Motors Corp. is considered to be the world’s largest automaker.

Financial Capital
Recently, GM stated that it will hire nearly 300 workers and invest $545 million in five Michigan plants. According to Joe Spielman, vice president and general manager of GM's North American manufacturing operations, investments demonstrate GM's commitment to Michigan and to improving its products. The money resource that GM exploited in the investment was used to conceive of and implement strategies; therefore known as the financial capital.

Human Capital
GM today employs about 325,000 people around the world. People working at GM are considered to be the Human Capital in the firm. According to Barney, “Human capital includes training, experience, intelligence, and insight of individual managers and workers in a firm”. Thus, human capital is one of the main four categories of resources a firm has.
Moreover, GM plans to hire 280 people at the Pontiac plant, all workers who are currently employed at GM plants or have been laid off from their jobs. Even though these workers were laid off form their jobs, they were still getting most of their pay and benefits. These benefits they get from GM will let them come back to work with GM in the new investment since they were considered as valuable human capital.

Physical Capital
Physical capital includes the physical technology used in a firm, a firm’s plant and equipment, its geographic location, and its access to raw materials. Geographic location as a type of a physical capital is an important resource for firms. In regards to GM’s Michigan investment, it has targeted 12 facilities for closure by 2008, including four locations in Michigan that employ 4,751 hourly and salaried workers. These locations are considered to part of the physical capital.

In conclusion, I think that GM is employing “strategic flexibility” in regards to this Michigan investment. This is because they are trying to generate higher profits by staying perfectly tuned to the market and avoid getting trapped in dead-end business model. In specific, by this investment GM is applying the “operating agility” wherein its able to quickly refocus its efforts in better placed to respond to changes in demand and thereby even out profit swing.