|Type of paper:||Essay|
|Categories:||Leadership analysis Automotive industry Comparative literature|
General Motors Company, established in 1908 in Flint, Michigan, began as Buick's investment company and later on grew speedily. During their first year in business, General Motors obtained Elmore, Oldsmobile, Cadillac, and Oakland. It then formed General Motors Truck in 1911; later in 1918, it acquired Chevrolet Motors Company (Jeffrey, 2012). Ten years later, General Motors extended its business to other countries such as Australia, Japan, India, South Africa, Egypt, and New Zealand (Jeffrey, 2012). General Motors Company is known as the fortitude of United States manufacturing, and for almost a century, it has been a preceding investor in development and research. General Motors is the most fundamental in the economy of the United States and an employer of one out of ten employees and is known to purchase United States steel, iron, aluminum, glass, electronics, and plastics. General Motors has had significant experience in the business world, and in 2004 it sold more than 8.2 million trucks and cars, which is approximately 15 percent of the universal vehicle market netting a conveyed net income of $2.8 billion on more than $193 billion in revenues (EveryCRSReport.com, 2010).
It operates hundreds of production lines in the entire world. It serves approximately of 100 lines in 30 vehicle-assembly plants in North America, 100 main press lines in 17 metal fabrication plants, and more than 120 lines in 17 engine and transmission plants. Over 400 first-tier suppliers provide about 170 significant categories of parts to these plants, representing hundreds of additional production lines (Jeffrey, 2012). The operation of these production lines is vital to General Motors' productivity and success. In cases where demand exceeds production, General Motors increases its sales revenue or reduces the cost of labor that is related to the production to increase its production lines throughput to increase profits.
Apple Company (AAPL), on the other hand, is a leading company in mobile communication, computers, and different similar hardware design, manufacture, and marketing. It is also known to sell software, application, services, and third-party digital content (Kane, 2015). AAPL was established in 1977 in Cupertino, CA, by Steve Jobs. It has expanded exponentially, and it supplies a diverse scope of customers (Froud, 2012). It is the only company in stock history that attained 1 trillion dollars in market capitalization (Yoffie, 2018). Apple Company sells its products both to retail and online stores. Apple Company in 2014 achieved 28% of its total net sales via its direct sales channels, and 72% was tallied via its indirect distribution sales (Heracleous, 2013). The company has employed well-informed salespersons to augment the sales of its products. They have retail shops along busy streets where they can attract their customers (Heracleous, 2013).
a) IPO Process
i. How many Underwriters did General Motors and AAPL IPO Firm Hire? The General Motors IPO firm hired a team of four leading underwriters for its IPO. These underwriters are Morgan Stanley, Citigroup, Bank of America Corp., and JP Morgan Chase & Co. AAPL IPO firm hired three underwriters, among others, on its IPO, and they include Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, and Merrill Lynch, Pierce, Fenner & Smith Incorporated (EveryCRSReport.com, 2010).
b) What were the Costs of Going Public for General Motors and AAPL?
General Motors, in its IPO, raised a record $20.1 billion, whereby pricing its common shares at $33 the upper range of its price. AAPL Inc., on the other hand, went public with $4.6 million shares, which went for $22 each (EveryCRSReport.com, 2010)b) How Risky is it to Invest in General Motors and AAPL?
Before starting any business or investing in any company, it is essential to be knowledgeable of the risks that might be expected. Knowing these risks is significant in preparing the investor for anything that might arise during the period of trade. All businesses have risks, and General Motors and AAPL are not exceptions (Froud, 2012). Investing in General Motors is risky, and the risks of investing in this company and lose your money are high (Jeffrey, 2012). There are internal risks and external risks. The internal dangers are an assessment of the quality of product and innovation. According to the prospectus, General Motors has lost part of its market share due to the public's negative opinion of the products they produce (EveryCRSReport.com, 2010). The varying views of customers affect the finances and operations of the company.
The company's ability to reduce the cost of its products. Reduction of costs will result in reduced advertisement of the products, thus the production of automobiles that are not pleasing to the consumers. Other internal risks in investing in General Motors Company are inadequate cash flow, the inability of the company to complete the restructuring of General Motors European operations (EveryCRSReport.com, 2010). General Motors' external risks are Supplier base and raw material pricing, price of gasoline and Auto sales volume, and financing. Investing in AAPL is also risky if the company does not address the probable pitfalls that might result in the loss of investors' money.
c) How do the Firms Intend to Use Proceeds from an IPO?
Out of the total $20.1 General Motors' sales, it plans to give the government and Union Trust owners the proceeds of its IPO and not to General Motors. AAPL is planning to return its profits from IPO to investors (EveryCRSReport.com, 2010).
d) Based on the Provided Financial Statements, Would You Consider these Firms to be Good Investments?
Based on General Motors and AAPL financial statements, I can consider investing in these firms as they are very compelling since they have strong financials and occupy unique positions in the business sector (Yoffie, 2018).
e) Why did These Two Companies Decide to Sell their Shares on the NYSE or NASDAQ, Respectively?
Though selling shares weaken the ownership of a company, it increases money without endangering holders to reimbursements or depleting the cash flow of the future. General Motors and AAPL companies decided to sell their shares because they wanted to generate cash from these sectors to allow their management to choose the stockholders and also to raise money for the expansion of their firms (Froud, 2012).
f) The Primary Motivation for These Firms to Become Public.
In my opinion, the primary motivation for General Motors and AAPL firms to become public is the need to raise a lot of money to keep the firms running. After going through the prospectuses of these firms as a potential investor, I would prefer investing in Apple Inc. to General Motors Company. This is because according to Apple's IPO I discovered that AAPL Company's ability to earn a profit on their initial investment increases the probability of much more sales in the future (Froud, 2012). Unlike the General Motors Company, which reported a loss on their initial investment hence posing its investors at a higher risk of losing their money in the future.
3. Analysis of Whether General Motors and AAPL Created Value in Their Post-IPO Period
The two companies demonstrate two different effects after venturing into their post-IPO period. After going public and listing their first IPO, GM shares went down by 2% (Jeffrey, 2012). This is a tremendous loss for many investors. Making investments in stocks needs one to make profits, and GM does not portray this as their shares dropped tremendously after 2010 (EveryCRSReport.com, 2010). On the other hand, AAPL IPO has improved. It offers excellent investment opportunities as the stocks are increasing, and the company is performing well in the post-IPO period (Yoffie, 2018).
EveryCRSReport.com. (2010). General Motors' Initial Public Offering: Review of Issues and Implications for TARP. EveryCRSReport.com.
Froud, J. J. (2012). Apple business model. hummed.manchester.ac.uk.
Heracleous, L. (2013). Quantum strategy at apple inc. Citeseer.
Jeffrey, S. H. (2012). General Motors Company: Restructured to Rediscover American Innovation. Robins School of Business, 1-29.
Kane, Y. (2015). Haunted Empire: Apple After Steve Jobs. New York.
Yoffie, D. B. (2018). Apple Inc. in 2018. hbs.edu.
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