General Motors International Operations - Research Paper Example

General Motors International Operations Abstract General Motors Corporation commonly known as the GM is a multinational automotive company whose headquarters are in Detroit. This paper gives a general analysis of the company and its progressive success. As evident in the paper, the company sells more than seven million vehicles across the globe. In the analysis, the paper will evidence how in the early 1990s, the company initiated a long-term project that would see it increase it performance and subsequently the profits. The project aimed at improving its performance hence face the world competition of other related companies like china. Some years later, the company announced it wanted to reduce its investment by seventeen Billion US dollars to pat the pension debts as well as tax debts. The pension process required special legal grant to free itself from tax penalties. In concluding, this paper proves how the company strategies to maintain its market share. This is evidenced the company has expanded marginally maintaining more than thirty vehicle plants in thirty-one countries. Introduction Automobile industry has grown tremendously within the last few decades as a result of technological advancement (Tuman, 2003). General Motors Corporation, a company based in America whose headquarters are in Michigan is a good example. The company is the world’s largest manufacturer and marketer of vehicles with many new and competitive brands. The company markets its vehicles under brand names like Buick, Chevrolet, Opel, Daewoo, and Vauxhaul. The company also sells its products under other brand names based in China like Alpheon, Jeifang, and Wuling. Further, the company has absorbed more than 200,000 people across the globe and has business links with almost all the world countries (Crumm, 2010). In addition, the company also provides financing services through its subsidiary financial contracts. America provides the largest market for light vehicles, commercial vehicles, and the long chases. It roughly consumes about a half of the total produce of the General Motors. General Motors was desperate to shed some for its ownership branches mainly in North America to settle government loans. However, the two successive presidents of the United States, George bush and Barrack Obama, agreed to fund the company to enable it retain most of its branches in North America. Through this funding, Davis (1999) argues, General Motors introduced Vauxhall Nova “the smallest and most fuel-efficient gasoline-power car ever offered by General Motors” (pg 113). General Motors has gone through a past positive progressive record since its incision despite the few challenges it might have undergone. As the largest world’s automobile industry, the company has recorded high profit levels for a notable period of time. This success can be attributed to its slogan stated by Crumm (2010) that, “What is good for General Motors is good for the country” (pg 1). For the last two years, Toyota Company, General Motors’ main competitor has recorded a higher level. To compete effectively in the market, the company is focusing on the current market demands of their high consumers like Brazil, China, and the United States (Davis, 1999). The company has an expansion plan from which it expects to benefit extensively by investing more in new markets to meet the growing market demands. Diversity in General Motors is quite evident. Through this diversification, the company comprises of almost all the fields of production, which include manufacturers, dealers, retailers, auto engineers, and body repairers. As a result, a swing in material change would occur automatically. General Motors has undergone economic and political surges, and there is little public criticism over the ever-expanding corporate power and control of the General Motors. Due to the large size and the scale of production, General Motors has a manipulation effect to the economic and political state of any nation it has ventured or has business dealings (Crumm, 2010). The General Motors collaborated with SAIC motors of China to promote the automotive industry in the country. Since then, China has recorded the highest ever number of vehicles sold in the country. In the year 2010, the country sold more than one million cars realizing a profit of over one billion US dollars. Business in China is quite different compared to other countries; in order to start any business in China, one must first acquire a license. After acquiring the license, a foreign company must collaborate with a local business of either city or provincial status. The foreign company is required to deposit about one hundred and forty thousand US dollars in any Chinese bank, which is kept until the franchise is officially dissolved and if any, the debts are cleared. The partners should divide the amount due into two distinct halves where each takes one half. The economic influence of General Motors is by big margin felt in United States where almost all the citizens have an illogical love for vehicles. With more than two hundred and nine million personnel as licensed drivers, and more than two hundred and sixty million vehicles, the country has the highest number of vehicles per head (Davis, 1999). The rate of vehicle acquisition in the United States is by big margin higher than the population growth rate. Surprisingly, fuel consumption for the vehicles only amounts to 22% percent of the total world’s oil production. This simply explains how General Motors Company has high influence to the economy of the country. However, the financial ability of the company fell in late 2007, and more worse in the United States. The total scenario became a nightmare when General Motors had declaration of its bankruptcy in 2009. The seriousness of the matter went up to government, which made a pledge of thirty million US dollars top up. This trend affected the production of the company, leading to a drop in the market share. This gave competitors like Toyota Company to build their reputation in the market (Tuman, 2003). The culture of General Motors is very interesting. GM runs its organization as a federation with decentralized profits centre, and many autonomous fiefdoms hence it was difficult to settle at an agreement or land at a single idea. These many divisions and the stifling bureaucracy made the company management have issues in the process of decision-making. A political correctness however emerged that mobilized against the authority and challenged it to meet the customers’ needs (Dunne, 2011). In many parts of the world, General Motors has invested heavily meeting client’s needs. For instance, China is the oversea country the company has highly invested (Cooney, 2011). Nevertheless, the company is still conducting a research on the country to have the largest investment in it after it ends the seven-year contract with United States. The country has pledged to withdraw fuel charges for the company so that it can heavily invest in it. This is in addition to the reduced tariffs on imported plants. The country in which the company invests in however has restrictions, which the company has to meet before it ventures into business into the same country. Most countries have made it easy for foreign investment. They do not concern the amount of capital an investor invests and the investor is entitled to create any enterprise within the country as long as is allowed by the law of that country (Dunne, 2011). General Motors faced it hard to venture in the Chinese market. The company was building S-10 trucks by the year 1999 when it started business in China and generally the market could not afford them(Mann, 2011). Japan based Toyota Company and China Company had great animosities, thus this gave GM a leeway to market its products. General Motors bought the Daewoo Company in China, which was bankrupt to use it as the showroom. General Motors then designed the five-seat and eight-seat micro vans from the China and sold them under the Chevrolet brand. This brand earned the General Motors Company the largest sum in the Chinese market. Economic integration creates opportunities for the member countries, but brings about challenges to the international investors. Countries that have formed integration make it very hard for the General Motors to venture in those countries or do a direct investment. To achieve this, Dunne, M. (2011) perceives that “General Motors could hope to build small cars at a competitive prices.” This would promote economic growth. Economic integration is built mainly to provide favorable conditions for local production and interregional trade. Therefore, for a company to venture into such regional organization, it has to follow long bureaucratically procedure. In areas where the comprising countries have formed integration the manager of the international company, say General Motors has to see the possible opportunities in different perspectives (Davis, 1999). The manager should access the opportunities the integration must take into consideration for the varying degree of change if at all they have to partner. It is the responsibility of the manager to ensure that the new environment offers sustainable grounds for a long-term competition advantage (Cooney, 2011). The international manager must influence the integration to settle at the best possible environment. This means that economic integration has had great negative effect to the expansion of General Motors Company. In many nations, governments have for a long time engaged in trade regulation especially in international trade interaction. The main reason as to why government enters in to trade is to protect the local industries while at the same time creating employment opportunities to its citizens. In doing so, the government aims at protecting the infant industries as well as the local industries. It thus has to restrict international trade until its local industries reach international competition level (Dunne, 2011). In order to control trade, the government employs tools of trade control. For instance, tariffs are used, which Cooney (2011) defines as duties charged on any shipment from foreign countries. The charge raised over a certain commodity is dependent on whether the source is a member or non-member of a trading block. Tariffs act as source of government revenue apart from raising the price of the imported goods. Government may also give subsidies to local industries in order to make them compete globally. Government may also use quota system in order to reduce the amount of good entering a country from other countries. Quotas increase consumer prices since they eliminate the economies of scale (Dunne, 2011). In conclusion, General Motors, just like any other company has strategies for its future expansion. Its expansion is driven by the view that in the near future, there will emerge markets that will offer a significant potential for growth of demand. The company has good plans to swap out the outdated technology and endorse a new technology that will see it cater for the new market demands. General Motors has a marketing philosophy based on both the corporation’s, and the customers’ standard will. The market strategy does not give space for competition to a specific business, but instead aims at scoping the lions share. However, for the time General Motors has been in existence, it has managed to serve its clients in the best possible way despite the drawbacks and the stiff competition in the automobile industry. References Cooney, S. (2011). China's Impact on the U. S. Automotive Industry. New York: DIANE Publishing. Crumm, A. T. (2010). What is good for General Motors?: solving America's industrial conundrum. Baltimore Maryland: Algora Publishing. Davis, R. W. M. (1999). General Motors: A Photographic History. Carolina: Arcadia Publishing. Dunne, M. (2011). American Wheels, Chinese Roads: The Story of General Motors in China. New York: John Wiley & Sons. Tuman, P. J. (2003). Reshaping the North American Automobile Industry: Restructuring, Corporatism, and Union Democracy in MexicoEmployment and Work Relations in Context. London: Routledge. Read More