The Ever-changing European Market: General Motors - Essay Example

The Ever-changing European Market: General Motors Globalization is one of the biggest issues being tackled in the politics, business and academic world today. (Smith & Yaw, 2002: p. 1; Tierney, 2004) In 1990s, large-scale businesses are more focused on producing more goods using less investment on capital, human resources, and raw materials. Due to the rapid improvements on communications technology, economic freedom and the continuous promotion of trade liberalization (World Trade Organization, 2008), the modern business trend has gradually shifted from multinationalism to globalization. As a highly reputable automobile company, General Motors has been considered as one of the top three biggest automobile companies aside from Ford and Chrysler for quite some time. (CBC News, 2009) Back in 2007, General Motors was able to sell more vehicles as compared to Toyota. Unfortunately, Toyota was able to manufacture 9,237,780 vehicles as compared to General Motors with 8,282,803 vehicles as of the last quarter of 2008 (OICA, 2009). As a result, Toyota was able to reach more sales as compared to General Motors during the first quarter of 2008 (Bunkley, 2008; U.S. News and World Report, 2008). Globalization is not only focused on the continuous global movements of goods and services from one country to another but also the global traffic of human resources. (Steger, 2003: p. 37) With regards to the large supply of cheap labor in the global market, medium- and large-scale businesses are taking advantage of either hiring competitive employees to join the team or establishing a manufacturing company in other countries. Likewise, it is also crucial for businesses today to actively participate in the trading of goods and services in the world market. Upon determining the struggle of General Motors caused by the changes in the global business environment, the main purpose of globalization and the significant role of modern managers with regards to understanding the process of globalization will be thoroughly discussed. Recent Struggles of General Motors in the World Market One of the major challenges of General Motors in the U.S. is the battle between the company and the union labour group in terms of high salary and wages and generous employee benefit packages which makes vehicles made by General Motors less attractive in the global market. (CBC News, 2009) The market price of each General Motors made automobile is way too high as compared to vehicles made by other automobile companies around the world. For this reason, General Motors is facing a lot of challenges in terms of being able to maintain its number one position in the global automobile markets. In order to enable General Motors to successfully compete in the global markets, the company should be able to find new ways on how they can effectively cut down the operational costs since this particular business strategy will enable the General Motors to capture a huge portion of the market that are price-sensitive (Jones & George, 2003, p. 114). Even though General Motors also established a plant in China (General Motors China, 2009), the company is still selling their vehicles at a premium price. Since many people around the world are trying to maximize the value of their money, most of the Asian and foreign automobile consumers prefer buying Toyota made cars as compared to cars made by the General Motors. General Information Including the Main Purpose of Globalization Globalization is “a process of interaction and integration among people, companies, and governments of different countries which is driven by international trade and investment through the use of information technology” (The Levin Institute, 2008). Basically, the concept of globalization allows business people to maximize their available financial resources by taking advantage of the low-cost products and services that are readily available from developing countries. Because of the differences in monetary exchange rate, large-scale businesses from developed countries are able to purchase more homogenous products and highly competitive human resources at a much lesser price. By being able to offer homogenous products to its target consumers at a relatively low market price, large multinational companies like General Motors should be able to easily compete with small-scale local businesses (Jain, 2003, pp. 1 – 2). Upon analyzing the world market today, globalization plays a crucial role in strengthening the dominance of capitalism within the global economic system which indirectly erodes the importance of local cultures and traditions by establishing a single business culture around the world (Stiglitz, 2002; Kellner, 1998 & 1997). Aiming to promote global trading, the World Bank, International Monetary Fund (IMF), and the World Trade Organization (WTO) among others have exerted a lot of effort in removing the global trade barriers to increase economic growth among the developing countries (Mender, Baker, & Korten, 2001). For this reason, General Motors should make extra effort in searching for new ways on how the company could manufacture vehicles that could compete with the average price of the Japanese made cars. Basically, the main purpose of globalization is to promote free trade across the world by removing all possible barriers that will prevent people from allocating the world’s resources more efficiently (Nanduri, 2006). In the process of promoting free trade in the world market, big multinational companies like General Motors is expected to earn more profit by making use of the lowest paid human resources which are readily available in developing countries all over the world (Tasini, 2007). In line with the need for General Motors to establish an automobile manufacturing plant in developing countries like China, managers of General Motors should have a better understanding of the business process behind globalization. Reasons Why the Managers of General Motors should have a Good Understanding of the Globalization Process Globalization process is actually referring to the business practice that aims to integrate the world economy, culture, technology and business governance including the people who lives in different countries. (Lopez, 2000) Since globalization significantly involves the integration of people with different racial, ethnic, religious, and cultural background, globalization process is not only being powered by the existing technological changes, economic activities, and political forces but also the impact of dealing with a diverse culture that exists in each country (Mcfaul, 2006). Aside from the fact that globalization increases business insecurity, it also contributes to a significant change in the way traditional business processes are being conducted (Connell & Wood, 2005). The significant changes in the way the business of General Motors is being operated has shifted from the local movement of goods to a more rapid international trading of goods and services. This includes the gradual shift from a pure national economy into a globalized economy is made possible through continuous global trade, outsourcing of goods and services, foreign direct investment, the use of information and communication technology, migration, and the international capital flows. (Friedman, 2008, p. 49; Bhagwati, 2004) For this reason, Lopez (2000) stated that the “economic power of a country is no longer strongly associated with political power”. Instead of relying too much on political power, the World Trade Organization (WTO) in collaboration with other related agencies like the the General Agreement on Tarrifs and Trade (GATT), International Trade Organization (ITO), International Trade Relations (ITR), G-7/G-8, and the World Economic Forum among others are finding ways to strengthen the existing global trade policies in order to protect the international traders as more businesses are becoming activein the global markets (International Trade Relations, 2008; World Economic Forum, 2008; Barry & Honey, 2001; Anderson & Cavanagh, 1997). To ensure that more businesses like General Motors could take advantage with the consequences of globalization, the World Commission has been made responsible in regulating the world economy in accordance with the social dimension associated with globalization (World Commission, 2003). Given that globalization process is bounded by the economic, polical, and social dimension of each developed and developing country (Lopez, 2000), the manager of General Motors should have a better understanding with regards to globalization process to empower them to have a better competitive edge as compared with other business people who are very much knowledgable on international trading policies. In line with this matter, the managers of General Motors has to be familiar with the continuously changing globalization and business law to avoid unintentionally violating the globally recognized criminal code on issues related to bankruptcy, intellectual property righs, banking procedures, and other related corporate law aside from the standard international trading regulations, rules and other related legal practices (Global Policy Forum, 2008). Conclusion Industrialized countries have come into the stage of maturity wherein the prices of their local goods are no longer competitive because of the high costs of labor, raw materials, business taxes, and other necessary expenses for the production of goods and services. To cope with the ever changing European market, General Motors have to find ways to produce the same quality product at a much lower costs. In line with this, General Motors should continuously search for new ways on how the company could maximize the purchasing value of their money. Even though General Motors was able to establish a manufacturing plant in China, the fact that the company is still selling its vehicles way above the market price of Japanese cars makes the company less competitive in grabbing the biggest market share in the global automobile industry. Therefore, the company should introduce new and cheaper vehicles in the market References Anderson, S., & Cavanagh, J. (1997). 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