Business strategy of General Motors - Essay Example

1. Industry Analysis The automobile industry is among the ancient companies whose presence has the effect in the economy. Although experiencing a process of evolution over time, the automobile industry boasts of dominance in the economy. Statistics supports this assertion, given the fact that automobile industries employ almost 10 percent of the entire American population. General Motors is among companies that continue to grow and develop in tremendous lengths. Thanks to excellent strategic plans based on powerful long-term goals, the multinational has spread its wings with a vast geographical presence in all the continents. From America, where the company was founded in the early 20th century, over and across to Africa where dealer shops have been established, General Motors satisfy a great deal of customers (Terlep 2010, 10). Dealing with a wide range of products, the company mainly assembles vehicles and provides spare parts. Being the mother company to such subsidiaries as renown Chevrolet, Buick and even the Cadillac, General Motors specialize in personal vehicles; this way its customer bracket entail individuals seeking comfort and convenience, as that their vehicles are customized in order to satisfy those very needs. By doing that, the company manages to maintain its customers as well as attracting potential buyers. With time, however, the company has broadened its scope by assembling and distributing trucks used for commercial use. In a great way, the change has doubled the sales, consequently leading to supernormal profits. While one may argue that, the motor vehicle industry is highly competitive and rarely profitable, great leadership coupled with a strong human resource team has led to exemplary performance by the company (Vlasic 2012, 1). An equipped laboratory has also ensured the company to make great strides in terms of technological advancement with the anticipated outcome of reduced cost of production as well as efficiency (Norton 2011, 5). Value for which its customers hold is also maximized leading to increased profits as a result of a rise in sales levels. General Motors is among the major shapers of the American economy given the fact that the company is among the largest purchasers of steel, iron and aluminum used in its industries. The company trains a huge number of potential employees and thus qualifies to be ranked among the top workers employers in the United States of America. It has not been all smooth sail for General Motors as lawsuits have rocked the company, crippling its intended growth and development. Some of the legal suits involved workers claiming compensation for termination of employment among other issues. Others entailed external parties holding conflicting interests with the company. These, however, on the perspective of the company can be viewed as challenges, which have been tackled by use of strong litigation team present at General Motors. 2. Porter’s Five Forces Model This concept is generated by analyzing five aspects in a company that offers a given company competitive advantage as well as a sense of attractiveness. It is a strategy used in strategic management by investigating the micron environment, as well as the macro environment. An efficient combination of the five forces is supposed to result in supernormal profits for the company. While two of the five forces entail internal weaknesses, the remaining three involve competition that emanates from external sources. It is important, therefore, that a General Motors defines all the elements that relate to its operations. Decisions on aspects of the company require keen attention on the different perspectives facing the company, the resources available, and the customers, not forgetting both the external and interior environment in which the company exists. Management of business strategies entails offering a sense of direction to the company through formulation of policies in line to the specific objectives stated by the company (Norton 2011, 5). On laying plans to achieve the short-term goals, resources are then allocated to facilitate efficient implementation. In the course of employing the strategies defined, a number of issues are anticipated, and thus allowance for feedback is given to support plans. The same feedback also acts to help alter sections of the plan that prove inconsistent with the bigger mission of the specific company under study. 3. Driving Forces General Motors hold to the mission of ensuring they produce a product that is of high quality and efficiency in terms of fuel consumption. The mission is expected to be achieved by continued innovation in design and holding to the highest possible quality standards. The objectives are meant to make sure its customers enjoy utmost value for their money with respect for environmental friendliness and modernization in equal measures. Such a phenomenon would ensure confidence in the company is renewed enabling the company expands both geographically and marketing. Thus, all the business activities at General Motors are directed at achieving the best possible product for the consumer. Achieving such targets entails the formulation of risky business strategies that involve the top members of the organization (Don 2014, 5). The board of governors would usually have to hold a meeting so as to brainstorm on the only options available to them to put company strategically in order to enjoy maximum benefits. Voting is the method that is commonly employed in arriving at the preferred strategy of employment. Democracy has its say on such situations, but this takes place after elimination of a number of inappropriate ideas. A special case of arriving at the choice of strategies to be used could be in a case where the constitution of a given company, spells out a different mode of arriving at the selection. Most importantly, the welfare of the company is of prior interest. Thus, any personal conflicts between a member and the company are overruled in respect to the company. Before the adjournment of the meeting or at a later date, the project team is selected to spearhead the effective implementation of the proposed strategy. Assessments of progress and evaluation of the project takes place after a regular period to ensure the activities carried out are in line with the set goals. The top organization members are regularly updated on the progress, and they are contacted in case of emergencies or when there is, need to alter certain set regulations with the general wellbeing of the company at heart. The following describes a number of business strategies available for implementation at General Motors: Efficiency in fuel consumption Rise in the fame of the Green Campaign has promoted research on producing environmental friendly products. Furthermore, the disturbing global warming effects seem to be motivating studies on ways of reducing effects attributed to the vice. Academicians and researchers alike, advocacy on the use of decomposable products seems to be the trending phenomena. Increased suffering by humans has probed the insistent search for ways of reducing the global warming at a level. Through conferences held at international forums, discussions on policies to be enacted continue to take center stage, with funds being released by bodies such as UN to support the course. Laboratory experiments on ways of changing products to become environmental friendly receive much credit, with the innovation of motor vehicles, for example, to satisfy the same objectives. As a result, we have witnessed production and use of hybrid cars, electric cars and even flex fueled motor vehicles, which are targeted at the very consumers who cannot live without automobiles. Consumers are forced to change in respect to the initiatives of environmental preservation. Luckily, the ever-rising fuel prices is a blessing in disguise as it tends to promote consumers to prefer the automobiles using alternative energy. Another option would be to the use of vehicles consuming less fuel, which implies less pollution of the environment and, therefore, improved environmental friendliness. General Motors can be seen attempting to catch up to the same pattern, with increased production of cars that average 30 mpg. The projections of the company also hint at producing automobiles with more than half of them being flexed fueled and, therefore, environmental friendly. The scenario is expected within a span of five years (Welch 2010, 13). Consumers are sure to appreciate the notion and thus popularity of the company is expected to grow exponentially. Brand restructuring This entails the process of generating a new image with which the consumers can relate. A lot of the tasks involved here deal with public relations and thus an elaborate team is supposed to be selected to lead a task force. It is important for a company to mainly concentrate on given area or scope which they perform best. For this reason, General Motors can cut down on production of other products within a span of five years. Since Chevrolet, Buick and Cadillac continue to be the core business for the company, it is important for a company to either sell off or close on alternative products. Production of peripheral products that do not compose of the company’s main business is very costly for the company. This is evidenced by financial records of the past. Brands such as Hummer, Saab and Saturn can only be seen as hindrances to profit making as the models lie way behind in terms of model development and re-branding. Attempts to rejuvenate these franchises would only lead to exploitation of resources with an uncertain assurance of profit. To make the case worse, some of the models, the hummer for instance, conflict with other important strategies of the company; this renders their presence inconsistent with the mission of the company and, therefore, making them unpopular. Reducing Costs Although oblivious to most, the company’s costs can greatly detriment the profit making ability of a company. Manufacturing and overhead costs count for the major expenditure indulged by many companies. At other cases, expenses such as employee remuneration could lead to the extinction of profits enjoyed by the company. Proper management of funds with a special focus on the costs incurred is thus crucial to ensuring a company makes profit. By the restructuring of the General Motors brand discussed above, huge savings are expected especially on cutting down of the peripheral projects (Hummer for instance). Profitable dealership opportunities are likely to aid in the short-term objective of cutting on costs. Another initiative that is expected to generate a reduction in costs is the laying off of workers and reduction in wage rates. Despite the anticipated animosity that this move is expected to generate, setting up of a set maximum salary is the best way to go for General Motors. The executive bosses at General Motors are guilty of setting up provisions where they enjoy stock options coupled with huge chunks of bonuses. Lack of liquidity at the company can only be attributed to these kinds of factors, making the company rely on expensive forms of capital in order to do business. Incentives for promoting high levels of integrity and professionalism could also be implemented to ensure that the final product is of high value and the minimal cost is used to produce it. 4. Key Success Factors a. Rejuvenated marketing General Motors is supposed to coin its identification around fuel efficiency and sustainability. Advertisements ought to be centered on those objectives that are important value factors to a large number of potential customers. The company should be clear on its strategies and how it appreciates the presence of its customers. b. Emerging Markets Northern and Southern Asia are quickly acquiring buying power with which they are ready to transact business. States such as China, Japan and India are experiencing an increase in the demand for vehicles. Acknowledgement of that scenario provides General Motors an opportunity to place strategically itself in the automobile industry to enjoy benefits. To achieve market presence in those countries, General Motors ought to create good relationships with the governments. In addition, creating jobs for citizens of those countries by establishment of manufacturing industries is likely to increase the fame of the brand in the new territory; that way the company can gradually take center position in the automobile industry in the countries. 5. Competitive Environment Analysis General Motors face huge external pressures in terms of competition and thus it is important to conduct an assessment of the strengths and weaknesses of their rivals. Such an investigation will help formulate strategies for exploitation of competitive advantage. 6. The Top Three to Five Competitors in the Industry The automobile industry has quite a big number of companies competing for the same market. However, there are key players who’s dominance is evident and compete favorably with General Motors. They include Daimler, Toyota, Ford, Volkswagen, Nissan and Honda respectively. 7. Internal Company Analysis This entails an investigation the core internal features of a business company, for instance in this study, General Motors. Revelations on the internal issues facing company results in the realization of profit. Long-term or short-term goals can be made in respect to the results of such an analysis. 8. Tangible Resources They are physical features and can be quantified easily. General Motors possess these fixed and non- fixed assets in its name. The statement of financial position is a reliable source of seeking this information. 9. Intangible Resources Such resources are not being physical and thus cannot be touched. Quantification of such resources is difficult due to the qualitative nature. Resources of this kind could include technological know-how possessed exclusively by employees of the company. 10. Organizational Resources They incorporate all the available resources that a company possesses at a given period that the company can exploit at the aim of profit. At the beginning of the financial year, a certain amount of resources is available to General Motors that allow for business transactions to take place. References Akerson, D. (2012). General Motors. Shareholder letter, 2(1), 23-24. Checkler, J. (2012). Creditor Lawsuit Could Undo Elements of 2009 GM Bailout. The Wall Street Journal, 1(1), 1. Donn, C. (2014). Strategic and Operational View. Strategic and Operational View, 1(2), 1-7. James, H. (2013, December 10). Government Sells Last of its GM Shares. USA Today, p. 1. Krebbs, M. (2013). Good bye Pontiac,Saturn, Saab, Hummer. Genral Motors, 1(1), 1. Micheline, M. (2009, July 15). General Motors. The New York Times, p. 7. Norton, M. (2011). General Motors Business Strategy. General Motors Business Strategy, 1(1), 1-6. Terlep, S. (2010). GM to Take New Chevy Campaigns For a Spin. The Wall Street Journal, 2(2), 12-23. Vlasic, B. (2012, November 18). For GM a Big Day on Wall Street. The New York Times, p. 1. Welch, D. (2010). GM IPO Said Likely To Price At High End or Above. Bloomberg, 1(1), 12-14. Read More