Framework for Managing Development in the Networked Organizations - Case Study Example

Running head: business capstone: general motors (gm) company 25th August Introduction General Motors (GM) Company is an American global company that engages in designing, manufacturing, marketing and distribution of motor vehicles as well as dealing with financial services. Being headquartered in Detroit, Michigan, the company was founded in 1908 by Frederic Smith, William Durant and Charles Mott (Gustin, 2008). Based on its strong brands in the US market, GM has benefited from high revenue that has made it to expand in more than 157 countries. Under the leadership of Tim Solso and Mary Barra, the chairman and the CEO respectively, GM has maintained a high level of output in US and in the international markets. For example, in 2013, the company production output stood at 9,714,654 vehicles. This paper seeks to discuss some of the major aspects that have General Motors to be a successful company locally and internationally. The impact of mission, vision and primary stakeholders on GM success One of the major aspects that make GM to be a unique company is that it does not have an official mission statement. However, according to the company website, making the world top brands can only be achieved through the support of world greatest workers. The company focus is to take pride of its workers and take precaution to produce exceptional cars as well as providing ownership experience to its customers across the globe. Through the commitment that the company has to its customers, the company missions makes it to be innovative thus producing quality brands that meet the needs of its customers in the local as well as global markets. GM vision is to become the global leader in transportation products thus earning trust and loyalty from its customers across the world. In order to produce top brands, the vision of the company has made it to be driven by integrity and strong team work thus making the company to enjoy high sales and dividend. One of the major GM stakeholders is the employees. With more than 219,000 skilled employees, GM has been able to improve its services in the production facilities as well as in the distribution centers. Similarly, the management team headed by Tim Solso has put in place effective management policies that have made the company to be innovative and deliver long-term investment value thus making it to effectively face off its main competitors that includes Toyota Motor Corporation, Bayerische Motoren Werke AG, Nissan Motor, Daimler AG, and Ford Motor Co among others. On their part, the shareholders have made the company to be successful based on their increased investments. This has made the company to continue giving dividends to the shareholders. Other notable stakeholders that cannot be overlooked are the financial analysts. Through the conference calls that GM holds for example the one that will be held on Thursday, October 23, 2014, the financial analysts are able to review the company quarterly business results. In this way, the company is able to come up with well prepared financial reports. Five forces of competition and their impact on GM The first force of competition that has an impact on the performance of General Motors is bargaining power of suppliers. GM policy is that volume is critical to suppliers. The company relies on high volumes in order to cut the bargaining power of the suppliers. In this way, the suppliers are not able to increase their prices thus reducing the cost of production for the GM resulting to high profits for the company. The second force of competition is the bargaining power of the customers. GM believes in special customization for its customers. As a result, the customers are not likely to switch to the producers who are not able to meet their demands thus making GM to incur high revenue. The third force is the intensity of existing rivalry. General Motors benefits from large industry size in the sense that due to the multiple firms in the motor vehicle industry that are able to operate without stealing the market share among themselves, the company is able to expand its market share (Maynard, 2003). The fourth force of competition is threat of substitute. In order to ensure that GM maintains strong positive relationship with its customers, the company invests in product differentiation thus ensuring that the needs of all its customers are met. As a result, the customers do not look for substitutes in other companies leading to increased sales for GM. The fifth force is the threat of new competitors. Based on the high profits and sales enjoyed by companies in the motor vehicle industry, more firms are entering the industry leading to stiff competition. GM on its part has embarked on expanding its distribution network and strong brand names thus ensuring it effectively deal with the competitors. General Motors SWOT analysis Strengths Strong operations in the home market Global operations Strong brand portfolio New Vision and strategy Wide market segment in China Weaknesses Brand dilution Car recalls High cost of operations Culture of bureaucracy Opportunities Changing customer requirements High fuel prices Acquisition of other firms Positive view of green vehicles Threats Exchange rates Rising prices for raw materials Stiff competition New emission rules Capitalize on its strengths and opportunities and addressing weaknesses and threats Being a global company, GM should ensure that it retains its international position by ensuring that it creates positive public image for example by sponsoring sporting activities in developing countries. In this way, the company will also be advertising its brands in the developing markets where it has not extensively undertaken promotion and advertisement programs. Another way through which GM can capitalize on its strengths is by diversifying its brand portfolio. As the demand for vehicles increase globally, it is vital for the company to expand its brand portfolio and foreign outlets in order to benefit from the global demand. To capitalize on its opportunities, GM should continue with its acquisition strategies especially in foreign countries where it is not well established. In this way, it will be possible for the company to utilize the marketing avenues that the acquired company uses. Ultimately, General Motors will increase its sales in foreign branches. One way to addresses the weaknesses that GM is facing is by ensuring that it adopts modern technology and uphold extensive research and development in order to reduce the number of recalls. Additionally, the company should maintain effective cost policies that entail looking for low cost raw materials without compromising the quality of its brands. In this way, GM will address the threat of rising prices for raw materials. The company should also ensure that it reduces its carbon emissions to ensure its benefits the support of the governments as well as the public. Strategies GM may use to maximize its competitiveness and profitability. General Motors face stiff competition from foreign and local companies. Thus, there is need for the company to initiate strong marketing strategies. For example, the company should adopt master strategy. This entails providing brands that meet the needs of small and heavy spenders. It is worth to note that due to the slow rate of economic growth in the third world countries, consumers may not be able to acquire top GM brands (Kotler and Kevin, 2009). This implies that if GM produces more brands that average earners can afford, the company sales will significantly increase. Another strategy that the company can adopt is diversification of its brand portfolio. This will not only make the company to meet the diversified needs of its customers, but it will also ensure that the company risks are distributed among the investments. As a result, if one of the departments performs poorly, other units will provide financial support thus ensuring the continuity of GM. Communication plan In order to ensure that all the stakeholders are aware of the above strategies, the company should put that information in the corporate magazine in its website. This will not only make new customers to be aware of the new strategies but also, it will make the existing customers and investors to provide feedback and comments on the master as well as new brands that the company will bring in the market. Corporate governance mechanisms One of the major corporate governance mechanisms that GM adopts is improving the productivity of its workforce. For example, through the General Motors Service Technical College (STC), service technicians are able to enhance their skills. Additionally, the company supervisors and managers are provided with leadership training an aspect that makes them to become more productive. Besides the training program that the STC offers, the employees are provided with an opportunity to give their feedback an aspect that has made the company to adopt the fix it right the first time policy that is appreciated and valued by most customers. The second corporate governance mechanism is diversity (OSullivan, 2002). According to Ken Barret, the Chief Diversity Officer, GM values diversity and all the employees regardless of their nationality, race, religion and gender are provided with opportunities within the company to perform to their best. The company uses social media including twitter and facebook to advocate for diversity in corporate. As a result of including individuals from various nationalities in the management positions, the company leadership has been productive based on the strong team work and experiences. Effectiveness of GM leadership and recommendation GM leadership is made of three key people among others as mentioned earlier. These include Tim Solso and Mary Barra the chairman and CEO respectively as well as Dan Ammann who is the president. Based on the management’s efforts to make GM a successful company, the leaders have established the president position whose responsibilities are to oversee global operations. As the result of hiring large number of workers, the company sales have been increasing since 2010. Likewise, the number of units that GM produces is high as compared to its competitors (Keller, 1989). For example, in 2011, GM produced 9.025 units making it to be at the first position globally in terms of production. During that year, 2,503,820 and 2,547,203 units were sold in US and China markets respectively. With the 2013 rejoining of S&P 500 index, the leaders aim at improving the financial position of the company as well as increase the shareholders returns. The major area that the leaders need to improve is the technology that is employed in the production facilities. Due to the large number of recalls, GM has been facing reduced profits. For instance, as the result of 2014 recall, the company profits reduced to 108 million during the first three quarters. GM should undertake more research in order to avoid the faulty ignition switches that have caused the 2014 recall. Assessment of GM as a responsible corporate citizen GM is focused at creating strong positive relationship with the community. In this regard, the company has adopted the culture of being a responsible corporate citizen in various ways. For example, in 2008, GM became committed to engineering most of its manufacturing in order to landfill-free. This was achieved by recycling production waste that is reused in the manufacturing facilities. In order to reduce carbon emissions, the company has for a long time embarked on the production of flexible-fuel vehicles. As the result of the efforts made by GM in conserving the global environment, the company has gained the support of most governments an aspect that is proved by the way GM has entered many regions in the world. GM is also engaged in philanthropy activities. The company is one of the leading contributors to charity work across the US and other countries. For instance, in 2004 through the General Motors Foundation, the company gave over $ 17,200,000 in-kind donations and more than $ 51,000,000 in cash to charitable organization globally. Conclusion Based on the above discussion, it is quite clear that for any company to be successful, it must utilize all the available opportunities to get rid of the threats and the weaknesses that face it. Even though GM faced financial problem in 2009, the support of the government as well as effective leadership has made the company to maintain strong presence in the local and global markets. By using the modern methods of advertising for instance through social sites such as facebook and twitter, GM would expand its market share and enjoy a strong customer loyalty. References Gustin, R. (2008). Billy Durant: Creator of General Motors. Ann Arbor: University of Michigan Press. Keller, M. (1989). Rude Awakening: The Rise, Fall, and Struggle for Recovery of General Motors. New York: Morrow. Kotler, P and Kevin K. (2009). A Framework for Marketing Management. New York: Pearson Prentice Hall. Maynard, M. (2003). The End of Detroit: How the Big Three Lost Their Grip on the American Car Market. New York: Doubleday. OSullivan, D (2002). Framework for Managing Development in the Networked Organizations. Journal of Computers in Industry, 45 (1): 71–80. Read More