General Motors: Globalization - Case Study Example

General Motors: Globalization General Motors: Globalization In the past few years, the society has maximized the use of technology in meeting the demands of globalization. People have had to deal with the different issues that emerge from transferability of ideas, products and views across the world within the shortest time possible. The emergence of the internet has made it easier to connect to different parts of the world without the need of physical presence. The world has accepted globalization as the best way of bringing together the world from the cultural, economic and social perspectives. Companies now have to take into consideration the importance of having an interconnected society that allows for quick movements across the world, and consider investments across the divide. The dissemination of knowledge allows for easier maximization of skills and knowledge, with companies looking for different ways of outsourcing services to reduce the costs of operation and make their products affordable by all. General Motors (GM) is a global multinational automaker that has remained at the top of the industries for several decades. The increasing globalization continues to boost its presence and the growth of its market share is a key evidence of its presence in the global market. Globalization, therefore, is an effective way of understanding the merits and demerits of dealing with increased connectivity across the world. GM continues to take advantage of globalization by making use of its subsidiaries to produce its vehicles at a cheaper price. The aim is to create a platform where the company can reduce its operating costs, increase its manufacturing ability, and increase the number of units sold annually. This has made the company look for different means of outsourcing cheaper skills yet effective in meeting its ultimate goals of being a quality automaker in the world (Dunne, 2011). Its branches across the world all have their different aims and objectives, and that provides different attributes that ought to take the center stage during each manufacturing process. The needs of the locals must be met to make the company a favorite amongst its core producers. GM: Historical Background Headquartered in Detroit, Michigan, GM has been in existence since 1909. It continues to provide the world with a variety of automobiles from its facilities. It has expanded its brands to thirteen with production in 37 countries, and owning majority stakes in a myriad other companies across the world. This has made it one of the largest companies in the automobile industry, serving as a designer, a manufacturer, marketer, and distributor of automobile and automobile parts across the world. It has an employee base of close to 212,000 employees in more than 120 countries. From 1931 to 2007, GM has been the company with the largest global sales in the industry, and it continues to position itself strategically to reclaim its glory. It is amongst the largest global automakers based on its vehicle unit sales (Dunne, 2011). Globalization Many define globalization based on the experiences attained from various interactions. Some writers view this as a compression of the world by through the intensification of the consciousness brought about by appreciating the world as a whole (Steger, 2009). Sociologists define it as the process people adapt by imitating what they see across the board and incorporate them into their social activities. This provides people with the ability to appreciate others by understanding why they do what they do (Sorrells, 2012). Other authors see it as a widening, speeding, and deepening global interconnection that is both formal and informal from a local, national and regional perspective. As such, coming up with a single definition of what globalization is all about is difficult (Panitch and Gindin, 2012). Nonetheless, merits emanating from globalization across the globe show that companies as large as General Motors can prove to be essential for the growth of its business. It is changing the world and the way people think about it. Friedman called it a flat world and argued that companies ought to take advantage of the outsourcing, supply chaining, and globalized trading attributes emerging from continued globalization. The growth of any company depends on its ability to use the resources available and maximize on global markets that offer cost-effective services (Steger, 2009; Sorrells, 2012). GM and Globalization When the company started, its main concentration was the US. The rest of the world was not in the picture. Further, the current ability to move from one nation to the next was not as easy as it is today. Setting up businesses in foreign countries was not an issue many sought to take advantage because of the risks involved. In the current generation, however, not taking the risk of setting up business in an area with huge potentials will hurt the company more and that will be a disaster in the making. GM realized this and begun rolling out plans to establish its presence in various continents. This has expanded its market share, increased its revenue, and expanded its skills in dealing with different terrains across the world. This has made one of the preferred brands for its various car models (Dunne, 2011). GM has also been taking advantage of the globalization attributes and is now taking advantage of outsourcing to deal with its increasing demand. The company spends at least $56 per hour for their workers while in the US. In Mexico, the company spends $7 per hour, while in China it costs only $4.50 per hour. In India, it is even cheaper with each worker costing the company only $1 per hour. This means that there is potential outside the US, and the company is not hesitant in showing the impact this will have on its operational costs. Even if the production levels have not reached the maximum levels in China and India as seen in the US, the company is already taking advantage of its proximity to Mexico. This effectiveness has led to an increase of the Mexican hourly workers over the past five years from 9,073 to 9,235. Consequently, in the US, the numbers have reduced from 89,000 to 50,000 over the same period (Ratner 2011). The sector has also been experiencing exponential growth in its major sales. It has been able to work on increasing its sales across the divide, and other competitive companies such as Toyota have realized that outsourcing is a good way of cutting costs. This has increased competition across the industry, and the fact that most of the countries have two or more automobile distributors and/or manufacturers, the market share is slowly being a point of concern (Sorrells, 2012). To deal with this challenge, GM has positioned itself as one of the greatest producers by shifting its business model to accommodate the changes in the international front. They are now making cars that can suit the lowest earners in the various countries, and the increased varieties are making it sell more units in areas they previously had little market share (Dunne, 2011). By taking advantage of advancing technology, GM is making it possible to increase mutual dependence among all nation-states across the world. This allows the company to make good use of the resources available. This allows the people working for the company to make use of their time while working (Dunne, 2011). GM is a good example of the benefits that globalization has brought in the world today. The flow of capital allows the company to invest on the untapped resources that would be essential in developing its facilities across the world. The concept of open economy allows GM to make extensive growth and inventions that benefit the company and improve its performance in the global market. The transportation of products from one place to the other has also become cheaper and easier. This allows the companies to create better business models that encourage a mutual compassion and increase positivity when dealing with challenge sin the industry (Panitch and Gindin, 2012). The problem that GM has to deal with is an economic meltdown affecting major economies such as Japan, the US, and China (Dunne, 2011). This has the probability of destroying the company’s forecast, reducing the expected revenues. The fall in prices in one area may be a disadvantage if the regulations do not support cross-border trade. Such barriers are present and can only be eliminated if political interests cede. Cheap imports from one country may lower inflation rates, but could also hinder the development of local production facilities (Panitch and Gindin, 2012). In conclusion, globalization is a good venture for any industry. However, the impact will depend on the way the company deals with its facilities. GM has made great strides in its expansion. It has opened many facilities across the world, taking advantage of the global setting. Globalization is only good if it plays into the company’s strategic objective. The growth of companies today depends on the ability to maximize on the available potentials. By working on pushing its general agenda forward, the company continues to gain so much from this exposure. References Dunne, M. J. (2011). American wheels, Chinese roads: The story of General Motors in China. New York: John Wiley & Sons. Panitch, L., & Gindin, S. (2012). The making of global capitalism: The political economy of American empire. London: Verso. Rattner, S. (2011). Let’s admit it: Globalization has losers. Retrieved from http://www.nytimes.com/2011/10/16/opinion/sunday/lets-admit-it-globalization-has-losers.html?_r=0 Sorrells, K. (2012). Intercultural communication globalization and social justice. Thousand Oaks: Sage Pubs. Steger, M. (2009). Globalization: A very short introduction. New York: Oxford University Press. Read More