General Motors - Business Model and Direction - Case Study Example

General Motors: Business Model and Direction General Motors business model General Motors Company is an American multinational corporation, which designs, makes, markets, and distributes automobiles. It is the home of Buick, Chevrolet, Cadillac, and GMC (General Motors, 2015a).The General Motors (GM) Company uses an international business model (Murphy & Watts, 2014). This means that it develops, manufactures and markets cars and trucks’ as well as their spare parts universally. GM produces cars in close to 37 countries through brand names such as Alpheon, Buick, Wuling, Baojun, HSV, Cadillac, Jie Fang, GMC, Chevrolet, Vauxhall, Holden, Opel, and UzDaewoo (General Motors, 2015a). GM has been operating for over 100 years and has produced about 450 million vehicles globally, and operates in nearly every nation worldwide. Research has demonstrated that a firm, such as, GM adopts an internationalization strategy to gain access to new customers, attain lower costs via economies of scale and increased purchasing power, further exploit its competencies, to gain access to the capabilities and resources located in international markets, and spread its business risks across a wider market base. General Motors goals, objectives and strategies at corporate level In the next five years, GM is focusing on restructuring its brands whilst focusing on its core business with Chevrolet, Cadillac and Buick remaining at the core of the business. A corporate strategy, as found out by Abraham (2012), is carried out at the corporate head office and defines the scope of the business in relation to the markets and industries that it competes. It consists of new ventures, vertical integration, decisions about diversification, acquisitions, and allocation of scarce resources between units. Figure: GM alliances with competitors (Ferell & Hartline, 2011). At the corporate level, GM aims at maintaining its customers as long as possible. GM’s goals shape the manner in which it invests in brands across the globe to inspire loyalty and passion. The corporate level strategy also entails translating breakthrough technologies into experiences as well as automobiles that customers like. Proceeding further, the corporate strategy motivates GM’s entire team to serve and enhance the society where it operates worldwide. In conclusion, the corporate strategy is geared towards building the General Motors into the globes most valued car manufacturing firm (General Motors, 2015b). The firm’s corporate level executives attend to the overall performance of the company. They also pursue opportunities to leverage cross-business value chain relationships together with strategic fit into competitive advantage. In this regard, GM has a competitive value chain matchup pertaining to common technology, production, and distribution channels. The firm’s corporate strategists have initiated actions to enhance the combined performance of the organization’s collection of businesses by divesting some businesses and acquiring others. General Motors goals, objectives and strategies at division level GM has various divisions to enable it cover the international market effectively. Divisional strategies are concerned with how the various divisions within firm work and compete towards the realization of the firm’s goals and objectives. Furthermore, the divisional strategies detail the deployment of resources at the operational level (Ferell & Hartline, 2011). GM uses a multidivisional structure that is a decentralized structure which comprises of a set of operating divisions organized along geographic, market, product, and customer lines, with a central corporate headquarter. The central corporate headquarter exercises overall control, monitors the divisional activities, allocates resources, and carries out various support functions. At the GM, each division operates independently with profit and loss responsibility. The divisions are also organized on functional lines. The division managers watch over the daily operations as well the development of business-level strategy. Murphy and Watts (2014) assert that in 2013, GM restructured its international division and moved most of its administrative and management functions from Shangai to Singapore. According to Abraham (2012), multidivisional structures are common among firms that pursue some form of diversification. General Motors operates in various countries across the world. General Motors goals, objectives and strategies at functional or departmental level At the departmental level, GM has a functional structure which is organized along functional lines including research and development, engineering and design, sales and marketing, customer service, logistics, production, assembly, quality control, technical services, and personnel. All these sections have functional managers who report to the chief executive officer and a corporate staff. This type of arrangement permits the functional managers to focus on their area of responsibility, thus leaving it to the GM’s CEO and the headquarters to give direction and make sure that their activities are integrated and coordinated. Ferell and Hartline (2011) claim that this type of strategic operation lightens the load on top management and makes a more efficient utilization of managerial resources. The major advantage of this mode of operation is that there is greater task specialization. As a consequence, it promotes learning, provide productivity benefits, and enable the realization of economies of scale. Functional structures are suitable for high-volume production firms, if their products are closely related, and there is a limited level of vertical integration. For example, GM manages all its brands namely, Chevrolet, Buick, Cadillac, and Oldsmobile under a common functional structure that is designed to enhance technical transfer and capture economies of scale. The firm also has total quality management (TQM) programs, which according to Waali, Deshmukh, and Gupta (2011), is a philosophy of managing a set of business practices which put emphasis on continuous improvement in all the operations phases. TQM aims at producing high quality products and fully satisfy the clients’ expectations. At GM, it has attained its biggest successes after TQM was extended to employee efforts in all the departments in its bid to restructure the firm as a global automobile firm. It reformed the corporate culture and shifted to a total quality improvement business philosophy which permeated in every part of the company. TQM has instilled commitment and enthusiasm to doing things from bottom to the top of the organization. However, studies have demonstrated that TQM takes an extended period of time to realize significant results. The firm also uses Six Sigma to enhance operating excellence. Dess and Eisner (2008), note that the Six Sigma techniques improve the strategy execution as well as increase production quality. References Abraham, S. (2012). Strategic Planning: A Practical Guide for Competitive Success. New York: Emarald Group Publishing. Dess, L., & Eisner, G. (2008). Strategic Management: Text and Cases. New York: McGraw-Hill Irwin. Ferell, O., & Hartline, M. (2011). Marketing Strategy. New York: Cengage Learning. General Motors. (2015b). Corporate Strategy. Retrieved February 10, 2015, from http://www.gm.com/company/investors/corporate-strategy.html General Motors. (2015a). General Motors. Retrieved February 10, 2015, from: www.gm.com/ Murphy, C., & Watts, J. (2014). GM to Jump Start International Operations. Retrieved February 10, 2015, from http://www.wsj.com/articles/gm-to-overhaul-international-business-model-to-boost-key-emerging-markets-1407791951 Waali, A., Deshmukh, G. S., & Gupta, D. A. (2011). “Critical Success Factors of TQM,” Production Planning and Control, 14 (1), 3-14. Read More