Strategic Management and Strategic Competitiveness - General Motors - Case Study Example

Strategic Management and Strategic Competitiveness

• Introduction

General Motors is one of the automobile behemoths in the world. Its journey to world domination has been aided by various factors with globalization changes being at the top of the list. Technological advances have similarly impacted the growth of the company into its present status. In addition to globalization and technology, the mission and vision statements also contribute to the general success of the company. In order to earn above-average revenues, it is essential that the company invests in the organizational research model and the research-based model. In addition, the stakeholders also play a significant role in the overall success of the company. In the present paper, all the above-mentioned factors that produce fundamental impacts to the organizational success of General Motors will be assessed.

• Effects of Globalization and Technology

According to various literatures, globalization is the exchange of ideas and goods on a global scale between the human populations. It traces its influence in the European and western expansions. The integration of global markets has influenced the manner in which companies such as General Motors conduct their businesses due to the altered dynamics. The issue of globalization and advance in technologies are intertwined at the establishment of e-commerce sales. The intense competition that globalization has brought means that GM has had to explore other means of selling its products so as to remain relevant and compete in the automobile industry (Hitt, Ireland, & Hoskisson, 2012). General Motors, with its expansive market, is using its online presence to reach its customer base. Nevertheless, the establishment of the GMBuyPower.com has enabled the company to increase its sales by reaching a customer base that is increasing technology-savvy.

According to experts, the competitive pressure that GM has experienced has compelled it to invest in innovative ideas. The industry’s workforce has of late been characterized by talented scientists and engineers leading to the development of some of the most innovative vehicles. According to Gamble and Thompson (2014), "The automobile industry, for example, has significantly expanded the electronics and computer content on the vehicle, with applications today ranging from powertrain controls for improved fuel economy and reduced emissions, to enhanced safety systems and chassis controls, to on-board communications systems like OnStar" (p. 23). The necessity to keep up with the ever evolving technological space has led to GM creating the fuel cell technology, which is its most advanced product to compete on a global scale.

Moreover, globalization has ensured that GM establishes a presence in various countries across the globe. Globalization has resulted to declining trade and the obliteration of investment and trade barriers on automobile companies including the General Motors. As a consequence, the opportunities for General Motors to internationalize its operations as well as reproduce its overheads in other countries have dramatically increased. Statistics revealed that the growth forecasts of the US and UK markets, hitherto the core GM markets, are grim relative to the potential of the emerging markets in the Asian as well as African markets (Gamble & Thompson, 2014). The entry into these emerging markets was being curtailed by the low purchasing powers of their consumers. In this regard, the GM had to form an alliance with like-minded parties leading to the Global Automotive Alliance that now enable it to raise enough resources. With the partnership, General Motors and its cohorts are now selling almost 13 million units of motor vehicles across the world. Therefore, globalization has increased the sales of GM vehicles across the world.

• The Effect of Industrial Organization and Resource-Based Models on the Operation of the GM

The objective of any company that is involved in business is to earn returns that are referred to as above-average. The Resource-based theory and industrial organization theory are the two models that GM can adopt in order to gain competitive advantage and subsequently earn above-average returns. The resource-based theory demands that GM engages in activities that offer it competitive advantage in the industry. The identification of GM’s internal resources and analyzing them for their strengths and weaknesses is fundamental to the objective of applying this theory (Goetsch & Davis, 2014). In order to earn an above-average return using this theory, GM will be required to sustain a competitive advantage. Therefore, it is important that the company should create and execute stratagem that will allow it to excellently exploit their capabilities and resources so as it may capitalize on the opportunities that exist in their external environment more than its competition.

The internal organization model employs an external perspective to elucidate that forces that are found outside the company’s environment to impact a firm’s strategic actions. In this model, General Motors will need to examine its external environments for the purposes of identifying the environment with potential for above-average returns. In this analysis, the company is required to examine the barriers to entry, the economies of scale, product differentiation, and the level of concentration of competitors in the industry as well as the diversification aspect of the environment (Goetsch & Davis, 2014). Afterwards, there will be need to determine the attractive industry that GM can invest in. Consequently, the formulation of strategies will follow after which the necessary skills and assets will be identified. Finally, GM will implement the proposed strategy that will in turn result to above-average returns.

• Vision and Mission Statement

The mission and vision statement of GM are captured in the following words “We are here to earn customers for life.” These simple yet incredible words have proved tremendously significant to the performance of the company. As the letter and the spirit of the statement suggests, GM has been indicated to value their own companies by providing goods and services that inspire loyalty to the brand. To achieve this, the company invests into brand of vehicles that will inspire customers to become loyal to it. Further, the statement is essential since it compels the company to invest into the latest technologies, which they adopt when manufacturing vehicles. In addition, the statement motivates the staff of the GM at their various places across the world to serve and enhance their host communities. All these inspirations that are derived from the mission and vision statement are intended to enhance the overall performance of the General Motors staple. Particularly important herein is the creation of loyalty amongst customers which translates to an improved company image and sometimes sales.

• Importance of Stakeholders

The key to the success of GM is solely dependent on the relationship that the company has on both internal and external stakeholders. This relationship is founded upon the core values of the company and as it continues to evolve, the company strives to ensure that the stakeholders feel as part of the company. There are various levels of stakeholders that are related to the company. The most important stakeholder to the company is the customers. These include both individual and fleet customers. According to experts, customers are the most important people in a business. In the year 1998, GM held a conference in which it committed itself to move from the “contemptuous paternalism” to one whereby both the customers and employees were allowed to contribute to the decisions of the company.

According to anecdotal evidence, the relationship that exists between a company and its internal and external stakeholders is fundamental to the success of the GM Corporation. This particular argument is established by Hitt, Ireland, and Hoskisson (2012), who argue that:

“By its very nature, relational wealth mediates among the attributes and capacities of people, groups and firms (including firms’ human and financial capital) and influences successful work co-ordination, work performance and goal achievement. For inimitable benefits to accrue from inputs, they must be bound together in a manner that is inimitable,” (p. 29).

The existence of a good relationship between the company and its stakeholders has also given it a certain competitive advantage. According to Hitt, Ireland, and Hoskisson (2012), it is extremely complex for other companies to break a competitive advantage of a firm even if they know that its strategic capability is founded on stakeholder connections. The authors posit that the ties of this nature are very convoluted and idiosyncratic to the extent that their breakage is inconceivable.

Whilst the external stakeholders are important for buying products from the company, internal stakeholders are equally important. A good relationship with the employees of the General Motors would ensure that the company achieves its organizational objectives. A good rapport between the management and the employees inspires the latter to work hard so as to implement the strategies of the company. Furthermore, internal stakeholders will work to maintain the image of the company if the relationship is good. Therefore, both internal and external stakeholders have a critical role to play in the overall performance of General Motors.

• Conclusion

In conclusion, General Motors is one of the best performing automobile industries in the world. Its performance has been greatly influenced by its adoption of technological advances and the effects of globalization in general. In addition, it has been indicated that the company can employ the usage of industrial organization and resource-based theories to earn above-average revenue. The vision and mission statement of the company has also remarkably influenced its performance in the wake of stiff competition from other players in the industry. Lastly, the company’s internal and external stakeholders have played vitally significant roles in its performance.