Environmental Factors at General Motors - Research Paper Example

? Environmental Factors Paper Organization: General Motors Introduction General Motor, with its long history as automobile manufacturer, currently markets its products in 120 countries. In most of the countries, it operates through its direct subsidiaries. World automobile market has expanded manifold in last few decades. During ‘50s through ‘70s, the US manufacturers played a dominant role in automobile markets but thereafter the onslaught of companies from Japan such as Toyota, Honda, Mitsubishi and Nissan made the US companies to market their products in a different way. Marketing environment factors profoundly influence company's marketing operations. The paper attempts to explore various environmental factors such as free-trade Agreements, global demographic changes, increased competition, technological advances, legislative compliance that influence marketing decisions of General Motors (GM) in its domestic and international operations. Impact of Free-trade Agreements In 1994, the US entered into a Free Trade Agreement with Mexico and Canada called NAFTA. Just in the prior year in 1993, GM exported only 1600 vehicles to Mexico but in 1999, gearing its marketing efforts, the company could export 52,000 vehicles to Mexico despite currency crisis in Mexico (The Trade Partnership, 2004). This demonstrates that GM could take advantage of free trade agreement to boost their sales. Demographics and Physical Infrastructure People’s behavior, characteristic, their growth trends will largely influence the demand of goods and it becomes extremely important for a company to know about demographic changes taking place locally and globally so that company can divert its marketing efforts to exploit these changes. Different countries have different population growth rates. Higher population growth rate in a country or region is likely to create higher demand for a product. China and India both have huge populations of over 120 billion with huge untapped market of passenger vehicles. Both have been growing at much higher GDP growth rates relative to world average. GM recognized this fact and directed its marketing efforts toward fastest growing automobile markets in the world. GM formed a joint venture with Shanghai Automotive Industry Corp. Group (SAIC), China in 1997. The joint venture markets its most popular brands such as Cadillac, Buick and Chevrolet and in 2010, it sold 1 million vehicles. China sales are rising at a record rate and in 2011 it touched over 1200,000 units. In order to harness full potential, GM has formed 11 joint ventures in China and currently, GM is a leader among all automakers in China selling almost 2.5 million vehicles there. Saturated markets of Western Europe and many developed countries show either negative or near zero population growth rates and it is obvious that GM is not likely to achieve favorable results by any level of marketing efforts in that region (General Motors China, 2012). Legal/Political Environment Marketers need to understand the legal/political environment of the country before embarking on the business in an alien land. GM expanded into the countries such as China, India, and Russia for manufacturing and marketing their products only after when these countries liberalized in their bid to become market economies. No company would like to work in a hostile environment. Legal setup is equally important so that whenever required the company can approach an independent judicial system for a fair hearing and remedy. The company needs to follow local laws on environment, on emission standards, corporate laws and the laws that are enforced by regulatory bodies in that country. That is why it becomes extremely important for the company to get fully acquainted about all applicable legal requirements of the country where it plans to market its products. This will also ascertain whether it is in the benefit of the company to operate there or not if the stringent laws may impede its growth. The Foreign Corrupt Practices Act (FCPA) of 1977 and Social Responsibility The FCPA legislation was enacted in 1977 and it is incumbent upon the US companies to comply with the act particularly when do international business. Violation of the act may lead to criminal and civil proceeding against the company. This act certainly impacts the US companies doing business in other countries as the companies from other parts can get their work done through bribery and other unethical ways. The FCPA forbids the US companies to pay bribery or adopt any corrupt practices to continue with the business activities (Koehler, 2010). GM conducts its business operations in a socially responsible manner. In 2005, GM decreased its water usage by 23.3 percent and green house emissions by 12.5 percent. GM has also shown its commitment to develop fuel cell based vehicles with an aim to decrease emission loads and improve environment. GM also helps students by developing mentoring programs, classroom lessons plans and many other social programs in the countries where it operates (Manley, 2011). Effects of Technology Rapid advances in science and technologies impact the marketing decisions of the company. The changes in technology provide opportunities for a new-product development. Vehicle emissions have become a key issue and major hindrance in safeguarding the environment across all parts of the world. An automobile company's future lies in innovation and developing technologies that can meet the objective of providing vehicles that do not add to pollution. GM has correctly recognized this need of time and has directed its efforts to develop and market green automobiles in world markets. Accordingly, General Motors have introduced Chevrolet Volt, a green car recently and ready to launch a new electric car in the Chinese and other markets. The vehicle will consume less than 15kWh power for almost 100 kilometer run – a much improved design than the other available competing designs. The vehicle can be easily charged with a standard household outlet (Lucas, 2012).The point is that technological environment is equally important while formulating marketing strategies. Conclusion Thus, it is quite clear that the numerous environmental factors impact marketing decisions especially, when the company operates in several international markets. When the company grows and operates in several markets, its social responsibility also increases manifold. Ever since the world has become a global village and the economic interdependency of the countries has increased, it becomes extremely important for the company to conduct all business activities most ethically. General Motors has always taken a moral, social and ethical stand keeping in view all stakeholders including customers while taking any major marketing decisions. It is true that the company has gone through a major business setback in 2007; nevertheless, the company is on a recovery path through its well formulated marketing strategies in last few years. References General Motors China (2012). General Motors. Retrieved December 5, 2012 from http://careers.gm.com/worldwide-locations/asiamiddle-east/china.html Koehler, M (2010). The Foreign Corrupt Practices Act. Retrieved December 5, 2012 from https://indylaw.indiana.edu/ilr/pdf/vol43p389.pdf Lucas P. (2012). The Green Car. General Motors introduces new electric car. Retrieved December 5, 2012 from http://www.thegreencarwebsite.co.uk/blog/index.php/2012/11/27/general-motors-introduces-new-electric-car/ Manley, M. (2011). Toyota and GM: a Comparison of its Mission, Values, Social Responsibility and Ethics. Retrieved December 5, 2012 from https://sites.google.com/site/michaeljmanley671/toyota-and-gm-a-comparison-of-its-mission-values-social-responsibility-and-ethics The Trade Partnership (2004). NAFTA: A Decade of Growth. Retrieved December 5, 2012 from http://www.tradepartnership.com/pdf_files/NAFTA_Decade_of_Growth.pdf Read More