General Motors Company Commonly Called as GM Case Study
- Length: 10 pages
- Sources: 9
- Subject: Business
- Type: Case Study
- Paper: #17871369
Excerpt from Case Study :
General Motors Company, commonly called as GM is one of the largest automobile manufacturers in the world. It is an American multinational corporation headquartered in Detroit, Michigan. It has business operations in more than 157 countries around the Globe. It was founded in 1908 as General Motors Corporation; and renamed as General Motors in 2009. The top brands of the company include Chevrolet, Isuzu, GMC, Jie Fang, Cadillac, Vauxhall, Baojun, Buick, Holden, Opel, and Wuling. General Motors operates through fully-owned subsidiaries and joint ventures outside the United States. It has currently employed more than 212,000 individuals from different nationalities and regions that work in 396 different facilities and sections (General Motors, 2013).
General Motors is the largest automaker in the world on the basis of sales volume. It has around 21,000 dealers and business associated in all the six operating regions of the world. General Motors enjoys strong brand equity and high level of appreciation by the international community. Its strong focus on quality, innovation, and performance of vehicles has made it the world's best automobile brand (General Motors, 2013).
The Theses Statement
This essay will analyze the internal and external business environments of General Motors using SWOT and PESTLE analysis; the organizational strategy and structure; type of leadership and motivational techniques used by its managers, the control system, organizational culture, human resource management, risk management, quality management, and information management policies and practices. The purpose of these analyses is to evaluate how the organization follows the related management theories, models, and concepts in different aspects of its business operations and policies.
1. Analysis of the General Business Environment using PESTLE Analysis
The general business environment of a company constitutes all those forces which can impact its operations, sales, and financial performance in a positive or negative way (Frederic, Agnes, & John, 2011). The forces which collectively form the external business environment for General Motors include political and governmental forces; economic forces; social, cultural, and demographical forces; technological forces; legal forces; and environmental forces (Blythe & Megicks, 2010). These forces can be analyzed using PESTLE Analysis.
i. Political and Governmental Forces:
General Motors operates in 157 countries around the Globe. Every country has its own political and governmental infrastructure which significantly impacts the local and international firms operating in that country. Being a multinational corporation, General Motors has to face different political and governmental environments in different target countries. If there is political instability, poor governance, or unfavorable behavior of the regulatory authorities towards foreign firms in some country, General Motors observes negative impacts on its performance. Therefore, it has to carefully analyze the political and governmental forces in every target country before setting up its business in its automobile markets.
ii. Economic Forces:
Economic forces are the second most critical forces in the automobile manufacturing industry. The economic situation, inflation, unemployment, costs and availability of raw material, interest rates, exchange rates, industry patterns, GDP growth rate, and various other economic factors of target countries impact the business operations, profitability, and policies of General Motors (Jobber, 2009). When all these economic indicators are in favor of manufacturing businesses, General Motors can confidently pursue growth strategies for its business operations.
iii. Social, Cultural, and Demographical Forces:
Social, cultural, and demographical forces impact the earning and spending patterns of the general public. These forces include income levels, life styles and preferences, social classes, age groups, population density, etc. (Cadle, Paul, & Turner, 2010). General Motors produces all types of vehicles like sports cars, personal and family cars, luxury cars, trucks and heavy weight vehicles, etc. Therefore, it targets different age groups, income classes, and consumer segments in every country. The social, cultural, and demographical forces also have a leading impact on the sales performance of General Motors.
iv. Technological Forces:
Being one of the largest and the most competitive automobile manufacturers in the world, General Motors has to give special focus on the quality and innovation in its business processes. Technology is the most significant factor that leads to competitiveness and sustainability in the global automobile industry. Therefore, General Motors has to keep an eye on the technological advancements in the automobile sector and mold its manufacturing operations and capabilities to match these advancements. Some recent innovations by General Motors include the introduction of hybrid and electronic cars, fuel efficient engines and power equipments, and environmental friendly production plants in different regions of the world.
v. Legal Forces:
Legal forces include governmental laws and regulations, tax rates, duties, and other restrictions and acts imposed by the local governments. Being a multinational corporation, General Motors has to adhere to the local laws and regulations of every country in order to operate in a legal and lawful way.
vi. Environmental Forces:
Besides contributing to the industrial growth, automobile manufacturers are also expected to show concern for the environment and the community in which they operate. General Motors gives strong emphasis on quality and efficiency of its operations so that they can cause the least harmful impacts to the environment. It has begun manufacturing hybrid and more fuel efficient cars as a part of its green environment initiative. Other social benefit and environmental protection steps include children education, welfare programs for the under-privileged and poor people, waste management programs, etc.
2. SWOT Analysis for General Motors
General Motors is the world's largest automobile manufacturer on the basis of sales volume. It has sound financial position and strong brand equity all over the Globe. Its manufacturing capabilities, resources, and competitive strategies also contribute towards its success and prosperity in the industry. Among these strengths, the company also enjoys some strong competitive advantages: including highly innovative, modernized, and fuel efficient cars, high level of customer loyalty, and strong supply chain and distribution network. Moreover, General Motors has always pursued growth strategies for its business which help it in maintain its market share in the global market (General Motors, 2013).
Despite enjoying the aforementioned strengths and core competencies, General Motors also has some weaknesses in its business operations. The biggest weakness is the decreasing sales performance in some regions of the world due to increased competitive pressures and changing consumer preferences in favor of electric and highly modernized cars. Secondly, General Motors has lost its market leadership position to Toyota Motors in Japan due to a series of joint ventures and expansion projects by the latter during the last few years.
The most potential opportunity for General Motors is to introduce more innovative and stylish cars in all major target markets of the world. Keeping in view the changing technological demands, it can expand its operations in hybrid and electric car categories. One major opportunity for General Motors is to target middle and upper middle income groups by selling its family and personal cars at competitive prices (Paley, 2006). It can reduce its heavy costs of manufacturing by making its production operations more efficient. These strategies will help it in achieving greater competitiveness in the industry (Williams, 2012).
General Motors faces the biggest threat from its industry rivals. The top market leaders in the global automobile industry are Honda, Daimler AG, Nissan, Volkswagen, Ford, PSA Peugeot Citroen, etc. These competitors are posing big threats to the company's financial performance and market share. The second major threat for General Motors is the day by day increasing costs of operations and research and development. In order to keep itself on the competitive edge, General Motors has to heavily invest in innovation, R&D, quality management, and workforce development. Moreover, external environmental factors like political instability, inflationary pressures, environmental protection regulations, and consumer preferences are also becoming more and more challenging with the passage of time.
3. Organizational Strategy
General Motors enjoys sound operational and financial strength around the Globe. In order to maintain this strength, it always focuses on implementing growth strategies for its local and international business operations. It uses all the three competitive strategies to encounter the environmental and rivalry threats. The most important strategy is to differentiate its vehicles from those manufactured by its competitors (Davidson, Simon, Woods, & Griffin, 2009). However, when the economic conditions turn unfavorable for manufacturing businesses, it adopts focus and retrenchment strategies in order to survive and move cautiously in the industry. The company is currently focusing to achieve cost leadership in its industry by controlling its heavy manufacturing, R&D, and promotional costs (General Motors, 2013).
4. Organizational Structure
General Motors uses a blend of functional and centralized organizational structure. The corporate wide strategies and policies are formulated by the Board of Directors and implemented by the Top Management. The responsibility to achieve the long-term objectives lies with the departmental heads that take reports from the top managers. The company has various departments including Production, Supply Chain, R&D, Sales and Marketing, Customer Relations, Quality Assurance, Finance, Human Resource, Audit -- all these departments collaborate with each other in order to achieve the organizational objectives in the most effective and cost-efficient way (General Motors, 2013).