Strategic Plan for General Motors Upper Mid Sedan Vehicle Segment Term Paper
- Length: 10 pages
- Subject: Transportation
- Type: Term Paper
- Paper: #86647186
Excerpt from Term Paper :
Strategic Plan for General Motors Upper Mid Sedan Vehicle Segment
To maintain and consolidate the status of the company as the number one auto manufacturer in the U.S. By employing the core values of continuous improvement, innovation and integrity and teamwork. To foster consumer enthusiasm and also enhance the team by giving them individual respect and responsibility.
Economic: Currently the U.S. economy is experiencing a slowdown. The buying power of the American consumers is shrinking and that is causing the sellers of goods to suffer. The automotive industry, being seller of high priced and high involvement product, is suffering as a result of this slowdown. The consumers are spending less and less on upgrading their cars or buying second hand cars. This will cause the sales of light vehicles in 2002 to go down from the 17 million units' barrier that has been achieved for the past three years (Levy, 2001). The increase in the unemployment rate has also seen lessening of interest in buying cars.
2. Technological: The minimalist approach that was predominant in the U.S. market during the oil crisis of the 1970's has gradually been phased out. Now the emphasis of the automakers is in providing sleek curves that would make their cars stand out. But looks are not everything in the mid sized sedan industry and many other factors are also being considered. Some automakers like Toyota emphasize on safety features while some manufacturers like Pontiac (GM) make performance their USP (unique selling point) (Adler, 1997).
B. Industry Environment:
1. Buyer Power: the buyer power in the car manufacturer's industry is very high as high volumes and high margins characterize the industry. Also the products that they make tend to be very much homogenized for a long while, with only minor variations introduced after introduction. This results in their achieving economies of scale and further decreasing their costs.
2. Competitive Rivalry: the rivalry in this industry is very high and each player has got a portfolio of cars that cater to specific markets. These markets invariably overlap and so one sees each different customer having to choose from a wide variety that is the sum total of the offering of each company. This means that the chance of substitution is very high. The sedan market also is very overpopulated as there are too many players vying for the same customer.
1. Technological Breakthroughs: The impact of technological breakthroughs tends to be huge on this particular industry. As a result this area presents a huge opportunity for all players. This may be a breakthrough in the product itself or the advancement can be in the production process that cuts down costs.
2. Changes in Government Regulations: The government regulations also present an area of opportunity for the carmakers and they should develop regulations in sync with the other countries so that the U.S. cars may be able to gain a firm foothold there as well. The GM cars are already above the government regulations so they have an edge here.
The U.S. auto industry has been facing threats from the foreign players since the 1970's oil crisis who offered a low priced more fuel efficient alternative (Phillips, 2000). Toyota is soon to eclipse Chrysler for the number three bestseller in the states. Other automakers like Honda, Nissan and Volkswagen are also rapidly gaining market share. Hyundai and BMW also seem to be increasing their market share. All this comes at a time when the big three are actually losing their shares (Brauer, 2002), so the threat is especially imminent.
Another threat has to do with the economic slowdown that has resulted in decrease in buyer power and shrinking the market size.
III. Operational Environment
A. Competition -- for the GM mid priced sedans, we see competitive threat in:
1. Dodge Intrepid: This car is marketed for its looks. However when it comes to quality of materials used and warmth, it falls short of the competition. (Lefkowitz, 2000). The Intrepid rely on its size and style as its main selling point. Overall the value and quality of the Intrepid is average. Only loyal consumers will insist and think that it is something of an exchange for the Toyota Camry. The standard power, good looks and room cannot be matched with those of Japanese cars. The only good features are that it is durable at an affordable rate. Noise and quality fall short in the Intrepid. Although most car lovers do not care for exterior but a family car require those features for it to compete with the other two midsize sedan competitors.
2. Ford Taurus: this car has improved but still does not compare to the Camry or Accord from the inside. Ford Taurus is a reliable family car. The car has good features, offers good value, handling and economy. With a solid track record for reliability an average American family relies on Taurus to for worthy driving. Although it is comparatively low in quality, finish and fit against the Toyota Camry, the bottom-line is Ford Taurus is only the comparable car against its Japanese counterpart. But it does offer good value for money and that is its main selling point (Lefkowitz, 2000).
3. Toyota Camry: Camry could be considered top of the line when compared to its American counterparts. The company maintains customer base despite resistance from the American consumer. The combination of innovation, technology and quality is hard to ignore. That is the reason why the Toyota Camry appeals to the masses from the young to the old. Also, its winning formula is its ability to sustain consistent standards. The car is reliable. Customers can expect the next in line will have the same attributes which is why customers are willing to buy Camry even when they are at the factory. Look wise the Camry is graceful, matching its interior quality.
B. Customer Profiles: the profile of the customers can be seen in many ways. The foreign brands like Toyota for example are more diversely sold across the globe as compared to the big 3. The customers of those also tend to be diverse. Their brands are positioned differently in different countries. If we look at GM, and in general the mid priced sedan section, it can be seen that the target consumer tends to be price conscious but still wants quality in what he/she purchases. The age bracket starts from the young families to even retirees (as is the case with the Camry) (Lefkowitz, 2001). These cars mostly enjoy high customer loyalty and repeat purchases are common. These purchases may be guided by emotion as usually these cars are bought by the new generations as well.
IV. Key Success Factors
A. Technology: GM has always tried to incorporate cutting edge technology in its cars and that has been the major factor in its success thus far. But lately the foreign cars have taken the top rung in this regard and the image of GM as a tech savvy company is deteriorating. But even then the technology that the company has employed has placed it at the top of the market.
B. Distribution System: their distribution has added immensely to its efficiency as the Electronic Dealership Systems and the Dealerships network continue to give it the edge. GM does not believe in global expansion. For a long time the company resisted globalization. That is the reason why it continued to see losses. Only recently that the company have ventured outside the domestic market to Europe and Asia with its alliance to the various companies of these regions. Not only had this expanded the scope of consumers but it also open up a new set of channel of distribution for its cars. Instead of exporting and transporting its cars at a higher price it can now introduce its upper sedan categories to the new market at a lower rate.
V. Company's Strengths and Weaknesses
A. Strengths: the GM mid priced sedans has got certain strengths that make the company stand out. They score high when it comes to adhering to the government regulations. Their financial reserves are huge and credit lines are also strong. The company is also shedding its staid image and actually taking some risks as compared to previous records. They have cut down on the brand management as they are actually focusing on improving their product rather than building the brand equity. (Welch, 2002). At GM, now the go-fast mentality has been employed rather than the play-it-safe mentality of before.
GM has become a giant in its industry and the recent slowdown of demand of its products has resulted in it having too many plants on its hands with less to produce. These plants reduce the overall efficiency of their system and also hurt the bottom line as the intangible costs such as depreciation etc. take their toll. The product lines that the company has are also spreading themselves too thin by…