Corporate And Business Level Strategies For GM Term Paper

Length: 6 pages Sources: 4 Subject: Business Type: Term Paper Paper: #97583351 Related Topics: Corporate Strategy, Publicly Traded Company, General Motors, Toyota
Excerpt from Term Paper :

Business Level and Corporate Level Strategies

Business-Level and Corporate-Level Strategies

General Motors business level and corporate level strategies

General Motors (GM) is a company based in the United States with its headquarters in Detroit, Michigan. GM is a publicly traded company that is listed on the New York Stock Exchange. GM designs, manufactures, distributes, and markets vehicle parts and vehicles (Laudon & Laudon, 2011). The company also sells financial services. GM acquired the title for the world's largest automaker in 2011. It managed to do this by achieving the highest number of unit sales in vehicles since its establishment. For 77 consecutive years, GM was able to lead the global automobile unit sales from 1931 to 2007. However, GM lost this position to Toyota with GM coming second. Toyota still dominates the market. The preference and needs of the customers are the focus of a company's core competencies. In a highly competitive business environment, meeting the needs of the consumer will allow the company to realize above average returns. Business level strategies outline several actions taken in order to ensure the company can provide value to its consumers. The strategies also allow the company to gain necessary competitive advantages through the utilization of its core competencies in service markets, or individual products. Business level strategy refers to the company's firm position in the industry in comparison to the competitors and the forces of competition.

Business level strategies

Cost leadership is the fundamental strategy employed by GM. In order for General Motors to compete in the automobile industry, GM had to employ this strategy effectively. Understanding that corporations mainly have price competition, cost leadership as a business strategy capitalizes on this factor. Using price competition, a company will have the opportunity to offer its services and goods at minimal prices, which would attract consumers in a specific market. GM has managed to employ this strategy and delivered its products at minimal prices compared to its major competitors. The company has enhanced its operational efficiencies by effectively allocating and utilizing it limited resources in the development and production of each automotive product. Employ such a methodology has allowed the company to sustain and achieve above average returns that offer the company an effective flow of its products at reduced cost.

Another strategy employed by the company is minimizing its number of brands within the market. This goes against the company's original approach it is mandatory to ensure the company maintains its sustainability. This approach goes against the cost leadership strategy, which makes it less sustainable. The company is selling or closing some of its non-core business brands with an aim of restructuring. The more brands an automobile company has, the more it has to spread its capital resources in order to build and market each brand. Spreading the resources too thinly results in brands suffering because no single brand would receive the required resources for marketing, production, and development.

Another critical business level strategy is product differentiation. GM has used this strategy by offering unique characteristics and features to its products. Offering value on its products has enabled the company to attract and retain customers, which has ensured the company not only relies upon price to gain competitive advantages. GM has managed to achieve all this using image management, rapid product innovation, high-quality features, advanced technological features, and high customer service. A simple analysis of the company's main brands reveals that Chevrolet is America's number one brand, and Cadillac is a luxury brand. GM creates value through reducing buyer's costs, raising buyer's performance, and sustainability. Reducing buyers' costs is achieved by offering quality products that have less breakdowns. Buyer performance is raised by increasing the buyer's enjoyment levels. Sustainability involves barrier creation through reputation and uniqueness perceptions.

Corporate level strategies

Corporate level strategies refer to the general strategy employed by a diversified company. The overall business level strategies that affect the entire company are what pertains to corporate level strategy. These strategies will involve the several corporations the company is competing with and the different ways the individual strategies are integrated and coordinated. The common corporate level strategies employed are financial performance, mergers and acquisitions, effective allocation of resources, and human resource management. In the current corporate environment influenced by globalization,...

...

With globalization, it has become quite easy for competitors to acquire similar technology and knowledge in an attempt to develop similar products. When analyzing the automobile industry, this fact becomes quite clear. Most of the manufacturers are developing similar products, which means that in such a competitive environment, market dominance is determined by human capital. The ability of a company to attract, retain, and optimally utilize its human capital will offer it the competitive edge it needs over its rivals (Aguinis, Joo, & Gottfredson, 2012).

Making use of an effective performance management has allowed GM to enhance its human resource. Performance management is a regular method for identifying, measuring, and developing the company's performance by focusing on its human workforce. The balanced scorecard developed and implemented by GM encompasses several organizational functions and operations. The balanced scorecard was introduced in all its operations with an aim of strengthening GM's strategic performance management. This has resulted in the different units understanding and focusing on how their capabilities and performance affects the company's overall business strategy (Freyssenet, 2011). Using such an effective performance management strategy has enabled the company to motivate its employees. The company has also achieved optimal performance in product delivery, which have offered GM the critical advantage it needs.

Competitive environment

The automobile industry is highly competitive, and it has a substantial number of market players globally. Toyota, Volkswagen, and Ford are the main competitors for GM. Toyota is the current market leader followed by GM in second, Volkswagen and Ford are third and fourth respectively. Therefore, GM's most significant competitor is Toyota. Toyota managed to take over from GM in 2008 after GM had been the market leader in terms of sales for 77 years. This clearly demonstrates that Toyota managed to outdo GM in terms of its strategies, and it has been doing so relentlessly. Taking over from a company that has been leading for that long is not an easy task, but Toyota demonstrated that using different business and corporate level strategies a company could manage to gain advantages over its competitors.

The business level strategies employed by Toyota are product differentiation, and cost leadership. Toyota has managed to combine these two strategies in order to gain competitive advantages over its rivals within the industry. Toyota has adopted several brands that have allowed it to distinguish its products from its competitors. According to Shimokawa (2010) Toyota has managed to create and maintain superior design and quality, which has been quite successful and has enabled Toyota to make a strong brand image. The image created has enabled customers to associate it with quality and long lasting cars. Having many different brands has given Toyota the opportunity to meet the needs of different customers. Product differentiation is achieved by giving customers a vehicle that would be suited for their particular need. The value offered by the company has increased and resulted in unique product features. GM's brand image has been deteriorating of late considering the number of recalls the company has done in the past one year. This has dented its image and has affected its stock price. Toyota has managed to maintain a good and clean image with little recalls and not all their vehicles are affected by the recalls.

The cost leadership strategy adopted by Toyota has allowed the company to develop and distribute vehicles at comparatively low prices, which has enabled the company to capture the low-end market. Many people consider this strategy as responsible for Toyota's rise to the top. In 2008, the global market was suffering from the financial crisis, which resulted in customers looking for low-cost vehicles. Many customers opted for Toyota models, and the customers have admired and liked the brand. Toyota has achieved cost leadership by supplier control, efficient distribution channels, lean production, and low costs for servicing. These elements have played a vital role in maintaining the leadership position it holds. The company is continuously innovating and looking for ways to reduce its production costs, which would translate to reduced selling price.

The corporate level strategies employed by Toyota include offensive and product development strategies. The automobile industry is driven by technology, which means product development is critical for all industry players. On an annual basis, Toyota has to announce and unveil new products or ideas. Therefore, the company is continuously looking for ways to improve in its products. Launching new models means the company will increase its product range and make further attempts to meets the needs of low-cost customers. The failure to launch new products will make its current models old and would result in loss of market share.…

Sources Used in Documents:

References

Aguinis, H., Joo, H., & Gottfredson, R.K. (2012). Performance management universals: Think globally and act locally. Business Horizons, 55(4), 385-392.

Freyssenet, M. (2011). The start of a second automobile revolution: corporate strategies and public policies. Economia e Politica Industriale.

Laudon, K.C., & Laudon, J.P. (2011). Essentials of management information systems. Upper Saddle River, NJ: Pearson.

Shimokawa, K. (2010). Japan and the global automotive industry. UPH, Shaftesbury Road: Cambridge University Press.


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