General Motors' value discipline and strategic alternatives for growth

General Motors Company and Alternatives to Realize Growth

Value discipline

According to management theorists Treacy and Wiersema, companies must always ask how they can provide value to their customers (Value Disciplines Model, 2011, Value-Based Management). Such value may be provided by operational excellence -- for example, a company that provides a high-quality product at a relatively low price, because of its ability to capitalize upon efficiency and brand marketing due to economies of scale. A company can also provide value to the customer through offering customer intimacy, or through product leadership by offering a unique type of item. However, due to the size of companies such as General Motors, its value discipline model must be based in its operational excellence. In the highly competitive market of car sales, offering low prices and/or high quality (and preferably both) by operating on an economy of scale is the only way to succeed.

Generic strategy

In the past, General Motors' strategy as a company focused upon generating a wide range of product lines, in contrast to Toyota's leaner format of offering only a few types of cars, most of which were based upon a fairly similar body prototype and marketing strategy. This is often cited as one of the reasons GM experienced such difficulty instituting quality control over its brands. Furthermore, despite the wide range of GM cars, there was relatively little diversity between the actual vehicles to justify GM's extensive variety of product offerings. GM has been pruning and getting rid of its least profitable brands as it returns to solvency as a company, after being 'bailed out' by the federal government.

However, GM's strategy remains focused on a broad market, rather than stresses a particular market segment. It is unlikely to desire to pursue either a broad or a narrow differentiation strategy, particularly given the fact that one of its most currently profitable market segments is in China. Wide-ranging appeal is required, but the products must be specifically tailored to meet each specific market's needs, particularly internationally, in terms of the cars' size and styles.

Recommend a strategy or combination of strategies

GM is currently pursuing a variety of strategies, attempting to become a leaner company. GM's elimination of underperforming or overlapping brands, while expanding its outreach of products beyond that of the trucks and large SUVs that made it so famous is at the core of its new approach. It has shed its Hummer line, because of the large vehicle's lack of profitability in recent years and the fact that the Hummer had come to symbolize the excesses of the bad, old GM.

GM's health internationally is considerably stronger than its financial health and cultural capital domestically. GM must thus continue to pursue a diversified strategy in the global marketplace, but try to provide cars for different market segments which are genuinely different. Smaller and more fuel-efficient cars like the Cruze are more popular abroad given the price of gas; the Volt is popular amongst environmental enthusiasts that can afford its high price tag. GM also continues to offer the types of trucks and SUVs which made it famous, and which are still quite popular amongst American consumers. GM must be a responsive organization, particularly as a global automaker, and deliver a diversified product range in the leanest manner possible.