General Motors (Automobile Industry) : Strategic Marketing Essay Sample

Executive summary

The following report includes the discussion about the profile of the company general motors. The report discusses about the general introduction of the company and the industry in which it operates. The report also includes the analysis of the opportunities and threats which are faced by the company in the current and coming period. The report also includes the analysis of the external factors which mainly includes the PEST analysis, porters five force analysis. The report also includes the internal analysis by using the value chain model and the analysis of the strengths and weakness of the company. The report includes the formulation of the strategy for the company in order to face the threats and challenges to be faced by the company and also the implementation of the strategy formulated. Finally a conclusion based on the analysis of the report.

Introduction and strategic profile

Introduction about the company

General Motors’ is an American based multinational organization generally known as GM. The company has its headquarters located at Detroit, Michigan. The company was the largest automaker in terms of the number of units produced in the year 2011. The company employs more than 202000 people in several nations, and has its operations in more than 157 countries. The company is among the leaders in the automobile and car manufacturing industry with more than 17 % share in the total auto market. The company sells its products in more than 170 countries. The company has its manufacturing operations in more than 43 nations and has an annual production of more than 83 lack unit of vehicles (General Motors History and Background Information 2012).

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The company manufactures a variety of vehicles which mainly includes the Opel, Chevrolet, Cadillac, Saturn, Vauxhall, Geo, Holden and many more. All these models of cars were operated by the company through the following brands i.e. Chevrolet, Buick, GMC, Cadillac, Opel, Holden and Vauxhall while the company also has two joint ventures in China i.e. SAIC-GM-Wuling Automobile and Shanghai GM. Being the innovator in the automotive sector the company has added several values to this sector since from its inception in the year 1908. In the year 1911 the company launched the self starter and also launched the front wheel suspension function in the year 1933 named as Knee-Action (General Motors To Reportedly Cut Capacity By Up To 25% and about 10K Jobs In Europe Amid Restructuring – Update 2009).
The company has a high research and development activities since its inception and has developed several new technologies in the automotive sector. The company follows several CSR practices in order to remain socially responsible towards the society. The company is also one of the largest manufacturers of trucks worldwide. The company research and development practices are focuses towards increasing the efficiency of vehicles and moving towards the electric based technology in order to reduce the harmful effects of fuel pollution and help in environmental conservation.

Introduction about the industry

The automobile industry includes the designing, development, manufacturing and marketing of the motor vehicles. This is one of the most vital sectors in terms of revenue generation on the earth. The automobile industry has vast growth and has huge potential to grow. This industry has employed a large part of population of the world. Tough this industry does not include the industries that are dedicated to the after sales services or delivery of the vehicle to the customers like repair, fuel filling stations and so on. There were more than 806 million cars and light trucks all around the world. These vehicles consume around more than 260 billion US gallons of gasoline and diesel fuel each year (Great Britain: Parliament: House of Commons: Business and Enterprise Committee 2009).
The automobile is treated as the prime source of transportation is several developing and developed nations. As per the analysis it has been analyzed that more than one third of the total automobile demand of the world consumption will be from the BRIC markets i.e. Brazil, Russia, India and China. Other major markets for the automobile sector include the Indonesia and Iran. The emerging markets of the automobile have more demand for the vehicles as compared to the established markets.
As per the J.D power study it can be said that the emerging markets accounts for more than 51 percent of the total sales of global light vehicles and their sales in the year 2010 and as per the study this trend is expected to increase by time (Great Britain: Parliament: House of Commons: Business and Enterprise Committee 2009). The automobile market is also one of the vital revenue generation industries for each nation. There is a high amount of sales of these products mostly in the emerging economies and the demand for the vehicles is also growing day by day due to the increase in the population and also increase in the disposable income in the developing countries like BRIC nations (Domansky 2006).

Opportunities and Threats

General Motors’ is the company which has a wide presence in US and has a wide presence in all around the world. The company has several opportunities available and also several threats which it faces.

Opportunities

There are several opportunities available to the company; the company has several emerging markets where it can expand its operations. The main opportunity which the company has is to expand its operations in India and china. Both are developing countries with vast population. In china there is a high expectation of the increase in the growth rate of the car market. Looki8ng at the growth rate of 2008 in china, i.e. 14 % growth from past performances there is a high expectation of growth in this country. There is also an expectation of the increase in the Indian car market. With the rise in the global truck market the company also has the opportunity to grow at a fast pace. There is an expectation of market volume by 21.56 million units worldwide by 2013. With the rise in the hybrid vehicles the company has a large opportunity to develop new hybrid products and market its current hybrid products. The company also has the opportunity to target the expected demand of more than 4.5 million hybrid vehicles by 2013 (Grant 2005).

Threats

There are several factors that create threat for the company operations. The continuing global recession in several economics have impacted the business of GM and are also creating a threat for future operations. With the global recession continuing for long the sales figure has already been affected which also has an impact on the future operations of the company. With the global recession the financial markets have also been impacted hard creating problem for the people to get easy finance for their automobile purchases and thus have a high impact ion the company operations. The weakness in the global automobile market is also one of the major threats for the company (Craig 2009). There is a high decrease in the requirement for the automobiles in the NAFTA region including Japan and Western Europe.
The high increase in the competition has also impacted the company operations at large. The company faces high threat from its competitors due to their advancement and development of new technologies by them. With the high increase in the number of automobile manufacturers like, Volkswagen, Ford Motor, Fiat Group Automobiles, Daimler, Honda Motor, AB Volvo, Hyundai Motor, Isuzu Motors, Nissan Motor, PACCAR, PSA Peugeot Citroen, Mazda Motor, Renault, Toyota Motor etc. All these companies are giving competition to the company at large and are also offering similar products and schemes.

Analysis

External analysis

All organizations and businesses operate in the changing world, and are subject to the forces which operate in the environment and are more powerful than they are which are beyond the control of the organizations. No business can survive in this world without interacting with the external environment. Just like the ship needs to be aware of the natural forces of the sea which it has o deal with and needs to be aware of similarly the business organizations are also subject to such external forces. Before framing any business strategy the external environment of the business needs to be taken care of.

PEST

Political factors: The political factor which impacts the company mainly includes the taxation policy, political constancy and trade limitations. All these factors have a high bearing on the success of the company. The company operates in several economies and have to keep in mind these factors that have a high bearing on the company operations in that nation. The withdrawal of the company operations from Europe reflects that the company was not able of reaps appropriate profits from that area and was also bounded by the government of that nation (Longenecker, Moore, Petty and Palich 2005).
Economical factors: The economic factors mainly include the financial condition of the economy. The GDP growth and the level of disposable income of the people of the nation are the vital factors that determine the level of spending that the people of the economy will make. The economic factors determine the strategy and the policy the organization will make in the nation it is operating. The economic factor also determines the level of growth of the company in the coming period. The economic factors makes the company more and more rely on it and make it compelled to make strategy as per the economic condition of the area it is operating in (Spulber 2004).
Social factors: There are several social aspects which the organization must keep in view while framing its policies and strategies. The organization must keep a watch on the social factors in the areas it is operating as the company operates in several nations worldwide, so it needs to keep a watch on the social factors of each area and formulate policies as per them. Social factors impact the operationality of the organizations at large. Social factors include the cultural values, rituals, religion etc. of people dealing with the company and also of the employees of the company. The company must keep a watch on its actions that must not hurt such issues (Stahl and Grigsby 1997).
Technological factors: technology is changing from time to time and thus has a major impact on the operations of the company. The changes in the automobile technology and advancement in the technology provokes company to innovate newer technology in order to meet the demand of the market and their expectations. The change in the technology makes the organization to do more and more research and development in order to provide the customers with the advanced and updated technology. The change in technology with the rapid passé brings in problems for the company and makes the company existing products obsolete (Wilson and Gilligan 2005).

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Porters five force model

Threat of New Entrants: The Company faces low rate of threat from the new entrants due to the high investment requirement in the industry. The company also faces low threat of new entrant due to the slow and slugging state of economies. There is a wide choice available to customers make it a small scope available for the new entrants. The industry also requires high fixed costs and constant research and development activities which prevents the new entrants to enter the industry.
Bargaining Power of Suppliers: The suppliers have a lower bargaining power with respect to general motors. This is because the suppliers rely on the vehicle makers for their sales they cannot make the vehicles themselves. The raw material provided by the suppliers was highly commoditized for the company. The suppliers do not possess certain powers to bargain with the company due to the company large size of operations.
Bargaining Power of Buyers: The bargaining power of the buyers is relatively low for the company, as the buyers have lower level of options available in US. As there are millions of customers no customers is that large to influence the operations of the company. The customers are also not in the condition to manufacture the car themselves.
Threat of substitute Products: The Company faces high threat of substitute products. There are several options that the consumers have. As there are several players in the market who are selling alike products which General Motors’ provide. There are a large number of substitutes available to companies and thus the company must keep a watch on its substitute product actions.
Competitive Rivalry: The Company faces high amount of rivalry from its competitors. As there are high number of players in this industry and there is a lower level of growth in the industry and the market players are stuck in it so every company provides a tough competition to one another in order to grab the existing level of customer’s base.

Internal analysis

Internal analysis can e said to be as the analysis of the strengths and weaknesses of the organization that mainly give the organization an advantage and disadvantage in meeting its goals and missions. The strengths give rise to the competencies of the company and weakness includes the drawbacks which resists the company in achieving the goals. Internal analysis includes the analysis of the value chain of the company which provides a details analysis of the company I terms of its processes and activities. The internal analysis includes the analysis of the assets employed by the organizations in order to attain the goals and objectives of the company in long term.

Value chain analysis

The value chain analysis includes the sequence of activities that are necessary for the organization to create the product, and provide it to its customers along with the post sales services. The value chain of General Motors includes the primary activities and the support activities. The primary activities of the company mainly include the activities like logistics, product development activities, and marketing and brand portfolio management and dealer support and customers services. All these activities make the company operational. The logistic service of the company is integrated into the different purchasing organizations and also into different distribution channel (Thompson 2001).
The product development activity of the company includes the successful engineering and continuous product development this also includes the standardized computer designing system. The market and brand portfolio management activity of the organization includes the repositioning of some of its brands and pricing of the products, development of new brand etc. The next primary activity is dealer support and the customer service. This is one of the most vital primary activities in order to increase the dealer and customer’s satisfaction.

Value chain of General Motors
The support activity of the company includes the information system which helps the company to transmit information within and outside the organization. This requires the development of the web based channel of communication in the organization. The second support activity in the value chain is the development of the human resource. This includes the costs which are required to improve the skills of the employees in order to improve the productivity. The third support activity includes the technological support required by the organization. Pioneering advancement in the technology is required by the organization in order to remain competitive. Finally the support activity in the organizational value chain includes the leadership activity. The leadership plays a vital role in the development of the organization and helps the company to stay ahead for long term (Gorchels, Marien and West 2004).

Strengths and Weakness

Strengths

There are several strengths of the company as the company is at the renowned position and has been known by the masses for its large scale of operations. the company also has the strength of having several number of brands mainly in terms of the other companies held by the organization. The company also has the strength of positive past record of high research and development activities and also the potential to expand in the technological upfront. The company also has the strength of committed work force. The company is also highly committed towards its functioning and shouldering its responsibility towards the shareholders, customers and employees (Domansky 2006). The company also has the strength of large scale production and having a diversified portfolio of brands in several nations. The strength of company also includes the high profitability of company from long term and making the financial position of company strong even in the adverse market and economic condition.

Weakness

The major weakness of the company in the current period is its decreasing market share in the automobile market due to the high increasing competition and also due to the company poor quality products which has also weakened the company image. The company also has a bureaucratic organization culture where mostly the top management has the powers and the employees were mostly treated as the real assets of the company. The company strategic planning of the human resource of the company mainly emphasizes on the efficient use of the workers or human resource where the empowerment of the workers highly impacts the quality, productivity and services of the company (Hill and Jones 2012).
The company also has the weakness of the rigid organizational culture having high resistance to change and lead to increase in the inefficiencies within the organization. The company has its main emphasis on the development of the SUV products and not on the development of the allied vehicles which is the demand of the current market. The company also fails to conduct the timely researches and this is one of the main reasons of making the company weak.

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Strategy Formulation

Strategic alternatives are options that are available to the company that it can use to resolve and overcome the threats and avail the strategic opportunity it is having. The main aim of this section is to focus on the options available to the company using which the company can overcome critical situations. There are three options available to the company this mainly includes:

Buying over the competitor:

The Company can adopt the strategy of buying over its competitors which is giving high competition to it. This will help the company to cover large market space and increase its operations and sales figure. The most strategic action of the company will be to merge with some company regarding its operations and manufacturing process in order to cut the cost of production and decrease its manufacturing cost and thus face the failing economic conditions. The buying of a company will help the company increasing its decreasing market share as well. The company can also launch or use the brand value of the taken over companies in order to increase its sales and customers base (Griffin 2011).

Price reductions:

This is also one of the strategic move which the company can take I order to bead the adverse economic condition of the people and provide the customers with cheaper buying options. This is one of the most vital strategic option which the company can adopt in order to face the adverse economic condition which is impacting the decrease in the sales of the company vehicles (Hill and Jones 2012).

Strategic alliances:

In order to face the competition which has become a threat for the company in long term the company can also opt for some strategic alliances related to the research and development activities and also for some cost advantage. The company by the way of strategic alliance can add to its capability and can decrease its cost associated with research and also related to its production activities. The company can also add to its marketability and can also decrease its costing and prices in the market by the way of these strategic alliances. This is one of the most vital measure available to the company to face the over increasing competition.

Strategy implementation

For the proper implementation of the strategy stated above an action plan is vital to be defined. The implementation of the strategy will include the cost benefit analysis. From the analysis of the strategies stated above it can be said that the company can easily benefit from the adopting of these strategies. As there will be low cost and cost saving by adoption of the strategic alliances and also by the buying over of any competitor. The sales of the company will also be increased and the assets of the company will be increased by the adoption of the strategic alliance and takeover of the company.

Marketing Plan:

The marketing plan of the company consist of four P’s i.e. product, price , place and promotion.
Product: The product of the company will be promoted by the adoption of the taking over of some competitor firm. As the company product can also be sold using the network of the taken over company.  The product list will also be increased as the company which is taken over will also be sold now under the banner of the company name and thus will benefit the company in long term (Griffin 2011).
Price: The price is one of the vital parts of the strategy implementation of the company. The reduction of the price strategy will also add to the company sales as due to the global recession the buying capacity of the people have decreased and thus a reduction in prices will help the customers to opt for vehicles and thus will increase the sales of the company (Hill and Jones 2012).
Place: with the adoption of the strategic alliance and the takeover strategy the company can also take the benefit of the place factor. As by take over the company can also tap the market where it was not operating earlier and the competitor was operating and can develop its market share in the areas where it was facing high competition from the competitor (Griffin 2011).
Promotion: By the adoption of the strategic alliance the company can easily promote its products by using the alliance resources and also by the adoption of the marketing activities of the alliance platform. The promotion of the company can also take place when the company uses the price reduction strategy.

Conclusion

From the analysis of the above report it can be concluded that there are several factors that the company needs to take care of. The company has several strengths which makes it a large market player with large market share. It can be concluded that the company has a high brand name in all around the world and have operations in several nations. The company also faces high competition from global players which makes the company face several complications. It can also be concluded that the company needs to adopt some strategies which will aid the company in improving the adverse situation it is facing.
It can also be concluded that the company has a good value chain using which the company performs in best manner. The company needs to adopt some strategies like the takeover of some competitor, or price reduction, or the adoption of some strategic alliance in order to face the threat it is having in this competitive world. It can also be concluded that the company can opt for any of the three strategies and also adopt some strategies which will help the company in increasing its market shares like the takeover or merger.

References

Craig, 2009. Gm Board Decides to Retain Opel/Vauxhall. [Online]. Available at: http://europeanmotornews.com/2009/11/04/gm-board-decides-to-retain-opelvauxhall/ [Accessed August 31, 2012].
Domansky, L.R. 2006. Automobile Industry: Current Issues. Nova Publishers.
General Motors History and Background Information. 2012. [Online]. Available at: http://www.acarplace.com/brands/gm.html [Accessed August 31, 2012].
General Motors To Reportedly Cut Capacity By Up To 25% and about 10K Jobs In Europe Amid Restructuring – Update. 2009. [Online]. Available at: http://rttnews.com/ArticleView.aspx?Id=1133122 [Accessed August 31, 2012].
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Hill, C.W.L. and Jones, G.R. 2012. Strategic Management Theory: An Integrated Approach. Cengage Learning.
Griffin, R.W. 2011. Fundamentals of Management. Cengage Learning.