Category: General Motors

Strategic Evaluation and SWOT Analysis of General Motors

Introduction

1.1 Introduction to Report

The following report is a strategic analysis of the American Company named called General Motor Company. This report contains the strategic analysis company’s profit and risk factors determining internal and external factors. This report is a research of the company’s overall information and the strategy to overcome their challenges and sustain in the market. There are three parts in this report, in the first part, it contains Introduction to strategy, Introduction to General Motors and a variety of Information about the company. In the second part of the report, it contains the analysis of General Motors through strategic position, strategic choices, strategic action macro-environmental factors, Porters Five forces analysis and Strategic Capabilities. In the last part, it contains SWOT analysis of the Company.

1.2 Introduction to strategic management

Strategic management is the study of a business and its environment. Alfred Chandler graduated from Harvard Business School defined strategy as the logical flow of the company which influence by the company’s goals and objectives. Chandler emphasizes that most of the companies try to make their business strategy by focusing on their goals and objectives. He also mentioned that many companies implement their business plans and strategic direction heavily referred through their set of company’s goals and objectives. Michael Porter was also graduated from Harvard, Porter focuses on deliberate choices, difference, and competition (Johnson et al. 2011).

The long-term direction of an organization depends upon the market and consumer the company serves along with delivering unique and extra services than of competitors. Mission, Vision, Objectives, Advantage and Scope are the marketing strategy statement which helps in leading companies towards the height of success. The mission statement helps in achieving the short terms goal for an organization. The vision statement tells what a company wants to achieve in long term similarly, the objectives tells the purpose of company’s establishment and wants to achievement in company period. Likewise, the scope determines the future of established company in the market and the advantage illustrates the differentiation in providing products and services to customers than of competitors. For this reason every companies needs to analyze their Competitors, Strength, Weakness, Opportunities and threats (Johnson et al. 2011).

The Corporate level strategy plays a huge role in making very important decisions like expanding their business into various geographic areas along with providing diverse goods and services in the market. Business level strategy is about competing within the same business level in terms of providing unique products and services than competitors. Operational level strategy determines utilizing the resources within the organization resources to meet the success for the business level and corporate level strategy (Johnson et al. 2011).

The exploring strategy model helps in understanding the organization into major 3 segments. Strategic position of an organization is concerned with the environment, capability, purpose and culture of an individual organization. Usually in Strategic position strength, weakness, purpose and environment opportunities and threats of an organization are concerned and to identify the impact PESTEL analysis is conducted (Johnson et al. 2011).

A strategic choice provides the option for strategy in terms of direction, where the company wants to move in the future and the method, by which strategy might be followed. Under strategic choices basic things like how business unit have to compete? Whom to include in a portfolio? Where the organization should compete internationally is concerned (Johnson et al. 2011).

Strategy in action is about implementing the strategy that has been formed. The fundamental questions that are usually asked in strategy in action are which strategy are suitable, acceptable, and feasible? How the organization should manage the necessary changes? Who should do what in different stages? Organized strategy must be in structure and systematic and both the top level managers and lower level employee must follow up the strategic plan, and it must be communicate within the organization (Johnson et al. 2011).

1.3 Introduction to company

General Motors Company is American automobile manufacturing Multinational Corporation that designs, manufactures, markets, and distributes vehicles and vehicle parts, and sells financial services Headquartered in Detroit, Michigan established on September 16, 1908 (General Motors 2019). General Motors Company was formed with an escrow account set up by R S McLaughlin for 15 years of Buick Motors in 1907 on September 16, 1908, in Flint, Michigan, as a holding company controlled by William C. Durant, owner of Buick. At the beginning of the 20th century, there were fewer than 8,000 automobiles in the US, and Durant had become a leading manufacturer of horse-drawn vehicles in Flint helped by his purchase of the Carriage Gear patent from the McLaughlin family in Canada (General Motors 2019). Mary Barra is Chairman and Chief Executive Officer of General Motors Company. General Motors made a sale of $147049.0M where Over 180,000 people are employed and Serving 6 continents (General Motors 2019).

GM is centered on strengthening core commercial enterprise of exceptional car, vans and crossovers, while also working to lead the transformation of non-public mobility through advanced technologies like connectivity, electrification, self sustaining riding and automobile sharing and also dedicated to turning in safer, better and greater sustainable approaches for humans to get around (General motors 2019). General Motors, its subsidiaries and its joint mission entities promotes vehicle and motors under Cadillac, Chevrolet, Baojun, Buick, GMC, Holden, Jiefang and Wulingbrands including other companies like OnStar, a global leader in vehicle safety and security services, Maven, its personal mobility brand, and Cruise, its self reliant automobile ride-sharing company (Chervolet 2019). General Motors annual revenue for 2018 was $147.049 billion, which was increased by 1% from $145.588 billion annual revenue of 2017 (Macrotrends 2019).

2. Strategic evaluation

2.1 Environment Analysis of General Motors

As per the macro-environment analysis of General Motors, they suffered politically and economically because the reductions come as the largest U.S. automaker undergoes a massive restructuring announced with the aid of CEO Mary Barra in November 2018. GM is halting manufacturing at five plants in North America and cutting 14,000 jobs as it realigns its group of workers and plants to produce more electric powered vehicles (Clifford and ferris 2019). Among the factories GM plans to close one in Lordstown, Ohio, where Chevrolet Cruze gets manufactured and getting closed because of poor sales of the model it manufactures (Olorunnipa and Sink 2018). Ohio is a imperative political battleground in presidential elections. In 2016, Lordstown, Ohio, helped deliver the presidency to Donald J. Trump, having a bet that he would fulfill his promise to retailer its auto industry (Tavernise 2019).

Being multinational automotive company General Motors enterprise delivered proper outcomes on the returned of greater pricing for the fiscal year and beats consensus expectations and suggested a revenue of $147 billion are making investments of 10 billion reais ($2.65 billion) in two of its Brazilian plants positioned in the country of brazil, Sao Paulo The two plants are placed in Sao Caetano do Sul and Sao Jose dos Campos and appoint 15,000 people, jobs that will be maintained as phase of the investment plan (Reuters 2019). GM are negotiating “feasibility conditions” to make investments 10 billion reais ($2.73 billion) in Brazil from 2020 to 2024, that new investments would depend on returning to profit and focuses on competitiveness that the enterprise is experiencing in order to make a sustainable future viable for our groups and the suited return to shareholders (Reuters 2019).

In the technology and innovation field, GM in china improving research and improvement of new materials, battery testing, concept auto design and the localization of international technologies. Advanced Technical Center will focus extra on new electricity vehicles, smart linked motors and advanced materials in an effort to meet Chinese customers. The technical core has developed a third-generation metal with more desirable strength, which helps an automobile minimize its weight with the aid of 20 % and a high-performance solid aluminum alloy, which has extensively accelerated ductility and tensile strength which is 40 % lighter than conventional aluminum alloy and A far off laser-welding technology was once also developed by way of the technical center which has accelerated the welding efficiency by using three to 4 instances and cut carbon dioxide emissions by using 50 percent (China daily 2019). Because of those circumstances and market segment General Motors sells 70% more cars in China than in the US (Business Insider 2017).

In order to maintain environment, General Motors has been creating technologies that have changed our world. General Motors creates and sales an electric vehicle to the world with Zero Crashes, Congestion and zero emission of co2 gas, and advancing its lineup of current vehicles while simultaneously investing in electrification, autonomy and offerings like Maven which means it can reduce the global warming and reduce in the pollution (General Motors 2019). GM aspires to decrease its carbon footprint by 77% of which is represented by using its international automobile fleet to zero, and toward that intention plans to introduce 20 new zero-emissions cars to world markets by using 2023(Forbes 2019). The impact that trash has on waterways, marine life, animals and humans on local, regional and world ranges as phase of the 2018 launch of the Keep Belle Isle Beautiful anti-littering campaign GM Partnering with 37 different volunteer groups, employees joined the Belle Isle Spring Clean-Up to remove 1,276 pounds of litter (General Motors 2019).

2.2 Porter’s five forces framework

Porter’s five forces framework helps in determining and identifying the attractiveness of an industry in major five factors which consist of threat of entry, threat of substitute, bargaining power of customers, bargaining power of supplier and competitive rivalry (Johnson et al 2011).

Analyzing the power of buyer of General Motors, there is a high power of consumers because the same categories of vehicles with similar prices are also provided by its competitors in which switching from one brand to another has become easier. The other competitors such as Volkswagen, Toyota, Daimler AG, ford, Honda, etc.are producing the vehicles on the same categories of SUV’s crossover, sport utility vehicles and ,a pick-up truck so Corvette (sport utility vehicles) sales in the U.S. have steadily declined each year for the reason that more than doubling with the introduction of the current-generation auto in 2014. Through the first six months of this year, Corvette sales have been down 5%. That places GM on pace to promote less than 20,000 units for a second-consecutive year and marks five-straight years of declining sales (CNBC 2019).

General Motors has a highly competitive rivalry with its competitors. General Motors made a sale of $147049.0M while Toyota Motor Corporation made a sale of $271165.07M, Volkswagen $266742.29M and Ford Motors Company of $160338.0M respectively thus, evaluating the result there is a big manufacturer chasing Toyota in term of revenues and sales soon, there is an intense competition (Statista 2019).

2.3 Strategic Capabilities of General Motors

As per the resources and capability analysis of General Motors, the company has assets of $75,293,000M and the human resources have reached 173,000. It has been used to maintain the quality and standard of the products the factories have been using fully automated equipment for production but the production line-up fully integrated AV manufacturing process is the best way to build safe and reliably performing self-driving vehicles is run by the staff. It helps to lessen the workload and higher efficiency in work (General Motors 2019).

General Motors capabilities depend upon the company strategy which is focusing on workforce improvement, using employee’s capabilities in its full potential and enhancing the competitive advantage. Research and Development is the main capability of the company. The company has a lot of the best expertise; good distribution channel of having in 190 396 facilities on six continents, a large amount of capital, have been contributing to the success of the organization (General Motors). The company produces different vehicle segment from low range up to luxury brands. The company has been doing great at innovation in designing, manufacturing, and sales that give a valuable product in term of cost and quality and to hold the strong foot on global market (General Motors 2019).

SWOT analysis

One of the strengths of General Motors is to constantly improving on the products in term of quality maintenance, efficiency, and flexibility. Research and development team is the biggest strength of Toyota because it gives value to the customer and tries to adapt to the changing technology. Besides that, it is producing safer vehicles, more environmentally friendly cars, and the automatic car has proved to be their main strength (BBC 2018). Besides, The Company has a huge amount of employees having 173,000 working on a daily basis and the strong brand image of the company has been created a long time back. The company strength also lies in the creativity of the employees as they are developing advanced technology (General Motor 2018).

General Motors Co is recalling 1.205 million pickup trucks and recreation utility vehicles worldwide due to issues with a temporary loss of power steering, switches shut unexpectedly, and cutting power to brakes. The recall covers sure 2015 Chevrolet, GMC and Cadillac pickup trucks and SUVs, and consists of about 1.02 million automobiles in the United States. The automaker has acquired reviews of 30 crashes and two injuries however no deaths linked to the recall. In 2017, GM had recalled here almost 800,000 pickup vehicles international because of the equal problem. General Motors might have drawback sometimes by the defective equipment, high-cost price, and conflict between both parties. Due to the strongholds of other auto mobile companies the company has been failing to sell its electric vehicles in a growing market (CNN 2019).

With the rapidly growing market of electric hybrid vehicles, General Motors has a chance to grab opportunities as the company holds a good brand image by selling the highest number of electric vehicles and gain the trust of people with its innovation and reliability and leans toward electrification and intelligent connectivity, the automaker said there are higher requirements for auto materials (Dandan 2019). Michelin and General Motors presented a new generation of airless wheel technology makes the Uptis Prototype eliminate flats and blowouts. This means Uptis offers significant potential for reducing the use of raw materials and waste, contributing to GM for a world with zero crashes, zero emissions and zero congestion (General Motors 2019).

The Company presently runs two manufacturing facilities in the country. India is anticipated to surpass Japan as the third largest auto market in the subsequent decade. General Motors has introduced that it plans to give up selling Chevrolet company automobiles in India at the give up of 2017. India has an extremely low vehicle penetration rate, with solely 32 vehicles per 1,000 human beings as of 2015. This potential that there is substantial room for the auto market to grow and, car sales could double from 3 million final year by 2025. However, there are costs to capture this growth that General Motors isn’t inclined to take on and possibly difficult to hold the market (Forbes 2017).

General Motors Company Closes Five Plants and Lays Off Thousands of Employees: Critical Analysis of the Issue

Company Profile

General Motors (GM) is an American multinational company that designs, manufactures, markets, and distributes vehicles and vehicle parts, and sells financial services to the public. Their mission is, “to earn customers for life by building brands that inspire passion and loyalty through not only breakthrough technologies but also by serving and improving the communities in which we live and work around the world” (Kissinger 2017). Their mission statement is very possible to achieve whereas their vision statement is more widespread. According to General Motors, their vision statement is, “to create a future of zero crashes, zero emissions, and zero congestion and we have committed ourselves to lead the way toward this future” (GM, 2019). With the use of General Motors’ knowledgeable team members and their understanding of the business, they offer products to dealers that meet their needs. General Motors Company provides all-around auto finance options to assist Chevrolet, Buick, GMC and Cadillac dealers to increase sales such as Prime Auto Loans, Non-Prime Auto Loans, and Commercial Vehicle Lending to name a few. There is also a Training & Development Program, Dealer Training, available for employees of the dealerships to develop their comprehension and victoriously offer the appropriate leasing or non-prime auto solutions for their customers. Existing competitors of General Motors include any car company but the most prominent ones include Toyota, Honda, and Ford. Their strategy includes Porter’s model that gives them a competitive advantage over all other car manufacturers. General Motors generates its competitive advantage through a low-cost strategy, and cost leadership is the main strategy used (Kissinger 2017). Corporate leaders within General Motors include Chairman and Chief Executive Officer Mary T. Barra and Senior Vice President & President and Chief Executive Officer Daniel E. Berce. They strive to make the best decisions for the company that helps their workers as well as their public customers.

Identifying the issue

General Motors plans to make its largest downsize since its bankruptcy in June of 2009 in New York which made General Motors the largest industrial bankruptcy in history. As of November 2018, there were plans of cutting 14,800 jobs in the United States and Canada along with ending production in several North American factories (Colias 2018). The “callous” decision was made by General Motors Chief Executive Mary Barra who says that she wants to act now in order to prepare for unforeseen changes in the United States car market. General Motors Company is not the only one to take effect from the changes in the automobile industry, but the automobile sales are declining in general. These changes are happening in the car market because of electric cars, no need for a vehicle due to uber, and fines against companies that don’t cut carbon monoxide emissions (Ewing 2019). She stated that ‘This is what we’re doing to transform the company. The industry is changing very rapidly” (Colias 2018). She justifies her decision by stating that acting now while the United States economy is strong and the company is in good health will help General Motors sustain their profits. In response to backlash from Trump, a Detroit auto-maker of GM claimed to have spent well around $6.6 billion on their United States plants over the course of 4 years and that this investment has ultimately created and preserved 17,600 jobs (Colias 2018). The cuts would affect the more educated portion of GM’s workforce such as the engineers, designers, and others within GM’s product-development operations (Colias 2018). GM is having to cut back on some models such as the ”Cruze compact car, the Volt and large sedans like the Impala, Buick LaCrosse and Cadillac CT6” (Colias 2018). GM’s Lordstown factory was working around the clock and even with all this production, GM hit this factory with layoffs to decrease some of GM’s expenses. Tommy Wolikow one of the employees laid off had been working for GM for nearly a decade and expressed that he hoped he could get his job back because his father retired with GM after working with the company for 46 years and he is so proud of this (Colias 2018). With U.S. vehicle sales on a strong run, surpassing $17 million GM still had to make these cuts, which should shed light on how much debt GM got themselves into (Colias 2018). The CEO Ms. Barra said, “the company wants to be more efficient in its core business of engineering and building cars while plowing more money into potential game-changing innovations” (Colias 2018). Giving some of the GM employees a boost that the company was not necessarily in a bad place but trying to reallocate their resources more efficiently. This could be so GM is ready to compete with any new technology that pops up for electric cars within the next couple of years. GM may be trying to get a head start in R&D for the future of their company (Colias 2018). This can be seen by GM spending around $1 billion a year on the autonomous-vehicle development program (Colias 2018). GM also hired 1,000 employees in San Francisco to work on the driverless-car they are working on (Colias 2018). Even though they are changing towards this type of vehicle, it comes with severe risks and consequences. Michael Wayland of Automotive News states, “Business cases for electrified and autonomous vehicles remain unproven, and nearly a decade after GM’s federally backed bankruptcy, the company again is becoming a political football” (Wayland 2018). Since they had to lay off so many people, GM reported receiving calls from dozens of large corporations expressing their interest in hiring the workers that were laid off (LaReau 2019). Because of this, they are outplacement services to help those affected gain a job. Gm is losing very good, well-educated employees just because they want an increase in a new and very specific technology, and this will hurt them in the long run. They must continue to plan their decisions in a strategic manner unless they want to end up where they were back in 2009.

Analysis and recommendation

The decision from General Motors CEO, Mary Barra, to change the production line has not only affected the company financially, but also their employees, lawmakers, and consumers. As of November 15, 2019, strikes at General Motors have decreased industrial production by 0.8% in October. Factories in the United States were using about 74.7% of their capacity in October; it has been down 4.1% since October of 2018 (Wiseman 2019). “Nearly 50,000 members of the United Auto Workers had walked off the job across the United States on Sept. 16, the first time a union had declared a nationwide strike against one of the Detroit automakers since 2007, and workers outside the General Motors factory in Flint, Michigan, seemed poised for a fight” (Kirkland 2019). They wanted what was right for not only the company but for themselves and their future.

In response to this issue, I would urge top-level management of General Motors to acknowledge their Corporate Social Responsibility, engaging in the empowerment of existing employees that are on strike due to alluded closings. It is important that they know and understand that the reason for their potential departure is not due to their inability or incapability to do their jobs; but, is due to the new products, markets and new production techniques that would ultimately make their current jobs obsolete within this particular organization. A notable con may be that workers will not be satisfied with just words of consolation. Some actions may need to be taken for them to feel a genuine sense of care from General Motors. In fact, it may be most beneficial for the greater good with the implementation of a Training & Development course that would teach the new techniques to existing workers. The con is that on average, an employer may spend anywhere between $900-$1,200 per employee on training & development (Freifield 2018). However, the investment in the Training & Development program should lead to a decrease in the need for external recruitment since they would be hiring from a pool of applicants within the firm, should the building stay up and running. However, if the end result is indeed the closing of the plant, the skills developed in the courses implemented should definitely position the workers well for new job opportunities outside of General Motors Company.

General Motors Company may increase the satisfaction of the company by having another program set up for the workers they are letting go. The program could be concluded of being able to write recommendation letters and a source to help the employees they are laying off to have another job. This action could lead consumers to believe the company cares for its own workers and even interest people to work for General Motors Company. If potential candidates realize that General Motors will lay off their workers in mass numbers it could easily reject the candidate from putting an application. This could also potentially set ease to the employees that are or could potentially be terminated because they do not have others putting in applications to add to their mass numbers being laid off. They do not want more employees entering their workforce at this exact moment to try and save their own jobs.

The conclusion for General Motors to end production in six of their cars is because they are trying to keep their customer base coming back. They came to realize that the models that they were going to end were Buick, Chevrolet, and Cadillac brands. North American customers wanted different types of styles of cars that were not popular anymore (Valdes-Dapena, 2018). Data are shown only the Cadillac XTS had sales that went up 15.9% and the models like Buick LaCrosse, Cadillac CT6, Chevrolet Cruze, Chevrolet Impala, and Chevrolet Volt were down 10.6%-26.5% (Valdes-Dapena, 2018).

Instead of closing five of their North American facilities and having many employees laid off, they should have the employees move with the changes within the company. This will allow General Motors to see within its company if they have any technicians for environmentally friendly cars that they are going to be producing in the future.

Another demand from consumers are environment friendly actions. In reference to Jackson Ewings findings, the change of the type of cars is also coming from an environmental standpoint. This being that pollution is rising and causing harm to planet earth. Research has shown that cars are at the top of the list for having an impact on global warming by releasing carbon dioxide. Although General Motors is considering what the customers want, they should consider the effect they are having on the people they have employed within the company.

General Motors should also consider the idea that the demand for cars has shrunk due to the companies that are floating around that provide rides and food delivery (Wayfast, Lift, Uber/Uber Eats). These companies are creating jobs and also decreasing the needs of other people to have their own cars. Maybe General Motors company could decide to find a way to partner with the companies that are creating a lesser need for vehicles. Ideas that if the company influences their employees to buy a car from general motors said employees could receive benefits such as free oil changes, free car inspections, discount on car being bought, and things of that nature. It could cost a lot of money, but may drive the demand for wanting a new car and it being from general motors. The employee will have to have a car to be employed at the said employer so the partnership could drive a high demand from its own employers.

Relationship to Course

General Motors has faced many issues within the last decade, and most of the major ones deal with key management concepts. Our issue focuses on the closing of several General Motors plants to focus on improving technology and driverless cars. As we learned in chapter one, they are trying to get a head start on competitive advantage in this side of the automobile industry (pg. 18-22). A competitive advantage in this specific area will help them be rare, valuable, inimitable, and non-substitutable. Innovation is the introduction of new goods and services, and they are trying to adapt to new technology before their competitors do. This directly related to the CEO, Mary Barra’s, business strategy. As we learned in chapter five a business strategy is the major actions by which an organization competes in a particular market or industry (pg 107). The business strategy helps achieve a competitive advantage because they think into the future about what will be the most effective and efficient in making the most profits in the long run. While trying to beat their competitors in this market comes at a large cost, it also costs thousands of loyal employees their jobs. GM laid off almost everyone in those five plants. In chapter eight we learned about employees being let go, whether it was fired or terminated (pg 187-188). For the most part, they temporarily laid off these employees until they can get their new and technologically advanced plants up and running. The problem is that this leaves these people without a job at the moment. And as stated above, many large corporations want these employees because they already have a hand in this kind of business. As we also learned about in chapter eight, outplacement is the process of helping dismissed people regain employment, and GM is trying to do just that (pg 188). Laying off thousands of people has its impacts on GM, and it is also helping its competitors by giving them their old employees for the time remaining. This decision to lay off thousands and close factories comes at a very large risk which we discussed in class during chapter five. Risk is defined as the state that exists when the probability of success is less than one hundred percent and losses may occur (pg 111). They are taking a very large risk by implementing this decision and it may backfire and prove to be worthless. The top-level managers discussed this issue for a long time before putting it into place, but there is a risk involved in any major decision. If a large loss does occur, then the blame will be taken out on those higher-level officials of the company. We discussed how they have a major role in decision making in chapter one of our textbook (pg 8). These top-level managers typically include the Chief Executive Office, Chief Financial Officer, president, and vice president. The decisions that these few people make influence the entire company as a whole, and they usually do not consult with any lower or middle-level officials before implementing these plans. They always hope for the best, but sometimes it ends up in a loss instead of a gain. Hopefully, the company will be able to turn around and be back in the market place like this event never occurred and they will not incur any major losses in years to follow. The decisions made by this company factor in many other topics discussed in our management textbook, but these few are the most prominently seen in our day to day lives.

Conclusion

In conclusion, General Motors made some very tough management decisions when implementing their plans to close several plants and lay off thousands. When making big decisions for a well-known company it is important for them to have indicating factors of what will put them near the top of demand. General Motors’s decision could cause them a high success rate in the long run if their driverless car technology takes off, but a large risk is involved in whether or not that will happen. Taking such a steep step could potentially harm their position in the market. However, Mary Barra, Chief Executive Officer, made some decisions that were risky and tough but does hope this will expand General Motors as a company. This being that they create a differentiated market for their consumers to choose from compared to their tough competitors. Even though thousands of people lost their jobs, they hope to turn the company around and regain success in just a few years. Time will tell whether or not this decision will make them millions or cause them to go into another major loss as they incurred back in 2009 with their large bankruptcy. Families across the globe hope that General Motors will get back on its own two feet as soon as possible and produce the best cars possible.

References

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Analytical Essay on General Motors Business Strategy

Introduction

General Motors is America’s largest car supplier and one of the world’s largest automotive companies. It designs, manufactures, markets, and distributes automotive and truck components, providing financial services with regional headquarters in Detroit’s Renaissance Centre. William C. Durant founded the company in 1908. General Motors is ranked number 10 in the Fortune 500 list of the biggest U.S. companies by total revenue in 2018. It produces vehicles in 37 countries. Chevrolet, Buick, GMC and Cadillac are its main car models. It is divided into three divisions: GM North America (GMNA), GM International Operations (GMIO) and GM Financial.

1 Old Vision Statement

“To create a future of zero crashes, zero emissions, and zero congestion, and we have committed ourselves to lead the way toward this future.” https://www.gm.com/our-company/about-gm.html

General Motors’ core values include “innovation, responsibility, teamwork, and continuous improvement.”

2 Revised Vision Statement

“to create an automotive (3) future of zero crashes, zero emissions, and zero congestion,(2) and we have committed ourselves to lead the way toward this future of global automotive customers (1) through innovation, responsibility, teamwork, and continuous improvement(4) .”

1. Customers
2. Customer needs
3. Product or services
4. Business values

3 Mission Statement

“to earn customers for life by building automotive brands(2) that inspire passion and loyalty(6,7,8) through not only breakthrough technologies(4) but also by serving and improving(5) the communities(1,9) in which we live and work around the world. (3)”

1. Customers
2. Product or services
3. Markets
4. Technology
5. Survival, growth, and profitability
6. Philosophy
7. Self-Concept
8. Public image
9. Employees

Primary Implications from EFEM (Opportunities)

The EFEM for GMs presents major opportunities for the company in the near future. Small vehicles segment has a higher potential in emerging global markets. The technically knowledgeable young generation, pressure towards emission-free mobility and ongoing adaption of autonomous vehicles, open new business avenues for growth. Increased connectivity and accessibility, AI, ML and investing in multiple technologies are consistent with GMs strategies.

Primary Implications from EFEM (Threats)

The General Motors EFEM also reveals major threats that it will face in the near future. A possible increase in import taxes would result in a drastic reduction in profits. Reducing electric vehicle manufacturing costs and adapting customers is already challenging. The predicted economic slowdown, US relations with other nations, and fuel price fluctuations are unfavorable to the industry.

4 The Competitive

Toyota

Toyota is a Japanese multinational manufacturer of automobiles. In 2017, Toyota is the largest manufacturer of vehicles and its corporate structure has more than 350,000 employees worldwide. As of 2018, Toyota was the world’s sixth largest revenue-based company. Toyota was the first car manufacturer in the world to produce more than 10 million vehicles per year. Toyota was Japan’s largest listed company by market capitalization as of July 2014.

Toyota is the world’s market leader in hybrid electric vehicle sales, and one of the largest companies to promote hybrid vehicle mass-market adoption around the globe. Toyota is also a leader in fuel-cell hydrogen vehicles. The 10 million milestones achieved in January 2017 were the cumulative global sales of Toyota and Lexus hybrid passenger car models. Its Prius family is the top-selling hybrid nameplate in the world with more than 6 million units sold worldwide in 2017.https://global.toyota/en/company/vision-and-philosophy/

4.1.1 Ford Motor Company

A global leader in the automotive industry headquartered in Dearborn, Mich., Ford Motor Company produces and distributes vehicles across six continents. Ford has manufactured operations globally, including in the United States, Canada, Mexico, China, India, the United Kingdom, Germany, Turkey, Brazil, Australia, Argentina, and South Africa. Ford also has an agreement of cooperation with the Russian automaker GAZ. It was founded and incorporated in 1903 by Henry Ford. The company’s car brands include Ford and Lincoln, with nearly 177,000 employees and 65 plants worldwide. The Ford Motor Credit Company provides financial services.

https://corporate.ford.com/company.html?gnav=footer-aboutford

4.2 Competitive Profile Matrix (CPM)

Primary Implications from CPM

According to Competitive Profile Matrix, General Motors ranked as the lowest among its two main rivals Ford and Toyota. The company’s low-ranking stems from falling behind in 6 out of 12 critical success factors and they are; Product Quality, Global Footprint Expansion, Financial Position, R&D, Automation/Technology and Top Management. However, company even ranks evenly with its competitors in areas such as Price Competitiveness, Hybrid/Fuel Efficient/Electric, Customer Loyalty, Reputation and Loyalty of Customers. Further, General Motors still dominates its two rivals over US Market Share.

Income Statement Overview

Compared to 2017, General Motors significantly improved its net income in 2018. This was primarily due to the elimination of discontinued operation loss (European Business) and lower taxation due to favorable tax law changes.

In 2018, however, operating profit (EBIT) decreased dramatically by 26% due to inefficiencies in the cost of the goods sold and increased operating costs. Other than that, there is a 14% increase in interest expenses.

4.3 Balance Sheet

General Motors increased its asset investment by 7 percent in 2018 compared to 2017. Its asset investments have increased primarily in long-term assets and cash and equivalents. On the other hand, by lower inventory levels, lower debt credit to debtors, and increased current liabilities, the company has deteriorated its working capital position. An increase in assets was primarily financed by increasing liabilities, hence the company’s exposure to debt financing increased by 9 percent in long-term debt and other current liabilities.

5 Historical Ratios

GM’s financial performance (ROA percent and ROE percent) increased in 2018. For 2018, however, both the GP margin and the margin of operating profit are adverse.

The company’s overall gearing rate has decreased as per the book values. However, the company’s debt servicing capacity has decreased significantly (22 to 14 times) due to higher interest commitments and deteriorated operating profit margin from 8% to 6%.

The position of working capital in 2018 was weak. Current insufficient assets shown by lower current ratio. In contrast, spending in property was not justified by producing enough revenue. (FA Change and TA Change)

6 Internal Factor Evaluation Matrix (IFE Matrix, IFEM)

Primary Implications from IFEM (Strengths)

General Motors ‘ main strength is its market share leadership. In addition, the main advantages for the organization are strengths such as presence in China, strong R&D and electrification strategies. Other than that, the company’s strengths are also addressed by global renewable energy initiatives, higher profit margins, comprehensive financial products, United Autoworkers, dealer network and fulfilment of financial goals.

Primary Implications from IFEM (Weaknesses)

General Motors ‘ high concentration in North America and China is a major weakness. In addition, the complexities of implementing autonomous vehicle strategy, poor marketing strategies, increased regulations and international threats, fragmented markets, increased labor costs, loss of supply chain, unsuitable customer mix and declining sales position have also undermined the competitive position of the business on the market.

7 Strategy Analysis

7.1 Strengths-Weaknesses-Opportunities-Threats Matrix (SWOT)

This matrix shows possible strategies for the company. The condition was a comprehensive analysis of internal and external factors and their influence on the company.

7.2 Boston Consulting Group Matrix (BCG)

General Motors is the US automotive industry’s market leader. Therefore, General Motors divisions; GMNA, GMI, and GM Financial are competing for BCG matrix comparison purposes with General Motors itself.

Cash cow: GMI with a high market share in low-growth markets. The goal should therefore be to produce further revenue without compromising the company’s long-term sustainability.

Stars: The market leadership position of both GMNA and GM Financial needs continued investment to maintain. Compared to other two divisions, they have higher ROI. The strategy should therefore be to finance subprime customers by investing more in GM Finance. This also increases the likelihood of GM Finance to become a cash cow for the organisation.

7.3 Internal-External Matrix (IE)

7.3.1 Internal-External Matrix by divisions

All GMNA and GMI are for all IFE and EFF with similar weighted scores. For these divisions, therefore, the prescription is to expand and develop. For these divisions, intensive (market penetration, market development, and product development) or integrative strategies (backward integration, forward integration, and horizontal integration) may be most suitable.

Nonetheless, for both EFE and High score for IFE, GM Financial has an average weighted ranking. Therefore, holding and maintaining the strategy should be. It is possible to consider market penetration and product development as possible solutions.

7.4 Strategic Position and Action Evaluation Matrix (SPACE)

Through ‘Aggressive Posture,’ all three General Motors divisions show that the company can make full use of internal resources to take advantage of opportunities for international market share. Because the company has high financial resources, high position in the market, has a competitive advantage and is part of an attractive sector, working under relatively stable environmental conditions.

As described in Michael Porter’s overall cost leadership generic strategy, this opens the way for cost leadership strategy. Cost Management is the approach aimed at making processes more effective and reducing costs wherever possible. It can come from productivity scale or range, overhead management, careful customer choice, automation, and standardization. The goal of cost leadership is to be at the market’s lowest cost. This will allow the company to survive a price war and reach the highest margins in the absence of a price war.

7.5 Grand Strategy Matrix (GRAND)

This matrix has two dimensions: competitive position and market growth. It is a useful tool for a company to develop alternative strategies. All four General Motors models (Crossovers, SUVs, Vehicles, and Trucks) fall into Quadrant 1 according to our study.

General Motors therefore has a relatively strong strategic position, focusing on established competitive advantage and taking advantage of it as long as it allows it. Through implementing strategies for product development, business development, market penetration, the organization should concentrate on existing markets. The organization has already embarked on similar diversification strategy to minimize the risk of limited lines of goods. The organization can still retain its emphasis and follow a vertical, backward and forward set of strategies to reduce the possible challenges that may occur in the future market place.

7.6 Quantitative Strategic Planning Matrix (QSPM)

The Quantitative Strategic Planning Matrix compares two different strategies that can be the best option for General Motors to pursue in the future. The first strategy involves General Motors improving its current products in the existing markets. The second strategy for the company focuses on entering into new markets with existing products. Both strategies are assigned a rating against each strength, weakness, opportunity, and the threat of the company on a scale of 1 (not attractive) to 4 (highly attractive). If the factors do not apply for the strategies, they are rated with 0. However, if one strategy was rated the other one needs a rating also.

General Motors should diversify with existing products into new markets instead of focusing on the markets of the US and China. The company should therefore invest outside of the US and China in new distribution channels and manufacturing facilities.

7.7 Strategy conclusion

General Motors has been analysed through different matrixes to understand and determine the most suitable strategy for its future success. Accordingly, BCG, IE, SPACE, Grand Strategy and QSPM matrix have been applied for our study.

As per BCG matrix, GMI considered as a “Cash Cow” and GMNA identified as a “Star” that is going to be a “Cash Cow”. Therefore, it is important to use strategies relevant to a “Cash Cow” for both divisions. That generates more sales without affecting stability of the business.

Further, IE matrix prescribes to grow and build all divisions as they have average scores. Strategies recommended were market penetration, market development, product development, and integrative strategies. Grand Strategy matrix also prescribes similar results as all products fall into “Quadrant 1”.

Moreover, SPACE matrix identifies General Motors’ ability to use its strength to capitalize on external opportunities.

Finally, QSPM matrix recommends a market development strategy instead of market penetration as a suitable strategy for growth.

8 Recommendations

Recommendations Overview

The recommendations for improvements were derived from the SWOT and QSPM, which contains the weighted factors to support the importance of the recommendation.

It is recommended to use strong R&D skills to develop products with multiple technologies, AI and IoT capabilities and enhance the company’s Electrification strategy. Further, same strategy can be strengthened through global presence to cater the global emission-free requirements. Further, without being cost-effective in electric vehicles it is impractical to gain sustainable market growth in future. Therefore, it is encouraging to invest in mass production whenever possible.

On the other hand, it is important for the company to diversify into other markets (excluding US and China) to minimize the risks associated with concentration. Further, there is a possible hike in import tariffs. As a prevention measure, flexibility of international manufacturing facilities will be improved and investments made in local facilities for import substitution of components that are imported currently.

Furthermore, emerge into new markets will not be possible unless the company partners with new distribution channels and networks. Developing strong branding among youth would be beneficial in the short-run as well as in long run.

9 Organizational Structure

General Motors Company has a regional divisional organizational structure. Characteristics of General Motors’ organizational structure:

1. Regional Segments (primary structural characteristic)
2. Business-Type Divisions
3. Corporate Functional Groups

Corporate Functional Groups. General Motors Company’s corporate structure has corporate functional groups as a secondary feature. The company uses these groups as a means to integrate all business operations.

1. Office of the CEO
2. North America
3. GM Financial
4. Global Manufacturing
5. Global Communications
6. Cadillac
7. South America
8. Legal and Public Policy
9. GM International
10. Tax and Audit Services
11. Information Technology
12. Europe
13. Global Human Resources
14. Global Product Development, Purchasing and Supply Chain
15. Finance and Treasury
16. Accounting Services
17. GM China

9.1 Improved organizational structure

The organizational structure of General Motors provides limited support for international brand consistency. This leads to a lack of focus on regional markets, resulting in reduced branding and marketing consistency on the global automotive market.

It is therefore important to develop a suitable marketing campaign which will establish consistency in the branding of General Motors. This recommendation may improve the strength of the company’s brand. For example, General Motors can build stronger brands that attract target customers around the world through a cohesive and effective marketing campaign.

10 Perceptual Map

The Perceptual Map focuses on four major vehicle categories and a comparison of their price (y-axis) and performance (x-axis). All products are in the high priced high-performance segment. From this, it should be very important for General Motors positioned close to each other are seen as similar to the relevant dimensions by the consumer.

11 EPS/EBIT Analysis

EPS/EBIT Analysis overview Viewing

General Motors ‘ EPS / EBIT Analysis can obtain the necessary capital from either stock or debt for the list of recommendations since the EPS for the two financing options has no difference under their EBIT ranges. In the future, the financing option for General Motors will be 60 to 40 debt versus stock financing, with more debt than stock to ensure that ownership is somewhat diluted and that interest on debt financing benefits from a tax shield.

Company Valuation overview

The Company Valuation section presents the value of General Motors with Ford included under the four methods of corporate valuation which are the net worth method, the net income method, the method of price-earnings ratio, and the method of outstanding shares with the average method included. General Motors is extremely strong in revenue with $14 billion relative to its biggest rival Ford. It is vital that the company undertakes to maintain and enhance its value in the future. Compared to its top competitor Ford, General Motors is extremely strong in its value by over $14 billion. Moving forward, it is vital that the company commits to maintaining and enhancing its value.

Projected Income Statement Overview

With regard to the projected statement of income, General Motors will be in a good financial position with the implementation of the list of recommendations over the next three years. Operating profit is projected to grow by more than $4 billion over the next three years as a result of high revenue growth of $11 billion from marketing, brand improvement to increase sales and cost efficiency. This is better than in 2017 through 2018, where revenue grew by just over $3 billion and operating profit fell by over $3 billion.

Projected Balance Sheet overview

Two key changes in the anticipated balance sheet are the $20 billion increase in cash and equivalents and the $20 billion retained earnings account over the next three years. Also, with General Motors pursuing a 40 percent equity to 60 percent debt ratio, $12 billion increase in liabilities and $20 billion in common stock over the next three years.

Projected Financial Statements Overview

Compared to historical ratios, General Motors will have better liquidation over the next 3 years from the high growth of the current and quick ratios. Also, equity will grow more compared to debt as seen from the drop of the Debt-to-Assets and Debt-to-Equity Ratio caused by the major increase in the retained earnings account. Most importantly, company has been able to improve Gross profit, Operating profit and more consistency with high Return on Assets and Return on Equity. The company will experience some drops in a few of the ratio metrics such as Total assets turnover, fixed assets turnover, Times Interest Earned from 2019 to 2021. All in all, the metrics reveal that General Motors can successfully expand its operations and improve its global presence, brands, products, and systems.

General Motors Transportation: Current State and Future Opportunities

General Motors has been pushing the limits of transportation and technology for over 100 years. Today, they are in the midst of a transportation revolution. And they have the ambition, the talent and the technology to realize the safer, better and more sustainable world they want. As an open, inclusive company, they also creating an environment where everyone feels welcomed and valued for who they are. One team, where all ideas are considered and heard, where everyone can contribute to their fullest potential, with a culture based in respect, integrity, accountability and equality. Their team brings wide-ranging perspectives and experiences to solving the complex transportation challenges of today and tomorrow.

At General Motors, innovation is their north star. As the first automotive company to mass-produce an affordable electric car, and the first to develop an electric starter and air bags, GM has always pushed the limits of engineering. GM is the only company with a fully integrated solution to produce self-driving vehicles at scale. They have committed to launch at least 20 new all-electric vehicles by 2023. 2.6 billion EV miles have been driven by drivers of five GM electrified models, including the Chevrolet Bolt EV.

The future depends on responsible stewardship of the earth, and they continually seek creative and innovative solutions for the environment. Their policies and technologies promote a cleaner planet from supply chain to manufacturing to the vehicles we put on the road. Across 14 recent new-vehicle launches, they have trimmed an average of 357 pounds per vehicle, saving 35 million gallons of gasoline and avoiding 312,000 metric tons of CO2 emissions per year. Today, their vehicle manufacturing process has the lowest environmental footprint in their history, thanks to steady progress toward achieving our 2020 operational commitments to reduce energy, carbon, water and waste intensity. They transformed how the world moved through the last century. And they’re determined to do it again as they redefine mobility to serve their customers and shareholders and solve societal challenges. Since GM has enrolled into U.S. Environmental Protection Agency (EPA) ENERGY STAR energy-reduction challenge in 2010, the company has already avoided over $237 million in energy costs and reduced 1.8 million metric tons of carbon emissions in 73 of its U.S. facilities. The company was able to cut its energy spending per vehicle produced by 5.6% in 2015 alone. GM’s environmental and sustainability policies didn’t stop there. The company has converted its global headquarters and an additional 122 facilities landfill-free and has committed to 100% renewable energy by 2050. It is also the only automaker in the world, which has signed ‘Climate Declaration’ to help solve climate change.

With new technical innovations, the possibility of new models within the automotive industry are endless. With the evolution of technology, the possibility to manufacture a product portfolio that includes more product variety which satisfies the different needs of consumers is extremely high. Another important strength of General Motors is its innovation, as the group is a forerunner in introducing products in the market and is far ahead of its competitors. Making great strides in the technological aspect of manufacturing doesn’t only allow General Motors to craft products in the benefits of its consumers but its product has set in motion a movement in which redefined the abilities of technology and its benefits to society.

General Motors should increase its capital expenditures to increase competitiveness and that is their goal. By reinvesting a higher amount of capitol back into the business GM will be able to increase their market share and stock value. By creating new models and adding in more advanced technology and fuel economy than competitors GM will be able to take customers from other brands and create new customers for life. The segments of the business that get the most capitol should be research and development. Understanding what the customer wants should be at the very core of this company. General Motors should increase their growth by acquiring other companies. As it stands General Motors over the last few years has been putting several small suppliers out of business. These suppliers have issues fulfilling orders for General Motor and often get charged for any downtime that results from a part shortage they cause. If General Motors were to take over their existing infrastructure and use their capitol to build all of their parts in house, they would avoid having a labor lost in wasting time and could quickly identify any supply related issues that needed to be resolved. GM should lower its debt in an effort to increase earnings and return on capital. General Motors has accrued more than enough debt after the collapse of 2008. Buying back shares should be at the forefront of the company’s goals. By taking back control of the company the capitol, the company gains can be allocated toward reinvestments in the company in order to get future returns. Some would argue GM got here mostly because the sales-killing recession came just as it was about to turn around. “This has nothing to do with the management of the company over the years”, – says David Cole, chairman of the Center for Automotive Research. “When you take sales down to Depression-era levels in a high-fixed-cost industry like this, it’s a killer” (Carty, 2016). GM should increase market spending. I would increase this marketing by a small amount but in the proper channels such as in the social media markets. General Motors should definitely make online marketing and international marketing increase more than print ads. Few people read print ads in today’s society. Newspapers are slowly fading away and hard copy books are becoming a thing of the past. Marketing online give GM the ability to not only showcase a few products like a print ad but to also give customers all of the information about all of their vehicles, old, new and, future concepts.

In concluding, General Motors will continue to see an increase in market share and profitability if they consider these recommendations. GM will be able to expand their business while cutting cost of labor expenses. By increasing research and development spending GM will see an increase in customer satisfaction and loyalty and will gain new customers, also increasing their market share. If General Motors does not begin to look at their company with a fresh set of eyes every year, then they may be well on their way back to the way things were in 2008.