Law has influenced industry environment

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.



According to the Landry (1978), the implementation of the law and the government have influence this industry from the 1960s. Most of the regulation concerned with the environment and consumer's conscious to the safer automobile. In 1970s, oil crisis forces the implementation of  Energy Policy and Conservation Act of 1975 it places limitation on mileage per gallon for all automobile. All have been standardized to 20 mpg by 1980 model, 27.5 mpg for 1985 model.


The vehicle industry has very huge influences economy to each state. According to the studies these industries use the most computer chips, the aluminium, copper, steel, plastic, vinyl and the rubber(Gale 2004). The research also showed that every worker in the vehicle industry has seven other jobs created in other industries. These industries cause the ethanol including anything from the aluminium.


Nowadays the society judges you to drive automobile's type. The manufacturer sees the society thoroughly; those impressive designs stand a strong position in the current cultural.


Technology has big impact on promoting and stimulation the sales by influences or effect of the advertising and the internet. Technology also makes the automobile with more function such as usage of Global Positioning System (GPS), Tire- Pressure Monitoring, Blind Spot Detection and Etc. The technology is making the automobile looks much safer.

External Near Environment

Porter Five Forces

Competitive Rivalry

In the automobile industry, there are a lot of foreign competitors such as Nissan, Bentley, Toyota, Honda, Mazda, Damiler Chrysler, Ford, Lotus, Isuzu, and etc in the 20th century. Damiler Chrysler is the main competitors among others because Damiler Chrysler is number two automobile manufacturers. The reason behind is because Damiler Chrysler comprises of different brands vehicles such as Dodges, Jeep, Chrysler, and Mercedes Benz with a good reputation product gain very strong strength in the market strategies. The automobile industry keep compared to one another to choose which of the cars the better and safety on the road. In order to gain a 'seat' in the market share it is necessary to attract the consumer through the advertising and buy the vehicles. The entrants Pricing arrangement has to be made in order to compete with other competitors. Yet it gains a lower profit. The higher competitive rivalry more strong threat to profits.

Potential Entrants

capital requirement into the industry are high and legal barriers are low,more importantly due to the popularity of globalization and free trade policies ( Hill,2005),the threat of new Entrants still high albeit the competitors have to balance the economics of scale on one side and have to create high entry barriers through their high levels of advertising.Yet it has to bear in mind that foreign entrants might find alternative access to distribution channels by searching direct car dealers.

Threats of Substitutes

Substitution plays a great role in threatening the profitability of industry. For illustration, consumer would like to make comparison between the products, in terms of the varieties available, more commonly the function, designs, as well as the price. The functions such as using technology to control the seats, RPM using electronic system, save petrol, Global Positioning System (GPS), vehicles stability, Anti Brake System (ABS), and etc. The designs should be more fashionable and attract the consumer. The most likely key factors would depend on the price and design. However, all these are subject to different class of people. It will not cause any threatening effect for those without any budget difficulties.

Bargaining Power Buyers

The buyer strength mentioned that the respective customer's ability negotiations withdraw the profit from the seller the price. The respective consumer has the authority to influence the price in the specific dealership, but in manufacturer strength. The customer can without any difficulty and with little cost, change to other auto dealers. In addition, the customer can enter the market information to find out the value and price from the technology which is Internet can enhances them to negotiate. But, when you have many respective customers, represents comprehensive sales in small proportion to everyone, they will arrange ability which a manufacturer spot bargains back and forth and creates to the industrial profit weak threat.

Bargaining Power Supplier

The supplier can control the price or lower the quality of the goods. Price and quality have huge influence on the automobile industry. Automobile manufacturer request input work, components, raw material and service. These input's expense possibly has to the advantageous important function. Whether the supplier is weak, moderate or strong depends on their bargain ability i.e. how many bargains power that they possibly to exert. The automobile manufacturer has seems exerts ability big supplier network which little bargaining authority.

Internal Analysis

Comparative analysis

Damiler Chrysler is top two in the automobile manufacturer. Damiler Chrysler come with many strength of well known branded vehicles that it can be recognize in the global such as Mercedes Benz, Jeep, Dodge and Chrysler.

Ford Motor Company a global company that with two core businesses which are automotive and financial services. The automotive that Ford Motor consists are the designs, safety on road, functions, sales and services of the trucks, cars and services parts. Ford has been aim for the cutting costs to increase the sales more than its competitors.


At present GM already had among a prominent position in the market side and the high quality passenger vehicle. GM models are Chevrolet Aveo, Buick Excelle, GMC, Saturn and Hummer. Hummer is the world best trucks. Buick has the reputation for morality and leadership.

Core competence

General Motors leadership is the innovation of Automobile industry. According to the Rubenstein (1992) this is the driving force behind its $190 above turnover. General Motors gains itself in the service advertisement technology using the innovation in the automobile industry in a dominant position, since 1908. In 1911, it has generalized; the design and the first commercialization automatic self starting engine. In 1926 then, its product Cadillac was the pioneer who devised a nationwide service strategy. Permits in 1996 General Motors the vehicle which equips is tracked in the emergency or in larceny's situation and permits the passenger and the OnStar personnel communicates OnStar which introduced the satellite technology. Other new automobile concept including compact car for example Chevy Aveo. In hybrid vehicle situation, however, General Motors is unable to follow to the market requirement stride width. However to some extent they failed to provide customer value thus they are highly competitive disadvantaged.


(i) The organisational assets

      i.e reputation of the company is excellent. It is show that in U.S. October 2009 SAAR of 10.6 million is a 13-percent improvement compared to last month, but is the second-lowest SAAR for October since the early 1980s( The increase of the sales proved that it is enough said to be reputatitive and trustworthiness. Further evidence can be shown in Chinese market and etc.

(ii) Human assets

                  Huge amount of employees were employed by GM the standard of skill and knowledge required are high. Therefore, it can produce the high level of productivity and efficiency .

(iii)Physical Assets

      Globalization provides advantageous position; GM industry can be found in major country such as China, Italy, Canada, U.S and etc. Moreover their factory are well equipped in order to controlled and enhance product's qualitative and quantitative.



Global Distribution

GM today has manufacturing operations in 32 countries and distributed 192 countries( With the globalization presence automakers try to drive down the cost by sharing the cost via global network or joint ventures with other companies. (Harbour ,2001) Although the market remains dominate by the small vehicle and provides only small margin. However, with the global network GM still can survive in Europe business and satisfy its customer.

Huge investment

With the largest amount of the annual sales at USD$ 185, 524 million stand roughly 15% of the global market (company press release) which enable huge investment R&D department. They spend close to USD$ 2.12billion on advertising in United States alone. This has reached customer through the first internet coupon worth USD$500 towards a Buick Regal (Halliday 1999).

Variety of brand names and strong name portfolio

GM as the automotive leader for the last century because its provide wide variety of quality brand names which targeted to all market such as Chevrolet, GMC, Buick, Saturn, Hummer etc

Onstar Satellite Technology

With over 3 million subscribers and its all on GM vehicles since 1996. The high technology technique allows the vehicles to be track in case of emergency or theft.


Cost of Retirement

Regarded as main weakness for the last century. They spent on the large proportion of their earnings of health care for their retirees as compared with new automakers. Over the years, GM use liberal approach to attract their workers to its plants (Hakim 2004). But no prediction towards  the cost of retirement.

Heavy Reliance on US Market

As mentioned above, USD$2.12 billion have been spend on advertising, its seems too dependent on US market. They cannot rely solely on financing to gain profit especially they tends to compete with strong competitors who are growing rapidly.

Government of China

Although GM have a huge market share in China but it is not inherently in Chinese firm. Therefore, there is some possibility that might be left out of certain legislation such as special promotion and tax breaks.


Low Interest Rates

When the interest Rates go down, it can stimulate the sales immediately.

Global Expansion

In recent times Chinese market growing rapidly by prove of the increase of sales. It shows that they need to be focus more on the foreign market. GM is at very good advantaged position due to its good reputation and trustworthiness. The same theory applies to US market as well; there is high possibility turn up to positive direction.

Variety of Models and Styles

In order to cope with tremendous change of trends it is necessary in an attempt to provide more varieties of vehicles.


Increase Price Fuels

GM is the large producer of trucks and SUV, decreased of sales subject mainly to lack of fuel efficiency Thereby create the opportunity for development of more hybrid or fuel efficient vehicles.

Price War

If GM compete directly with Chinese or Korean company,their unstable financial status and lack of experience in low pricing impede GM from succeed.

Pension Payouts

As mentioned above, employees benefited from generous contract provided by GM by way of pension payouts and healthcare. Nonetheless this caused GM  experiencing the large financial hits.

Key strategies Issues

By references to difficulties that GM faced, that is some threats can turns into positive ways. To  avoid losing any market share, they build up E-business strategy and technology for the Asian automotive industry. It is essential for GM try to turn threats into opportunity improvement and development. GM is planning to switch from light trucks to cars there is no plan on letting the light trucks production to slip away. The president of GM North America, Gary Cowger, believe that light trucks still have a huge market but the America is changing to more economic commercial car(Guilford,2003). GM tends to do more designated cars, more likely creature comforts and style. This plan occasionally compatible with the GM's slogan i.e. ' a car for every purse and purpose' ( Greensberg2003). The Onstar technology which GM asserted, they started to licensing these technology in order to prevent the possibility of other companies might erodes its brand name. The tension between maintain the good employment relationship and cutting down the healthcare costs that payable to employee. Some sought of incentives and benefits are necessary in order to improve the employee satisfaction, albeit costly and time consuming, but in a long term process, increase worker satisfaction have a overall positive effect on corporation.

Question 3

Potential options that available to GM are as follow :

  1. Market development
  2. Market Penetration
  3. Product development
  4. Restructuring
  5. Retrenchment
  6. Liquidation

GM should launch product development follow by market development, liquidation and restructuring. The reason behind is GM has to develop or innovate a new hybrid vehicles in order to compete with other competitors,but it has to be a new products marketed to existing customers.For illustration,Cadillac XTS Platinum Concept,this new trend compatible with the feeling of spaciousness which GM targeted conventionally,at the meantime it allows the firm to stay with the trend patterns as well,return back to 'Cadillac',it designated in a way that more emphasis on art side of Art & science.

GM must also re-evaluate the target market which they intends to approach,so far they keep the outlook conventionally for automobiles,but the trend is changing all the time.General Motors is in need of consider further what is the next position they focuses on and what market they targeted since what they did conventionally is no longer in the favor of company.What possible way for GM to do is to create a more high technology vehicles,which has been heard in rumors from the competitors( it can be Ford Motor Company for example).In a case that GM able to produce a 'high-tech' vehicles prior to Ford Motor Company has the opportunity to hit the market with theirs GM would then be a leader in these competition.

Eventually emphasis on restructuring.GM took a huge hit in few years and wants to get the reputation and frame to the top list.This can only be be succeed if there is severe change.In restructuring the product,the first task is about the development pace as well as retrenchment on employees.This key issue causes financial difficulties as the company is growing in size instead of profit.The company can be re-evaluated in different approach,since GM remained as a leader over past few years,it is high possibility that GM would be able to overcome the above issues.

Question 4

It is submitted that Carl-Peter forster is leaving post at Opel Europe,Friday November 6th, 2009. He as a GM group vice president and get rid of as head of European operations. With his leaving, it is necessary seek for a new CEO whom places a significant role in Opel,Europe. Carl-Peter has made The Opel brand tremendous progress through leadership over the past several years (CEO Henderson).  Most of the stakeholders feel disappointed with the leaving post of Carl-Peter because his contribution are to be seen in great strides in design, quality and technology and the launch of truly world-class products. Although the CEO Henderson asserted that no further management changes unless and until the new search of the CEO lead Opel Europe commences. The level of the confidence inevitably lose to a certain extend. The new CEO haven't been located so the stakeholders lack of confidence without CEO lead the Opel,Europe GM.


Table 1: SWOT analysis for GM



(1) global distribution

(2) huge investment

(3) onstar satellite technology

(4) variety of brand names and

strong name portfolio

(1) cost of retirement

(2) heavy reliance

(3) china government



(1) low interest rate

(2) global expansion

(3) variety of models and styles

(1) increase price fuels

(2) price war

(3) pension payouts

Table2:The ANSOFF matrix

- a good basic tool for analysing and planning where an organisation may go, and assessing the risk



Low risk
Market extension
More of the same to existing customers - concentrate on strengthening cost
efficiency, productivity and
customer service

Medium risk
Product/service development
Need to be clear about resource implications


Medium risk
Market penetration
New customers?

High risk
Higher risk and significant resource implications




Table 3

Top Seller Models in China In 2008

(Source: China Car Times [12])

Subcompact cars

Car Model


Chery QQ


Tianjin Xia li


Chevrolet Aveo Sedan


Geely freedom cruiser


Vw Polo


Compact car

Car Model


Vw jetta


Buick Excelle


Toyota corolla


Nissa tiida


BYD F3 and FR3




Mid size car


Car Model


Vw Santana


Honda accord


Toyota camry


Mazda 6


Vq passat





Full Size Car

Car model


Audi A6L


Toyota Crown


BMW 5 Series


Mercedes E Class


Cadillac CTS/SLS