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This report provides a broad view of strategic management of General Motors Company. I have undertaken the study about its market in Asian country especially in India. The company's mission, vision and its internal core competencies are examined. Analysing the GM's core resources and capabilities has revealed the company's current situation and the measures taken to position it in the future. Strategy analysis is undertaken viewing the heart of GM such as product development and engineering, technology and large scale operation. In order gain knowledge about its business environment SWOT analysis is undertaken. Threats are identified of the most important is the competition prevailing in the automotive sector. Opportunities are recognised in order to reposition it as a global competitor for its survival. The report also contains the information regarding the strategy of GM and the steps undertaken to accomplish it. As it has not made its strong market position in India in recent years I have made further reflection on the strategy followed and offered recommendations. If steps are undertaken to reposition its current strategy, General Motors can remain as a viable contender in the ever-changing auto industry.
Strategic management can be defined as the dynamic progression of formulation, execution, appraisal and manage of strategies for the purpose of intending the organization strategies (Kazmi, 2008:20). In other words strategic management can be defined as the conceptual framework of business planning and management which evaluates the effects of planned revolutionize and for provides the needed steps to move the growth of organization in upward direction (Harrison & Caron, 2009:75). Thus the strategic management is the procedure of assessing the organization and its business environment for the purpose of face and tackle the organization long term goals of adapting and adjusting its environment by the way of manoeuvring of opportunities and diminution of threats (Alkhafaji, 2003:31). Hence the strategic management is basically about setting the keystone aims of an organization, deciding the most suitable goals towards those aims and fulfilling both over time (Cole, 2003:3).
2.1 company profile:
General Motor Corporation is the second largest automobile manufacturer in the world. Founded in 1908, the company continued its overseas expansion in 1938 manufacturing and marketing vehicles outside US and Canada. The company's core business is the development, manufacturing and marketing of cars, trucks and automobile parts and also undertaking finance and insurance operation. General motors' company is very involved in producing cars for people at old age, hence tries to refine the existing vehicle's design by adding more technology to make it easier to drive. General Motors has strong market in Europe and in recent years it aims to create major impact in India. In 1994, General Motors India got incorporated in India as a joint venture with C K Birla groups and in 1999 got restricted as private limited company. Now it is offering under the brand name called "Chevrolet". It Because of the strong prevailing competition from the companies like Ford, Toyota and Home company Maruti Suzuki, it has faced challenges and difficulties for its survival. But in 2010, the General Motor Company made a significant impression by the introduction of a car called Beat in the name Chevrolet. The below mission and vision statement enabled the company to set its goals for Indian Market and followed strategies to attain its current position in the targeted market.
2.2 Objectives of the Report:
The following are the list of objectives to be accomplished for the report:
To gain knowledge about the mission and vision of General Motors India thereby to ascertain its objectives towards the stakeholders.
To investigate General Motor's resources and core competencies through SWOT analysis.
To understand the external and internal environment of the company through PESTEL analysis and Five Force Model.
To ascertain the strategies followed by the company for its recent success in India and examining the pros and cons of the strategies through Ansoff product/market matrix.
To offer recommendation on strategies that can be followed in future.
3. Company's Mission, Vision and effect on its Stakeholder:
Mission is the essential purpose of the company, concerning the reason of the company's existence, the business nature it operates and customer its targeting to serve and satisfy (Thompson, 1997). A vision is a description of something in the future; it can be organisation's culture, technology, business and activity (Kotter, 1990)
General Motors Company mission is to engage itself in a worldwide socially responsible operation. It is committed in providing products of such quality holding superior value to its customers and to share its success with its employees and business partners thereby the stock holders receive superior return from their investment. The company's vision is to become the global leader in automobile products and services and receive their customer's enthusiasm by way of continuous improvement which is driven by the GM's people through reliability, teamwork and innovation.
Stakeholders are the people who are directly or indirectly affected by the organisation's action they might or might not hold interest in the well-being or profit of the organisation. Stakeholder in a company are the individual and communities who offer either voluntarily or involuntarily to the wealth generating capability and activities and hence they are the possible beneficiaries and/or risk bearers (Post, Preston, Sachs, 2002). With the view of their mission and vision statement I have framed their goals to satisfy their stakeholders.
Customers are the king of any business hence ultimate aim should be to satisfy them. Satisfaction is the response of fulfilment by the customer. It is followed by the judgement about a product or service feature or the product or service itself, if it provides a pleasurable level of fulfilment or under or over fulfilment (Oliver, 1997). A business starts and ends with the customer. General motors' aim to offer products to customers which holds superior value compared to other competitor products. It aims to make continuous improvement through research and technology thereby offering products at higher value.
THE ORGANIZATION AND ITS MANAGERS
SOURCE: EDWARD FREEMAN, 2010:16.
FIGURE 3.1: AN INTERNAL AND EXTERNAL ENVIRONMENT
General Motor's mission is to share its success to the employees and hence aims to provide truthful communication and job security to the company's workforce. This enables the company to attain reliability, teamwork and innovation from its employees. This can make the company to be flexible with the ever changing business environment.
GM's goal is to engage itself into socially responsible operation which includes proving employment, environmental organisation and providing truthful communication. The company always aim to introduce cars that are fuel efficient, has alternative fuel usage and produces less emission. As the recent year's vision of people is to save the environment can be attracted and converted into business.
The company aims to become the world-wide leader in the automobile industry. With this aim the suppliers can be beneficial with the increased volume of production. As always GM is known for its mass production and large-scale operation, it can offer the suppliers for huge demand with the increase of its market growth.
4. GM's Core Competency:
Innovation is one of the main core competencies of General Motors. Since 1908 the company has been innovation in service technology of which its first attempt was in the year 1911 by an invention of self-starter engine which made a revolutionary in automobile sector. The next attempt was at 1996, when it introduces "Star One, a satellite system" which could track stolen vehicles. It is another competency is its interest in safeguarding the environment by making cars like "Chevrolet Cruze" and hybrid vehicles such as "Chevrolet Volt". Producing fuel efficient cars is also one of the company's main strength. Mass production and large scale operation is the key competency of GM.
5. SWOT Analysis:
SWOT is the abbreviation of internal strength and weaknesses and environment threats and opportunities. It can be used to exploit strategic windows to increase its profit potential (Meffert, 2000:68). With this analysis, the overview of the organisation situation can be derived. The below are the SWOT analysis of General Motors Company in India. It is a process of analysing internal environment of the business. It is used to review the resources, capabilities and competency of the company and is the third component of strategic planning (Charles Hill, Gareth R.Jones, 2009:19)
General Motors has a wide-ranging portfolio for large personal and commercial vehicles. Hence has better reputation.
GM has historical view as it is an American product with superior value hence its products has greater recognition.
Developed new culture strategy in Indian Market.
Strategic alliance with fiat, Suzuki and Chevrolet enabled to global entrance and reach.
Has strong dealer network.
Chevrolet Optra in 2003 and Chevrolet Tavera in 2004 made its presence in Indian market.
GM is technologically potential with strong team.
Decrease in market share more than 23% in 2007 in US leading in decreased capacity to invest heavily in emerging market.
GM has lack of experience in low pricing and as Indians highly prefer low priced vehicle it would be difficult for it to survive.
GM is vertically integrated.
As India is a developing country and rapidly undergoing development, there are many chances for the company to perform well to take advantage of its reputation in the automotive industry.
GM can influence its luxury cars like SUV's to rich Indian customers.
Indians usually prefer American products and GM can take this advantage to strengthen its market.
Prevailing competition from well established brands like Ford, Toyota and Hyundai who are holding the highest market share in India.
Raise in raw material cost avoids providing low priced cars.
Rise in fuel price can affect the customer preference.
Strong brand portfolio
Products at all ranges
Declining market share
Lack of experience in low pricing
Entry in emerging markets
Low admission model cars
Indian's preference towards American products
Raising cost of raw material
Competition from established brand
Hike in fuel price
The above table shows the glimpse of SWOT analysis of General Motors India.
FIGURE 5.1: SWOT ANALYSIS
6. PESTEL Analysis:
To know the external environment of General Motors Company in India, I made a PESTEL analysis. PESTEL is the acronym of political, economic, social, technological, legal and environmental factors. The factors highlight the position of government, macro-economic factors such as exchange rates, trade cycle and level of economic growth. Cultural and demographic changes, technological influences, legislation restrictions and finally on green issues (Jonson, 2008). As for any organisation certain environmental influences will constitute powerful forces which would affect the decision making apparently (Thompson, 2002). Environment in which a business operates is the aggregate of all conditions, events and influences that surrounds and affects the business operation (Davis and Blomstrom, 1971).
6.1 Political and legal factors:
Political factor means to examine the facets of politics having the impact of issues for an organization such as the issues happened within organization or in the area where the organization is based and political issues related to national and international politics changes (Williams & Adrian, 2000:161).As the customer's concern to save the environment is increasing rapidly the laws and regulations are affecting the automobile industry to produce less emission vehicles. As it is an emerging market like India which is entirely different from its home country, the company must act in accordance with the government policies which differ in every country. Hence clear research understanding and study should be made before implementing strategies as it is a threat to the company. Numerous technical directives and regulations are prevailing in the automobile industry. The legislation in India is of more legal in nature. There are much legislation such as consumer protection, taxation, low emission and laws on competition. This is the threat to the company as the company needs to have a clear study on it act of entry into new market.
6.2 Economic Factor:
Economic factor interrelated with the financial changes that happened inside and outside the organization which may affects the operations within company (Williams & Adrian, 2000:162).As Indian economy is developing day by day it is considered as one of the emerging market for automotive sector. The people in India has low disposable income, they tend to prefer products at less price. The Indian government tends to invest more for their economic growth through employment. This creates the opportunity for General Motors to start their plants thereby proving huge employment. A study showed that for each autoworker there are seven other jobs generated which includes from aluminium industry to lead to vinyl.
6.3 Social Factor:
Social factor refers to the changes happened in fashions, habits, trends, lifestyles and beliefs, of people (Williams & Adrian, 2000:163). In today's world people's lifestyle can be judged with the tyre of car they drive. General motors' should understand this factor and try to give the expected. The ultimate aim should be to make customer to feel proud when driving the car. Not only luxury cars can make it but also car which most stylish and unique features. This must be considered as an opportunity and converted into success.
6.4 Technological Factor:
Technological factors includes the changes happened in technologies and advance in the progression of production(Williams & Adrian, 2000:164).With the increasing technology day by day, people expect innovation in all the industry of most is the automotive. Researches, proper invention and new discoveries at right time can make the company succeed. Manufacturing advancement should be utilised and internet can be used for the promotional activities. This is a threat to the company as huge and proper utilisation of technology is needed.
6.5 Environmental Factor:
There is a huge development of interest in recent years to safeguard the environment which affects the survival of many automobile industries. Investment should be made on technology to produce cars which eliminated affecting the environment. This is the opportunity for General Motors as the company has already taken initiatives to produce car according to specific standard with low emission and many safety features.
7. Porter's Five Force Model Tool:
Five Force Model tool developed by Michael Porter helps in evaluating the competitive position of the company. It is a business strategy tool used to explore the strategic management tool. The attractiveness of the industry is defined by five external forces namely competition between present firms, threat of new entrants, bargaining power of supplier, bargaining power of consumers and threat of substitute products(Michael Porter,1985). Two factors in porter's five force tool is the competition from external environment and the other three is the threat from internal environment
I have made an analysis on how the automobile industry appeals for General Motor's. The below is the picture o showing General Motors Company's competitive position in India.
Threat of New Entrants:
Little brand franchise
High access to distribution channels
Price war is there.
Loyalty to existing brand.
Threat of Substitute:
Increased demand elasticity.
Increased price of raw materials.
Strong negotiation power.
High numbers of suppliers in turn lesser profit.
No adequate substitute for suppliers
Lack of ability to switch to supplier substitutes.
RIVALRY (Tata, Maruti Suzuki, Toyoto, Ford)
Degree of Rivalry:
Increased industry growth.
High rivalry from already established brand.
Increased competition leads to offer products at lesser price.
Low concentration ratio.
No exit barriers.
High strategic stakes
Low switching cost.
Increased buyers volume for cars
Increased power of buyers.
Good brand image.
SOURCE: PORTER'S FIVR FORCE MODEL: 1985.
FIGURE 7.1: PORTERS FIVE FORCE MODEL
The above picture shows that there is high level of competition prevailing between the rivalries in the automobile industry for general motors' in India. Proper strategies can make it stable in the Indian market. There is huge laws and legislation to be followed for the entry of the market. Since there are already many established brands with high loyal customer hence effective strategy needed to stabilise the market. More home brands like Tata and Maruti have strong core of business. Uniqueness can attract people as the level of purchasing power of Indian is increasing rapidly in recent years.
8. Strategy of General Motors:
A well-formulated strategy will help in organizing and allocating the firm's resources into a unique and possible position based on the internal capabilities and shortfalls through anticipation of environmental changes and contingent moves by intelligent opponent (James Brain Quinn, 1980:3). With the complete understanding on the threats and opportunities and the completion level for GM, I have pointed out the strategies followed by the company to success position its market in India. Strategy is the pattern or plan that integrates the company's major goal, policies and actions that are structured into whole.
In 2006 there was a big question of the survival of General Motors in India because of its uniformity of products and high price. In 2007, GM achieved 68% in sales thereby selling 60000 units. This made it to invest $200million in India to undertake manufacturing engines, transmission and drive trains. With its introduction of Chevrolet Tavera, it made its presence in India. After that it made many successful cars like Chevrolet optra, Chevrolet Aveo, Chevrolt Aveo U-VA, Chevrolet Optra SRV, Chevrolet Spark and Chevrolet Captiva it's stabilised its market. In effort of introducing mini car it made a successful Chevrolet Beat which is the one of the most selling car in India. And the recent release of Chevrolet Sail U-VA made it appealing for many Indians. Strategies implementation entails designing the organisational structure and the best culture and control system to put the chosen strategy into action. The following are the strategies implemented by the company to make it strong in Indian Market
In 2006, GM has set technology leadership initiative whereby the company highlighted its key strategy as energy and environmental leadership. By this initiative it activated a policy of energy diversity that can offer vehicles which can run with many different energy sources. This would reduce the world's dependence on oil and certainly increase the demand for vehicles. It has also taking continuous initiative to displace petroleum based vehicles with an alternative as E85 ethanol and electricity. The company hold the strategy of steps to reduce the negative environmental impact of the vehicles. In order to accomplish it has started introducing cars like Chevrolet Volt and was awarded Energy Star Partner of the year. Also in order to provide cars with fuel efficiency it has started its strategic plan of producing electric cars in near future.
Commodity price plays an important role in any good produces. For the cars the main ingredients are steel and aluminium. As the price of those increases and reduces the company's margin, the company is facing difficulty to provide cars at lower price in a foreign market where there is going to be import duty. Hence the company as strategic approach has introduced cars in the brand name Chevrolet in India with its manufacturing plant at India thereby reducing the transport cost. Chevrolet Beat during 2010 with special feature of sporty car looks at less price which created a major impact and increased sales volume. And now the recent make of Chevrolet Sail UVA is soon to hit the market at the end of 2012.
GM always aims to invest in potential technology and its recent investment in Flex-Fuel technology made it successful to reinvent itself with the invention of Chevrolet Beat and Sail U-VA with fuel efficiency. The recent make Sail U-VA has many improved technologies like airbags, ABS, real view mirror adjustor and mobile applications as like luxury cars but priced at low. GM has followed better strategies in technology and introduces cars with information technologies called OnStar in US. This technology provides vehicle security, communication and diagnostic system. And now it aims to introduce similar cars for Indians too. The company also had made improvement in technology for crash avoidance and crashworthiness through On Star an advanced crash notification. GM also aims to introduce more small customers and that is it has started with the fastest selling car Chevrolet Beat.
8.4 Decision Making:
In order to have a cooperative decision making framework, GM has established an Enterprise Demand Sensing Program which examines the methodologies in procurement, manufacturing and marketing
GM always believes on team effort. Hence it follows policy to share its profit to the workforce as way of compensation and to provide truthful information. GM follows an open-system interconnection standard called Manufacturing Automation Protocol (MAP) by which the programmable devices of different vendors in a factory environment can be connected. Through Computer Integrated Manufacturing (CIM) which is present in every individual cell are connected and flow of information is taken in all the levels which can enable the flexibility to add and remove any action without any hindrance.
General Motors which under the brand Chevrolet popularly called as "Chevy" has been adopting many strategies to maintain its relationship with customers. It's following Content Marketing Strategy to attract new customers and also to maintain its relationship with loyal customers. Many safety features have been added to the cars in order to safeguard the customers like airbags, Automatic Break System and communication system with Bluetooth. The company tries to provide cars with all these feature at affordable price. One of the efforts is the Chevrolet Sail U-VA where the Indian people can afford it at fewer prices instead of going for a luxury car. The company adopts a strategy to provide cars at various ranges to attract people of all lifestyle. . The company has launched Chevrolet Motors Program by which customer's maintenance cost has been refunded it is under a fixed amount for three years. As Indians mainly purchase vehicles with regard to its price, fuel economy, brand image and after sales service.
Initiative for Future:
GM is forecasting the next generation technology as Lithium. GM ventures have invested in SAKHTI3 by which rechargeable solid-state battery are manufactured at lower cost. This can enable to make less carbon vehicle in near future and hoping to less expensive electric cars. Developing innovative car is expensive and providing it for less cost it again a challenge
9. Ansoff's product market matrix:
In order to examine the strength and weaknesses of the GM's strategy I have used Ansoff's Product Market Matrix.
Existing Product New Product
SOURCE: ANSOFF'S PRODUCT/MARKET MATRIX MODEL.
FIGURE 9.1: PRODUCT MARKET MATRIX MODEL.
9.1 Market Penetration:
This strategy of market penetration involves improvement of existing market share in the present market in order to increase the company's growth. For this GM can improve the current market by making some positive changes in the existing vehicles and selling it again. This was followed by GM already as they have withdraw Chevrolet U-VA and made some changes and now have introduced it again as Chevrolet Sail U-VA at competitive price. As an act downsizing the company have plans for job cut by the end of 2014 in order to have more concentration on the emerging market.
9.2 Market Development:
Market development strategy is an act of marketing existing products in new market. This was followed by GM as they have introduces Chevrolet Beat and Sail U-VA in India which were already introduced in China 2 years back and has gained success. In a act of re-evaluating the market, GM has made vehicle for all ages like for sporty look it has introduces many mini cars and for old many traditional cars are still available. This understanding of market will definitely bring success for GM as the company's image has been changed and it is no longer known only for traditional vehicles.
9.3 Product Development:
In this strategy new product development is made in an existing market. GM is known for its innovation. It is evitable for GM to regain its economic glory and position. Hence it has made many initiatives like producing electric and hybrid vehicles with major safety features. This would make the GM to stand unique from its competitor. And nowadays many potential customers prefer to adapt for unique and eco-friendly products.
Diversification strategy involves moving o from the existing product and market and entering into new market. This is definitely a great risk bur if properly done gives success. GM can either look for new market for the current market's related products or unrelated product. Under related products GM can operated as a supplier of the products needed for the manufacturing that can eliminate supplier power and can take steps to eliminate middleman in marketing. GM has already undertaking financial services proving loan to customers in Italy. It can do the same for Indian companies too in future.
Recommendations and conclusion:
The following are the suggestions which I can offer according to my knowledge on the improvement measures of General Motors market in India.
From the above analysis it is clear that GM's output should meet the demand level of the products.
The company must make products for the present customer and also have to analyse the future needs for the same regardless of economic uncertainty. Demand analysis also should be carried out at regular basis.
Statistical marketing should be done on the action of considering the alternatives if not the planned one. Sensitivity analysis can be carried out which implies on "what if" circumstances and hence the steps can be easily taken to change to improve its expected outcome.
Cars should have a unique style and varied model as the uniformity in models is one of the main drawback for GM to stabilise its market.
In recent years GM was seen losing its part of financial and economic results in US and Europe which would affects its capability in India. This would be satisfied with acquisition and new ventures.
Instead of concentrating on trucks actions should be taken to produce mare mini cars with lots choices and salient features.
Thus every organisation should decide the terrain on which it would finish that is the product it would sell, the place it would sell and different is the product from its competitor. For this strategic analysis should be made with regard to mission and vision statements. Short term goal should be framed and analysis should be made upon the achievement periodically. I feel thankful for providing me such a useful topic which would help me in to run successful organisation in future.