Corporate Strategy Of New General Motors Commerce Essay

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Introduction: Corporate study

Founded in 1908, General Motors is an American carmaker, headquartered in Detroit, Michigan. It is the second carmaker world-wide, behind Toyota. GM also performs financier and insurance operations to complete its major activity.

Diagram of General Motors value chain

In 2008, GM encountered serious financial problems and was placed under the protection of US bankruptcy laws. The firm was saved by the US government and, on July 10th 2009, a new company was created, General Motors Company, to replace the former one. New GM decided to focus on five brands: Cadillac, Chevrolet, Buick, Opel/Vauxhall and GMC, selling Saab and abandoning Hummer, Saturn, and Pontiac. The restructuration plan, imposed by the government, drastically reduced stocks, workforce, and dealerships. It also fosters GM to develop the green technology and small cars areas. One should notice that China has become the first market of GM in 2011, behind the US end Brazil.

Internal analysis

Value chain analysis

Primary activities


Logistics is based on a global sourcing process that integrates 27 different central purchasing agencies, improving GM productivity every year [1] . Moreover, GM decided to create an organisation with a logistics company in 2000: Vector SCM, which aims to deal with logistics networks [2] . To cut administrative and operational costs and optimise the coordination between the supply chain and the distribution channel, GM set up a new system: the Build Transfer Operate Model, ($3,600 saved per vehicle)3. In addition, GM centralized the distribution channel of GMC, Pontiac, and Buick to reduce brand management costs and overlap [3] . Finally, GM implemented in 2005 a Retail Inventory Management model, a centralised information system that builds an interactive communication between the back-office and the front-office [4] .

Product development

11 independent engineering centres works on product development and are linked to the central R&D organisation². Founded in 1995, OnStar, the GM subsidiary specialised in high-tech car accessories, has continued its development and launched every year state-of-the-art technology programs (navigation systems, security systems, wireless systems, etc.) [5] . Last but not least, in its goal to develop green technologies, GM created a new engineering organisation specialised in electric and hybrid vehicles4.

Marketing & brand portfolio

Since its restructuration, GM decided to change its marketing strategy and to focus on its five most valuable brands: Cadillac, Chevrolet, Buick, Opel/Vauxhall and GMC, reducing considerably its brand portfolio. So as to restore and emphasise its brands image, GM has spent huge amounts of cash in marketing communication ($500 million only in 2008) [6] . In the same way, GM repositioned prices of 40% of its vehicle models in order to expand sales and make the most of the margins².

Dealer support and customer service

General Motors has one of the biggest dealers' networks in the world, which consolidates its second position worldwide. The year 2006 was marked by an important campaign to promote and improve GM car dealers' customer service so as to increase satisfaction4. As a result, a 2008 J.D. Power survey attested that GM customer service was one of the most satisfactory on the market [7] .

Secondary (or support) activities


With the creation of new General Motors, the board of directors was renewed. The resignation of Rick Wagoner (former chairman and CEO) and the retirement of Bob Lutz (former vice-chairman) have paved the way for new vision and strategy. The successful come-back of General Motors in New York stock exchange was a very good point for the Daniel Akerson, the new chairman and CEO. In a way, leadership has found back part of its credibility what should lead to new positive perspectives.


General Motors is pioneer in many technological programs, such as telematics systems [8] , advanced propulsion technology [9] , electronic controls and software [10] . In addition, GM is pulling ahead of competition regarding green technology, especially with a lithium ion battery program designed for electric vehicle [11] .

Human resource development

GM implemented a successful human resource program a few years ago: GoFast [12] . This social initiative, awarded in 2004, has been designed to simplify the bureaucratic organisation, and thus to enhance its effectiveness through three tools12. First, it has facilitated the emergence of new talents; second, it has made the reach of top positions easier for employees and notably women; third, it has improved training programs.

Information system

To improve its communication, GM redesigned its information systems. First, with GM BuyPower, General Motors has made the search for vehicles easier for customers, while collecting marketing information [13] . Second, with the new B2B web platform and the renovation of its global manufacturing information system, GM has made its production and supply chain management more dynamic and interactive14.

Core competence analysis

Core competence strategy [14] 



ΠProduct reliability: solving upstream of malfunctioning to improve quality and reduce recalls; extension of the "Go Fast" program to increase customer satisfaction

 Resale value perception: implementation of a control process to enhance second-hand cars quality and its value perception

Ž Consolidation of brands: selling or abandonment of unprofitable brands which releases cash to focus on five valuable brands

 Core values: setting up of an internal campaign so as to spread corporate values and strengthen the corporate culture of New General Motors

ΠStrategic alliances: Reinforcing cooperation with information technology firms such as Appel or Google, to offer new on-board services to customers

 Cost efficiency: Developing low-cost accessories for cars

Ž Market research: Valorising customer relationship management to collect more information about customers and better target their needs



ΠProduct & R&D: Reinforcement of the green technological program and the development of high-tech accessories through OnStar

 Technology: Enhancement of the demand and supply chains management through digital networks

Ž Leadership: Communicating on the values and vision of the new board of directors which opens up new management perspectives

 Large scale operations: Consolidating the second position among world carmakers and investing in emerging markets

ΠElectronic controls & software: Valorisation of On-Star activities to export them to China

 Product R&D and engineering: Developing the low cost and green automotive activities to conquer new emerging markets

Ž Information systems: Optimising the coordination between supply chain and distribution channel through logistics centralisation

 Brand status: Investing in brand management all over the world

Core competence map [15] 

External Analysis

Porter 5 (+1) Forces analysis [16] 

Competitive rivalry: high intensity

Competitive rivalry is strong in the carmakers market. Toyota, General Motors, Volkswagen, and Ford have the monopoly of the European and North American markets (50% of market share). To avoid cannibalisation, they tend to use the same kind of strategies, especially in terms of prices. Nevertheless, low-cost strategy adopted for instance by Renault's Dacia or the emergence of Chinese and Indian vehicles may disrupt the monopolistic situation and involve the setting of new strategic partnerships and alliances.

Suppliers: low intensity

Carmakers dominate their relationships with suppliers. They dictate business terms (prices, delivery, etc.) and diversify their suppliers so as not to be dependent. As a result, even if they deal with several carmakers, suppliers' turnover is only based on a limited number.

Customers: very low intensity

Customers can negotiate their car's price but only with car dealers and not with carmakers. Thus, they are not really affected by discounts made under customers' pressure by car dealers or on the second-hand market.

New entrants: very low intensity

As we saw it previously, the automotive sector is monopolistic. It is difficult for new carmakers to impose because this market calls for high investments in labour and capital. Some rare emerging carmakers, such as the Indian Tata Motors, could enter mature markets within years. Emerging markets remain the only possibility for local brands to exist. The green automotive market should represent an opportunity for new entrants within few years.

Substitutes: very low intensity

At the moment, public transport represents the only credible substitute to motor vehicles. Despite environmental risks and the increase of oil price, it remains hard to change mentality. Only drastic environmental measures could impose the use of public transport instead of cars in cities.

State: very high

States saved several carmakers during the financial crisis and forced them to adopt restructuration plans. Moreover, they implemented scrappage schemes, decisive for the survival of the automotive economy. In addition, trade tariffs on imported vehicles are still running by states to support local carmakers, which affects competition and prevents the new entrants from entering markets.

PESTLE analysis [17] 

Macro-environmental factor

Type and intensity of its impacts on the global market

Description of the impacts


Very high positive impact

Importance of the automakers in terms of tax contribution, jobs, and national symbol

ƒ° Support of states in case of difficulties (loans, car-scrappage schemes, etc.)

Trade tariffs on importation, environmental taxation

ƒ° Negative influence on turnover and competition


High negative impact

Sensitivity of the carmakers to the price of raw materials

ƒ° Negative impact of the rise of steel, plastics, energy, oil prices

Importance of credit availability for carmakers and car buyers

ƒ° Negative effect of the crisis purchasing power

Sociocultural factors

High positive impact

Different approach regarding cars according to world regions: developed countries try to emphasise public transport, while developing countries want to catch in the field of technology and make the most of modern vehicles.

ƒ° Necessity to take into account these differences to match efficiently needs


Low positive impact

Growing momentum for green technologies

ƒ° Necessity to take a stand on the market of hybrid and electric vehicles


High negative impact

Some security standards for cars, set by local legislations, have to be respected by carmakers

Environmental objectives involve limiting gas emissions of motor vehicles


Low negative impact

No direct impact of the environment, but the rise of environmental concerns has consequences on political, socio-cultural, and legislative areas.

Conclusion: Situation of General Motors in five years (2015)

By 2015, the iamge of




Strong brand portfolio

Extensive global presence

Growing business, specifically in Asia Pacific & Latin America regions

China partnerships and joint ventures

Robust dealer network

Large scale company operations, including 21,000 GM dealerships worldwide

New leadership, strategy culture and finance opportunities

Strategic alliances which have included Fiat, Daewoo, SAIC, Suzuki, Isuku, Saab, and AvtoVaz, leading to educated global entrances and reaches

Quality/cost improvement through outsourcing

One globally based sourcing process - operating under one budget and one decision-making group

Numerous Product recalls

Quality problems with foreign production

Declining financial performance

Resent financial operating loss

Decreasing market share

Negative publication and press

Poor relationships with UAW (United Auto Workers)

Ageing workforce

Bureaucratic culture



Moderate growth of global automobiles industry

Growth potential in India and China

Opportunities in emerging markets/global expansion

Positive outlook for hybrid electric vehicles

Increasing demand for electric/hybrid/hydrogen celled vehicles

Increasing technological gain over competition

Utilization of global design and engineering talents will result in shorter lifecycles, lower costs, and higher quality

Strategic alliances to integrate additional technology with On-Star system, such as Apple or Google

Building consumer confidence and brand reputation

Intense competition

Extensive government laws and regulations

Risks concerning labor wage rates

Rising raw material and transportation costs

Declining demand for light vehicles

Declining infrastructure of USA economy

Growth in currency valuation vs. US dollar relating to high export costs

Competitors (primarily Toyota & Honda) have a higher level of perceived value with a solid reputation for better product quality

Increased domestic and foreign competition, such as Tesla, Aptera and Aixam)

Chinese lack of intellectual property rights from government and competitors

Bonus question : 1 page

Added value

The GoFast program


Future business opportunities