Mini-Case: General Motors
Mini-Case: General Motors
Description
General Motors Company is one of the major American Multinational companies, which involves the design, manufacturer and the distribution of the vehicles and its accessories. The company has four main brands including the Cadillac, GMC, Chevrolet, and Buick. General Motors manufacture vehicles in close to 37 countries under thirteen brands. Currently, GM owns 20 percent stake in IMM and a 77 percent in GM Korea. It is forms part of other joint ventures including FAW GM, China and GM India among others (Simons, 2013). In terms of units’ vehicle sales, General Motors is one of the largest automakers across the world.
In the financial year 2010, General Motors (GM) produced 8.5 million units of vehicles, which accounted for 12 %of the world’s motor vehicle industry. The top markets for GM are China and the U.S. In 2010, GM had to file bankruptcy due to financial problems facing the company. After the bankruptcy, GM had to reorganize its structure and brand portfolios. Thus, the company shifted to corporate based hybrid brand architecture. In spite of all, GM has not been able to recover fully from the financial crises. For example, in 2014, the company’s revenues declined to $108 million and the value of the shares fell by 16%.
According to a 2008 report by Greer and Hauptmeier (2012), General Motors own 22.1% of the global market share. General Motors has also developed relevant principles relating to the environment, which are communicated to the public through a websites. The company has also faced criticism from its labor practices after the injury of 200 employees in Columbia. However, General Motors was able to negotiate with the employees to deal with the labor situations. The company has also operated on alternative technology vehicles to reduce the environmental impacts. Therefore, the paper provides a comprehensive analysis of the strategic situation and progress of General Motors.
Problem Statement and Problem Definition
Over the years, General Motors has faced difficult financial crisis, which led to the company filing for bankruptcy. However, the company has been able to implement various approaches to improve its financial performance. For instance, recently, GM has had to recall numerous vehicles to the various faults with the ignition and other major concerns. Apart from technical issues, GM faces major strategic problems, which must be handled to promote the overall financial performance of the company (Hill, Jones & Schilling, 2014). The main concern is to determine the appropriate strategic solutions and approaches, which could be used to enhance strategic growth and performance. It is important to analyze and recommend potential strategic solutions to diverse and expand the production of GM into the international markets. Therefore, the paper will come up with better ways of dealing with the inherent strategic limitations and exposures to improve the global outlook of the General Motors.
Solution Proposed
The proposed strategic solution is the implementation of the cost leadership strategy to assists in acquiring a higher market share. General Motors believes in the strategy of designing a care offer every purpose. The leadership of the company has rationalized cars into five segments from Chevrolet to a Cadillac. To enhance differentiation of GM brand from its competitors, the company positions its car product line in terms of price quality markets. In the last more than 30 years, GM has worked within the auto industry achieving close to 50 per cent market share in the United States which made it to be recognized as a top low cost leader.
Unlike Toyota, GM should focus on its limited brand to promote its competitiveness in the global market. Another proposed solution is the differentiation strategy. The differentiation strategy would help in overcoming major limitations. The implementation of the differentiation approach would help in giving the customers sense of value addition. Production differentiation also helps in reducing the inter brand competition. Most importantly, it is necessary to use the focus groups to understand the brand alignment and arrangements. Focus groups include the expansion of Chevrolet to growth products in Europe and the Cadillac’s expansion in Europe.
Diversification is a major strategic solution, which involves the shifting of firms from a new industry. General Motors should add more brands to its existing branding to enhance the marketing of the company’s products. Other proposed solutions include the intensive strategies including market penetration and market development. GM will have to seek to increase the market share through presenting products in the current markets. GM is a global leader with diverse portfolio of market brands understanding efficiencies and its connection towards global expansion. It involves the creation of sustainable model of reinvestment to drive continuous improvement in the design and manufacture of cars.
Market development solution would assists in introducing present products to other emerging markets including Brazil, India and China among others. Currently, the approaches of market development will be useful in expanding the operations and production of the company to new markets. The intensive strategies are critical strategic solutions towards gaining additional market to expand the revenues and the margins of the company. Defensive strategies such as signaling, entry barriers and preemptive strikes are also useful in concentrating on the use of offensive competitive solutions. The defensive solutions will help to obtain adequate competitive advantage, which allow the organization to promote in the right direction.
Protection
To enhance the protection of the company, GM has collaborated with government authorities. The partnerships help in complying with all regulations and laws within the economies. The ability to adhere to the various laws is critical in enhancing the protection of the interests of the investors at the company.
Value Proposition
GM value proposition is develop by the sustainability programs of the company, which seeks to create long-term stakeholder value. Every employee within the company performs the value proposition strategy of the company. The value proposition model usually considers the environmental, social, and economic activities that benefit the strategic success of the company. Value is developed from the growth opportunities, improvements and risk mitigation programs. At General Motors, the strengthening of the customers and empowerment of the community is enhanced through mobility. It defines the model of the company to sustainability. The communities would be feeling safer with safer and smarter vehicles.
General Motors is always concerned about integrating the sustainability program into the business within the purpose and values of the company. The main corporate strategic focus of the company includes creating a winning culture, driving core efficiencies, growing the company’s brands, leading in innovation and technology and the retaining customers. The strategic focus is made possible through the creation of strong and transparent stakeholder relationships and enhanced excellence (Simons, 2013). Therefore, GM demonstrates the competencies of sustainability, which aligns the strategic focus to the purposes, and values of the company to developing long-term value to both the customers and communities.
Team
The GM team involves the employees who are responsible for transforming the lives of communities. The GM team is the main source of expanding the core value of improving the community, more so where the employees lives and work. The company coordinates and communicates the available volunteer opportunities to the employees. However, the team always coordinates and leverages on the size and the scale of the company for long-term focus on the community. Thus, the GM team is an informal organization for community involvement. The company also believes in creating environment where employees live and work by collaborating with nonprofit organizations. The team of the company mainly volunteers in four main areas including education, health, environment and community development.
Sources of Finance
General Motors enjoy access to the various sources of finance to fund its operations. In terms of equity financing, General Motors is financed heavily through the funds collected from the secondary markets. Vanguard Group Inc is the top institutional holders of GM shares owning 5.14 per cent stake at the company. General Motors also have access to external loans from commercial banks. The market portfolio of GM gives the company a higher credit rating, which makes it possible to access both short-term and long-term loans from the commercial banks (Greer & Hauptmeier, 2012). Apart from the equity financing, GM relies on retained earnings to finance its expansion programs. The retained earnings are fund account available to the company to finance its further expansion subject to the shareholders’ approval. The use of the retained earnings is an example of internal sources of financing for the business. Other internal sources of finances include the disposal of assets to free up additional cash for the company. In terms of external sources of finances, GM uses the equity financing, trade credits and overdraft facility to finance the operations of the company. As a result, GM relies on both the external and internal sources of finances to fund its operations and expansion plans.
Stakeholder Analysis
The management of the stakeholders is important to the success of GM. It helps in engaging all the right people to enhance the success of the projects and investment plans of the company. GM appreciates the efforts of the shareholders and investors who have always provided strong financial support for the company. To achieve the goals of the investors, General Motors aim to create a lower cost structure, lower risk portfolio and a strong balance sheet. This indicates the ability of the company to increase the returns on the equity. From 2010, the company has engaged all the stakeholders appropriately including governments, community, employees, and the investors (Hill et al., 2014). For instance, the company has worked well with different governments to enhance the success of its joint venture partners with the emerging economies. GM is also recognized for their environmental initiatives to reduce the impact of global warming and climate in the society. The company also participates in social corporate responsibility programs, which engages the community and the public as a whole. The commitment to interact with the stakeholders indicates the efforts and focus on GM to develop products, which are customer centered. For instance, the stakeholders have been instrumental in helping the company to overcome the various challenges such increasing the efficiency of recalls from different countries.
References
Greer, I., & Hauptmeier, M. (2012). Identity work: Sustaining transnational collective action at General Motors Europe. Industrial Relations: A Journal of Economy and Society, 51(2), 275-299.
Hill, C., Jones, G., & Schilling, M. (2014). Strategic management: theory: an integrated approach. Boston, MA: Cengage Learning.
Simons, R. (2013). Levers of control: How managers use innovative control systems to drive strategic renewal. Boston, MA: Harvard Business Press.
The post Mini-Case: General Motors appeared first on Homeworkacetutors.
Comments
Post a Comment