General Motors is an automobile organization based out of Detroit, Michigan with over 212,000 employees working in 396 facilities across six continents, speaking fifty languages, in twenty-three different time zones (General Motors, 2015). After the recession in 2008, the American automobile industry needed to be revamped and reorganized to meet the needs of the individual brands, access to newer automobile technology, and repayment to the government for bailing the industry out. On November 10, 2010, General Motors became the world’s largest initial public offering which allowed them to build from their strong foundation to continue to provide its customers with great vehicles and provide its employees with a bright future at a great company. This analysis of General Motors will identify events in the company’s history, describe its performance, utilize Porter’s Five Forces Model, review strategies used, and provide recommendations.
General Motors are passionate about earning their customers for life (General Motors, 2015). General Motor’s automobile lineup includes mini cars, electric vehicles, heavy duty full-size trucks, convertibles, and monocabs that are made through all of the different bands now flying under the General Motors banner. The strategic partners for General Motors includes Chevrolet, Buick, GMC, Cadillac, Baojun,Wmling, Opel, Holden, Vauxhall, Isuzu, and Jiefang (General Motors, 2015). Some of these brands are not popular in the United States, but most likely have strong followings in the South American and European markets.
To keep General Motors relevant in the modern world it is important to keep expanding leadership related to vehicle electrification by focusing on advancements in electric motors, power controls, and batteries (General Motors, 2015). General Motors has also continued to evolve by taking a stance against environmental impacts of any sort related to the manufacturing, assembling, and distributing of any of their products. Additionally, General Motors has also taken a stance against human trafficking, slavery, or any other form of forced labor. There are twenty-four officers including the CEO Mary T Barra and President Daniel Amnann who both also are on the Board of Directions with ten other individuals (General Motors, 2015). Most recently, General Motors has actually had the best October in the past decade which creates a positive outlook for the future.
General Motors has five main purposes and values it embodies which include earning their customers for life, growing their individual brands, leading the automobile industry related to technology and innovation, driving core efficiencies, and maintaining a culture to win (General Motors, 2015). All of these values and purposes are essential to driving sales which is of course, the most important aspect of any business approach. Besides car sales, General Motors also offers service for Chevrolet, Buick, Cadillac, and GMC dealership and customers, which also includes providing parts and accessories for ACDelco, Genuine General Motor parts, accessories, and performance enhancement parts (General Motors, 2015).
Automobiles are not the only services General Motors offers its customers. Other owner benefits include Financial services with the General Motors card and automobile lending, Bluetooth capabilities, General Motors owner centers, Sirius XM radio, and OnStar services (General Motors, 2015). Each additional service General Motors extends to their customers allows them to get a step closer to fulfilling their main goal and purpose of earning customers for their lifetime of automobile buying.
General Motors is now one of the world’s largest automobile companies with 2014 sales over one hundred and one million in North America alone, another twenty-two million in Europe, thirteen million in South America, and fourteen million in other International Markets (General Motors, 2015). As mentioned earlier, General Motors is a publicly traded company on the New York Stock Exchange with a tickers identification of GM. As of November 24, 2015, General Motors was selling around 36.22 per share which was an increase of .14 from the previous business day (General Motors, 2015).
General Motors is sold across six continents, but is only broken down into four made segments including North and South America, Europe, and the remainder of their international operations. General Motors has sold 7.2 million vehicles in the first nine months of 2015, which now on record for being their best sales in October in the past eleven years. Additionally, the net income for the third quarter of 2015 was 1.4 billion and a record EBIT adjusted of 3.1 billion (General Motors, 2015). This is an increase of nearly a billion from the same time in 2014. Although, the net income to stock holders was reduced about a million from 1,471 billion in 2014 to 1,359 billion in 2015 (General Motors, 2015). This is a slight decrease which can also be a sign of change because if General Motors is reporting record sales and EBIT these increases will soon find it ways back to the pockets of the investors in the long-term.
The excellent performance of General Motors is most likely attributed to their focus on imagination and disciplined action to utilize the benefits of the imaginative ideas (General Motors, 2015). Creativity and imagination flourish in work environments that are accepting of wild ideas because if the company is more focused on breaking down ideas because most of them may not be feasible or viable at the current moment does not mean the idea could be great five or ten years down the road. Another aspect of General Motors that affects its excellent performance is the responsibilities placed upon their supply chain. The relationship which each supplier, distributer, and the manufacturer must be built on transparent, strong, and trusted partnership which ensures the products affordability, availability, and quality of the product for the customer (General Motors, 2015).
Porter’s Five Forces Model is utilized to analyze the business’ core competencies including threats of new entrants into the business sector, bargaining power of buyers, bargaining power of suppliers, threat of substitute products and services, and the intensity of the rivalry between competitors within the business sector. The threat to new entrants into the automobile industry is a serious problem for General Motors if the new companies are able to provide similar quality related to the automobiles, parts, accessories, and customer service at a lower price that would be more affordable than automobiles such as BMW for younger buyers. This is a serious problem for General Motors, because if they lose the young buyers they will never be able to fulfill their main purpose of earning lifetime sales from customers. If General Motors only serves the aging population, they may only receive one or two car sales instead of the average of five vehicles people purchase between eighteen to ninety.
The second force is the bargaining power of buyers which can both help and hurt General Motors because some customers are interested in getting the best deal for the least amount of money, while other buyers understand they normally have to pay more for the best quality. In the United States there are many different choices for customers to consider, which makes it so important that General Motors has a nice list of different brands that will attract different customers based on their likes, wants, and needs.
The third force is the bargaining power of the suppliers, which is almost nonexistent to General Motors suppliers because they have a strict list of expectations for each supplier to meet. The first is the California Transparency in Supply Chains Act of 2010, which states all manufactures conducting business in California must disclose information about their efforts to end slavery, human trafficking, and other forms of forced labor by any of their suppliers or subscribers (General Motors, 2015). This is enforced by immediate termination of contracts between any business entity and General Motors. Additionally, General Motors is just as strict related to responsibility to the world by focusing on reducing waste and pollutants. This is achieved through conserving resources and recycling all extra materials during each stage of the vehicles lifecycle (General Motors, 2015). If any of their suppliers or subscribers do not meet the standards presented they are replaced with a more responsible and accountable organization.
The fourth force is the threat of substitute services and products. This is a serious problem for the automobile industry as a whole especially thanks to mass automobile parts stores like Advanced Auto Parts and AutoZone and the ease of access of goods from around the world through phone and Internet ordering. To keep their customers coming back for all of their needs parts and accessories should be reasonably priced and exclusively sold through one of General Motors approved vendors. Some customers do not like being told where to buy things, while other customers are pleased to find their parts and accessories at a reasonable price without the possibility of ordering a part that may not be 100% compatible with the automobile it was purchased for.
The final force is the intensity of rivalry between competition within the automobile industry. In the United States people can buy pretty much any car sold around the world which keeps rivalries alive and well in the stiff competitive market. To stand above all of the automobile competition General Motors needs to focus on finding the cheapest way to mass produce technology for each new line of vehicles. Once the price tag of vehicles levels out related to the drastic increase in available some stock technology. Instead of an arms race related to war, this is a technology race related to automobiles.
In Conclusion, it is believed General Motors should use the value chain analysis in order to continue to ensure the supply chain is working at its most efficient and productive state. They should also continue to focus on the life cycle of each automobile they manufacture to revise processes that can be improved to increase productivity and efficiency of the supply chain as a whole. It is also important for General Motors to focus on their portfolio management to maximize the quality of the assets and losses associated with the organization including weighing the option to buy or rent new real estate before making a permanent decision about expansion. General Motors already focuses on their leadership role within the automobile industry as a whole, but should find ways to encourage others to use their leadership abilities to help the organization internally related to training new employees, creating new supply chain processes, and remaining imaginative and innovative. General Motors has recently created strategic alliances with other automobile organizations to make themselves as the world’s largest automobile provider. The final strategy to be considered is focusing on linking strategic rewards for loyal customers and hardworking employees. This idea gives employees and customers tangible reasons to remain loyal and help General Motors earn customers for their lifetime of buying vehicles.