General Motors Corporation (GM) is a multinational automobile manufacturer created in 1908.its headquarter is in the United States. GM is the world's largest automaker as measured according to the global industry sales. GM is the proud sales leader in the automotive industry for the for the last 77 years.
As of 2008, General Motors employs about 266,000 people around the world. It manufactures its cars and trucks in 35 different countries. The famous brands under the umbrella of GM are Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall, and Wuling. In 2008, General Motors was the ninth largest publicly traded company in the ...view middle of the document...
It will earn its customers’ devotion through continuous improvement driven by the integrity, teamwork and innovation of GM people. Becoming the best in the business is an unending journey, a constantly changing destination. But that’s where we’re determined to drive – one car, one truck, one customer at a time.
Fuel prices, along with healthcare costs have gone up which have increased the prices of the products of the company as well as its annual pension plans for employees.
Competitors are investing heavily in more fuel efficient cars, such as hybrid and electric cars that create a serious concern for GM which is losing out on innovation and differentiation.
EU has imposed taxes on carbon emission from cars to be paid by manufacturers which pushes further the need to produce fuel efficient cars and low carbon emitting cars.
Porter’s Five Forces Analysis:
•Threat of substitutes is moderate in the automobile industry but is always present nonetheless. The prices of the vehicles have been greatly influenced by the recent increase in prices of the complementary products, such as petrol and gas.
•For the close distances price sensitive people weigh the cost of public transportation with private. With higher prices of vehicles consumers who travel short distances prefer public transportation. Also, they lean towards second hand cars which offer them the same brands in cheap prices.
ii. Threat of New Entrants
•There is less threat of new entrants in the automobile market owing to the many barriers to entry. The existing automobile companies have acquired efficient economies of scale with massive production to cater to a larger market share.
•This is something that cannot be achieved over night and acts as an important barrier to entry apart from legal, political and environmental pressures.
iii. Bargaining Power of Buyers
•With regard to automobiles, customers have low bargaining power, which refers to having the power to influence the price.
•Although, having little bargaining power, the customers are increasingly becoming aware of the products, through immense information availability via media or the internet. They have become less brand-loyal and more price sensitive. And customers now look for more fuel efficient and low carbon emitting cars.
iv. Bargaining Power of Suppliers
•The prices charged by the suppliers have a direct and a rather large impact upon the overall profitability of the vehicle manufacturers.
a. Corporate Structure
•The organizational structure at General Motors is flat but is centralized.
b. Corporate Resources
•The company’s marketing activities have previously been focused towards sales expansion through offering discount packages.
•The company heavily relies on debt equity and as a result is heavily geared.