EXTERNAL ANALYSIS OF GENERAL MOTORS

Introduction

GM Motors is one of the brightest faces of US technology and development. In Automobile industries the company is a legend and known for its technologically advanced wide range of brands which ranges from light to truck vehicles. The company is doing business from more than a hundred years and since then they have developed and acclaimed a series of brands which have satisfied the customer needs and safety.

Following is a very brief detail of company’s SWOT Analysis, Porter’s Five Force Analysis and PESTEL Analysis along with a few recommendations for the company’s future strategies.

SWOT Analysis

Strengths ·         Globally acclaimed existence ·         Wide range of brands ·         Mounting business in Asia Pacific and Latin America ·         Quality and safety ·         Research and development	Weaknesses ·         Shrinking market share ·         Decline in finances ·         Product rejections
Opportunities ·         Hybrids ·         Growing markets ·         New brands	Threats ·         Competitors’ philosophy ·         Global recession and market downfall ·         Decline in demand

Strengths

General Motors is a well established and globally acclaimed name. The company has successfully completed a hundred years and it is on its foot since 1897 with an established wide range of brands all over the world. After a huge success in US, the company is flourishing its business in other corners and spreading its wings to Asia Pacific and Latin America. GM Motors philosophy of business and thrive for technological advancements and quality is their key to success. The company strongly believe in their customers’ safety and comfort and always develop new models which can satisfy the customer and assure their safety. For the same very reason of customer safety, the company has applied the technological advancements and striving to provide crash avoidance by adopting OnStar satellite technology which can forecast and notify a possible chance of crash.

Weaknesses

Japanese automobile industry has pulled a great impact on automobile industry all over the world especially to GM Motors, Ford and Chrysler’s market share which has resulted GM Motors in declining share and finances because of poor choice of investments and a couple of delayed actions in operations such as in Hybrid technology which almost led them to become a follower and reduced their market share in particular regions and also resulted as product rejections and recalls. In just 3 years 2007-2009 the company had a fall of 2.1% (GM Motors Annual Report, 2007-2009).

Opportunities

As per their agenda of innovation and technology, GM Motors should cash the hybrid technology in new emerging markets like Latin America and Asia Pacific as well as in US.

Threats

Competitors’ philosophy as compare to GM Motors stood stronger in the area of technology and they successfully evolved the idea of hybrid technology and took GM Motors a step back. Being a follower than a leader impacted brutally to the company in current global recession and has been a fierce blow on company’s profits.

Porter’s Five Forces Analysis

External environment of GM Motors as per Porter’s Five Forces Analysis is as follows.

Threat of New Entry

As per the economical slump, research and development cost, inflation with the respect to the automobile development structure, it is nearly impossible for the new entry to jump into business.

Buyer Power

As per the economical crises the dealerships and low rate products are more in and there is a little buying power in the market as compare to the past.

Supplier Power

Suppliers’ power has grown strong over the past few years and, as per the emerging markets which are inclined to the new ideas, it will stay strong in future.

Threat of Substitutes

Threat of substitutes is at its peak as per the economical depression, lack of new entries and a little buying power. GM motor’s falling share over the past few years also endorses the idea (GM Motors Annual Report, 2009)

Threat of Competitors

As per the market structure of business there are a few competitors such as Ford, Toyota, Chrysler, Nissan which are striking serious blows on GM Motor’s market share.

PESTEL Analysis

Political Factors

Environmental concerns of the government and the customers have inflicted dominance over company’s business progression and have resulted to make certain changes in operations since 1960. (United States Environmental Protection Agency, 1960)

Economic Factors

Automobile industry has its vital role of US economical growth. According to a number of studies the industry has contributed a huge amount of economical development over past many years.

Social Factors

Automobile industry of US has always produced a vehicle which became a sign of reliance and esteem and buyers always enjoyed the pride to drive in utmost safety and esteem. The industry knows its perks and challenges and always stands on up to the mark.

Technological Factors

Technological advancements such as internet and social connections over web have increased. As per the study conducted by the J.D. Power and Associates in 2002 indicates that almost 60% of buyers refers to the internet to generate and finalize their car.

Environmental Factors

The automobile industry has faced a couple of challenges over the past few years on the account of environment protection as mentioned earlier according to the United States Environmental Protection Agency, 1960.

Legal Factors

Most recent challenge in terms of legal factors and regulation is the ELV endorsement for automobile industry by the Automobile Recycling Law, July 2002 in accordance to which Japanese are now concerned and very aggressive on its compliance which is effective from 2005.

Recommendations

1. GM motors should strive harder to develop and lead new technology as per their company agenda.

2.  The company has to take bold steps to conquer new markets.

3.  When it comes to competition the company should work hard on remodelling by keeping the idea in mind of new emerging markets.

4. The company should take a more professional look on their portfolio and should drop the investments which are outdated.

References:

 

GM Motors Strategy Report, 2009

United States Environmental Protection Agency, 1960

J.D. Power and Associates Report, 2002

GM Motors Annual Report, 2009