Automotive industry Analysis

“There is no doubt that creativity is the most important human resource of all. Without creativity, there would be no progress, and we would be forever repeating the same patterns. ” – Edward de Bono The above saying could not be truer, more so in today’s business context. Organizations are trying to find new and inventive ways of first creating and then holding on to their competitive advantage and being creative is one way they can achieve that. Creativity is a very misunderstood term in organizations.

It is thought to be the creation of “something out of nothing” whereas it actually is “the radical and effective change of something understood deeply” (Robinson and Hackett 1997). General Motors is certainly trying to appreciate this, and the company is always seeking to bring new products – or improvements to their current products – to market. COMPANY BACKGROUND General Motors Corporation, also known as GM, is the world’s largest automaker and has been the global industry sales leader for 75 years. Founded in 1908, GM today employs about 327,000 people around the world.

With global headquarters in Detroit, GM manufactures its cars and trucks in 34 countries. In 2008, 8. 35 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn and Vauxhall. GM has and is supporting two and a half pensioners for every employee. It is the largest health care provider in the world. General Motors, writes a prescription every 1. 5 seconds for drugs for their retirees and others — 1. 5 seconds, 24 hours a day, seven days a week, 365 days a year — cost approaching $6 billion a year.

(GM website) Vision GM’s vision is to be the world leader in transportation products and related services. ‘We will earn our customers’ enthusiasm through continuous improvement driven by the integrity, teamwork, and innovation of GM people’. – (GM Website) Mission GM is a multinational corporation engaged in socially responsible operations, worldwide. It is dedicated to provide products and services of such quality that customers will receive superior value while employees and business partners will share in the success and their stock-holders will receive a sustained superior return on their investment.

COMPANY STRATEGY General Motors has a broad differentiation of products with five divisions which include five market segments. They also mass produce their vehicles and give their customers the option of upgrading from to one GM brand to another. GM’s overall sales growth in Europe continues to be held back by other models that are showing their age. GM Europe’s approach to the UK market is also criticised by motoring industry experts who bemoan the car maker’s lack of commitment to convert some key Saab and Cadillac models to right-hand drive.

GM is now trying to take Europe by storm after introducing diesel engines into its luxury models. It is producing Cadillac cars with diesel engines in a move that should make the luxurious American marque more appealing to European drivers. A recent spike in demand for upmarket cars with diesel engines that has made the segment the fastest growing and most profitable in Europe. GM’s success is committed to innovation and technology. GM is exploring a range of innovations and technology such as: -Alternative Fuels -Powertrain Engines -GM mobility -Hybrid Vehicles -Fuel Cells

General Motors is using advanced technology to make vehicles with improved fuel economy and lower emissions than typical internal combustion vehicles. Most importantly, these advanced technologies will give its customers better performing vehicles. GM has invested hundreds of millions of dollars in fuel cell research with the ultimate goal of removing the auto from the environmental equation, because they believe the automobile leads the way to the hydrogen economy and a truly sustainable future. As alternative technologies to the internal combustion engine evolve, their strategy is to develop a portfolio of options.

GENERAL MOTORS – SWOT ANALYSIS The aim of the SWOT analysis is to align the capabilities of the firm with the opportunities and the management should be made aware of the weaknesses and should aim to eliminate them. The threats and opportunities make up the environmental analysis while the strengths and weaknesses are the internal audit, the challenge for the management is to estimate its potential and build on its resources and competencies to create a competitive advantage. The strengths and weaknesses of a company are the internal aspects that will shape the entity.

This analysis determines the opportunities and threats to a company in its industry. They offer a view where there are opportunities that can be taken advantage of along with threats that should be avoided. Opportunities and threats review the key aspects from the business environment. This analysis will aid an industry participant to wage future threats and how to capitalize future opportunities the opportunities and threats of the industry are largely related to political regulations and technology. Strengths General Motors is a large corporation and has a fair share of the market.

Technology is a tool that has the potential to empower automotive industry leaders at all levels. GM uses technology to improve management and operations systems, as well as to identify proven instructional methods. It has a lot of technological potential. In addition to sorting out its model line-up in Europe, GM decided to tidy up after the departure of European chief executive Michael Burns who is joined the US supplier Dana. Hence, new leadership is another strength that the company has. Quality improvement and perception is another on of its strengths. Also, model acceptance of the different GM products has improved.

Weaknesses The main weakness of GM has been the high operating costs, which has made the company less competitive. General Motors has been failing to make technology work in its favor. GM has a bureaucratic culture yet it operates in a market that is demanding high flexibility. The company also has a poor relationship with the International Union, UAW. GM has also faced a lot of product design problems. The company’s’ financial performance continues to be quite disappointing and the negative effects of downsizing are kicking in. The company still has a lot to learn with regards to Lean Production.

According to Womack & Jones “lean thinking must start with a conscious attempt to define value in terms of specific products with specific capabilities at specific prices in dialogue with the specific customers. ” So, thinking in terms of lean principles, GM did manage to identify the value stream correctly but missed the critical starting point of specifying value. Basically, they were doing the “wrong good” (Womack and Jones 1996:19) adding to muda or waste. Opportunities The company is now investing money in new plans that would enhance the efficiency of the company.

The company is trying to use the knowledge it gained from Saturn experience and the Toyota (Nummi) joint venture. It should also continue to build on new found customer confidence. GM should benchmark itself with its competitors and take advantage of the changing consumer demand for new model types and styles. Threats The main threats General Motors faces are from its competitors both domestic and foreign. It has gone though a number of consumer lawsuits. Foreign legislation and regulation is also threatening factor that the company faces.

The declining quality of infrastructure in the different markets is also another threat. PRODUCT DEVELOPMENT PROCESS AT GENERAL MOTORS “We are in the arts and entertainment business”. – Bob Lutz, GM Vice Chairman, Global Product Development To conceive, design and conceptualize a product one has to go through a sequence of steps which is referred to as a product development process (Ulrich and Eppinger 2000). If a company hopes to maintain a steady stream of new, innovative products that meet or exceed a customer’s expectations, the decisions made at this phase of NPD must be sound decisions.

General Motors have a formal process for controlling the earliest phase of Ideas for new product features. Ideas can be entered into an electronic database by any person or group of people can enter an idea, including suppliers. These ideas require further validation to our specific requirements. Once the ideas are entered, a group of people from all functions and brands evaluates them, and decides whether or not to proceed with development. If the idea is approved, the appropriate engineering group is assigned to track development of that idea.

The General Motors process for bringing new ideas into the development phase resembles the process used at most other companies. Every effort is made to collect every idea and give it a fair, thorough chance to proceed. The process of deciding which ideas are a “go” is more of an art form than a science Selling the product idea To give companies a chance to make these decisions more reliably, the inventor of the idea needs to present as much information to the decision makers as possible. Or, to put it another way, he or she must perform a sales job for the idea. But in reality, proper attention is rarely given to a new invention.

This may be due to the fact that a lot of good ideas come from people who have job functions which are very different from that of inventing new ideas. Such people just do not have time to do anything more than input some information into a database and hope for the best. Even some formal concept generation groups don’t have a strong appreciation for the amount of work required to get an idea started on its way. Creating a new department To encourage the development of a larger number of ideas, General Motors created a new department called Design and Technology Fusion, which I joined in January of 2001.

The intention was to assemble a group of people who would do whatever it takes to get the development process started for some good ideas. To narrow the focus of the group, we were asked to concentrate on ideas or technologies that would enhance the design of our vehicles. In other words, Design and Technology Fusion was going to be responsible for doing the sales job necessary to get the development started on some new ideas. In order to accomplish this, there were three main strategies identified: Prototyping, Media Exposure, and Follow-up. Creating a prototype

The importance of prototyping an idea is seriously underrated. It is rarely enough to simply describe an idea in a text or even graphic format to sell someone on it. Independent inventors understand this. They know that if they are ever going to sell an invention to a manufacturer, they had better walk in with a prototype. The reason for this is simple: Even for visual people who can relate well to drawings, it is so much nicer to be able to hold an actual part and make it work. Prototypes also allow you to go through an iterative process of refining the concept.

In other words, as an idea is being assembled into a working part, you will be able to identify some issues that would be impossible to see in a sketch. The value of the media in development During the development process, the media can be a very powerful tool. There are several benefits to letting them tell the story of a new product under development. Doing this, however, is something many companies shy away from because they fear that when their new concepts hit the press, their competitors are going to steal their ideas and beat them to market.

However, there are two primary benefits to having new ideas covered by the media which may outweigh these risks. First, positive press coverage becomes a great tool to convince the decision-makers to commit the resources to develop the idea. There’s just something about reading a complimentary article about a new product idea that gives it credibility and respectability. Of course not every idea is a good idea, and working with the media is a great way to find that out. It is something like doing a clinic – but better, because the media tend to be more objective than someone being paid to give you input.

Also, typically, if the media does not like the idea, they simply will not cover it in their stories, because the public is only interested in reading stories about good ideas, not bad ones. The second benefit of media coverage is that it builds a positive, innovative image for your company. Your potential customers are reading these articles, and if an article is written in a positive manner, it could influence the customer’s opinion of your company positively. Of course, this means that you eventually have to come out with some of these great ideas or your credibility will be shot.

And obviously, not all new technology should be revealed in the prototype stage. If the new product is something that the future of you company rides on, it needs to be handled with more secrecy. After prototyping Once the prototype is done and the supporting information is collected, a presentation can be made to the decision-makers. By “supporting information,” I mean any positive feedback from the press as well as more analytical information like forecast cost and profit. This step is usually not as simple as making one presentation at a meeting.

The sales job will typically consist of hunting several different people down at different times and using the available information to convince them what a great idea you have. Follow-up doesn’t end there, though. Even if the decision is formally made to begin development, the inventor needs to track the early progress to make sure that things are moving properly. Development of some products can take years, during which time it could be easy for people to lose focus on the development work Project Management Project management runs deep into General Motors new product development process.

The organisation structure at GM is one where the Executive Committee consisting presidents, vice presidents and directors set broad technological directions and setting targets. The middle managers (general managers, senior engineers) have the responsibility of giving specific targets to the project teams. The background of all people at senior positions at GM is deeply entrenched in technology, making it easier for the project team members to relate to the senior managers better. This minimizes the “us – and – them attitude” in the team (Parry and Turner 2003). Teams select their own team leader who manages day-to-day activities.

Middle level managers make specific project proposals for the top management, who establish priorities leading to greater communication. Even junior engineers are allowed to voice their opinion, fostering innovation. RECOMMENDATIONS General motors should cut costs and this can be done in a number of ways. It should drop its unsuccessful product lines; it should standardize component parts across the different models and reduce the number of parts needed to produce a car. It should also decentralize decision making and manage its supplier relationships in a better fashion. . GM should also focus its resources on core products, cars and trucks.

It should realign its organizational structure to support core products and meet costs and quality goals. For instance, GM could have self managed creative work teams to figure out how to speed-up product development & improve product development. GM should also balance the needs of employees and unions with the needs of the company. CONCLUSION In conclusion, I think GM likes to talk about the voice of the customer. The problem is the base of their customers keeps shrinking. They need to listen to their competitors customers, too. Then they need to get some outside voices of people who understand what makes a car or truck passionate.

GM has a lot of brands so it should not try to do the same thing with all the brands. Finally, their plans of introducing diesel engines are unlikely to appeal to traditional motorheads whose love affair with powerful petrol engines remain strong. REFERENCES •Fleisher, Craig S. & Bensoussan, Babette E. , Strategic and Competitive Analysis, published by Pearson Education Inc. , 2003 •Womack, J. P. and Jones, D. T. (1998). Lean Thinking: Banish Waste and Create Wealth In Your Corporation . New York: Free Press •Ulrich, K. T. and Eppinger, S. D. (2003). Product Design and Development. Boston, Mass. ; London: Irwin/McGraw-Hill.

•Sutton, R. (2001). The Weird Rules of Creativity. Harvard Business Review, 79(8), pp. 96-103. •Meyer, S. A. (2000). Managing within a Creative Environment. Design Management Journal. pp. 10-16z •GM Posts Huge Loss: http://money. cnn. com/2005/10/17/news/fortune500/gm_loss/ •Farber, David. Sloan Rules: Alfred P. Sloan and the Triumph of General Motors U of Chicago Press 2002 •Maxton, Graeme P. and John Wormald, Time for a Model Change: Re-engineering the Global Automotive Industry (2004) •General Motors Website: www. gm. com •Turner, C. E. and Parry, G. C. (2003). Lean thinking – Lean New Product Introduction Game.. pp. 1-39.