Automotive industry

Introduction: General Motors Company commonly known as General Motors or GM is an American company and is the world’s second largest automaker company. General Motors produces cars and trucks in nearly 31 countries and sells them through these brands, they are: Buick, Cadillac, Chevrolet, GMC, Opel, Vauxhall, Daewoo, Isuzu, Wuling and Holden. The worldwide ranking of automobiles is done per year by International Organization of Motor Vehicle Manufacturers, GM ranked second on the list with 8. 5 million units sold in 2010 ( 50 Companies that changed the whole World, Pg.

14). Background of the Company: General Motors was founded in the year 1908 and became a leading manufacturer by 20th century. Its Headquarters is situated at Detroit, Michigan. General Motors was founded by William Billy Durant on September 16 1908. When he started the company he started with Buick brand but slowly and gradually acquired other brands which are presented I the first paragraph. At present there are about more than thousand automobiles in America which runs on electricity and gasoline.

If we re-consider the background of General Motors then this company has many significant stages that lead success of GM. They are as follows: Creation ( 1909) Acceleration Emotions Revolution Globalization Innovation and Challenges 1. Creation: As far as creationi is concerned we already know that it was founded by Mr. Billy in 1909. There is nothing much to describe about the creation but its worthwhile to know how this company sustained. 2. Acceleration: In earlier years Radio, telephone was the era and cars was mere a dream unless and until GM launched its first Cadillac Lasalle, it became a reality.

Due to good production , marketing and research they also opened new concept cars and started collaborating with other automobile companies. 3. Emotions : There were hard times which GM suffered a lot especially in 1930s political change in Europe and World War Two. This was the time when GM showed its optimism to grow even in adverse and bad situations. GM introduced trucks and tanks in this particular period for its sustainability and also to take advantage of situations, which might be create a feeling of pessimism of liquidation for other organisations in the similar situations. 4. Globalization :

After this backdrop of 1930’s still GM sustained to grow and after many years GM not only sold their cars in their mother country ( America ) but also to other countries. First of its expansion was opening a branch in Zaragoza ( Spain ). The company also successfully ventured with other companies to sell their vehicles like India and China and started showing their imagination and variety of products to world. In The company mainly gained profit from trucks and SUV’s which became centre fo attraction for customers in USA as well as other countries. In short we can say that GM was globalizing its products to the whole world.

5. Innovation and Challenges : By the start of Millennium GM already had flourished in the whole world and continuosly trying to improve themselves by imagining new concepts and ideas, technology and fuel efficiency concepts. GM also became leader in innovating Hybrid cars and SUV’s and developed sophisticated two mode hybrid systems. But however in 2008 as global credit crises were affected ( Recession ) GM also suffered a huge loss of liquidity and many others and took a decision to restructure their entire operations which may take several years ( GM History, March 26 2011).

Present Age GM : After all these decades GM still is leader in technology, marketing, engineering and other areas of business and automation. GM’s maximum sales takes place in US but they also grabbed their sales in many countries like China, India, Brazil, UK and Germany ( Bloolberg, 2011). To sustain such a huge company there are many factors which had an affect which may be adverse or good , which GM dealt with. There are ennumber of factors that let GM to show their capabilities and face adverse situations. For convenience these factors are divided into two main divisions they are : Macroenvironmental Factors

Microenvironmental Factors Macroenvironmental Factors : These factors are uncontrollable factors which influence the organisation decision making and also affects the performance and strategies used by the organisation. There are many macroenvironmental factors which affected GM, they are as follows: Economic Factors: As we know GM is an automobile industry and is flourished all over the world, so it has a huge impact from all countries. Even though GM is a strong brand in North America and all over the world, not all the brands are sold in the market.

The fact that when a consumer spends his or her a part of savings on purchasing a car, he or she may may give high considerations to utilities like fuel economy, quality, safety, price and value. GM brands differ from this kind of utlities. Also discount price, warranty etc affect their minds on buying motive. Though GM suffered heavy losses in the year 2008 due to global recession and bankruptcy, still today company gets surplus profits as majority 73% consumers still respond to GM cars, who they might buy in future. This particular type of market is called as Patriotic Shopping ( Company Profile, GM, 2011). Political Factors:

Stringent government regulations of each country and laws have affected this company from the date of its formation. All these regulations arise for the customer safety and customers increasing environment. As we know that GM is spread all over the world, they have to deal with strategy which can be used to all the nations. Such strategies are commonly related to exporting and licensing for marketing their product in that particular product. GM has to deal with all the political factors such as quotas, tariffs and other restrictions. Techonology: Techonological change has a major impact on any automobile industry.

Updating the new techonology and adapting new methods of production is the major macroenvironmental factor that affects GM. Hybrid techonology which is one of the new and fast growing techonology is been introduced by GM. Chevorlet Tahoe , GMC Yukon are the examples of such type. GM introduced Chevorlet Volt which runs on electricity. DOE ( Department of Energy) USA, has introduced a three year program of which is concerned with vehicle techolological competition. Its basically a research and development facility given to all the nations and challenges they have in front of them.

The latest challenge in front of them is that of Ecocar challenge. The ecocar challenge consists of all the techonologies which are latest in nature like, electric functions, hybrids, plug in hybrid and fuel plug hybrid motors, cars running on hydrogen and ethanol etc. This concept of ecocar challenge is introduced to motivate the automobile company to come up with the superior techonology to curb global warming which is the present hot topic for todays world by reducing green house gases ( Company Profile, 2011). Demographics: For all these years GM has been providing all sorts of product to baby boomers generation.

But now GM is shifting to X and Y generation customers in order to grab the market opportunities. As baba boomers are getting ready to retire that means their spending of money on special good that is cars and furniture will reduce, the X and Y generations that are in their 20’s and 30’s can think of purchasing speciality goods. Global: Many automobile companies collaborate with each other to grab global markets. In this perspect GM successfully took part in new trade association created by the alliance of automobile manufacturers.

Many automobile companies like Ford, Mazda, Diamler Chrysler, BMW, Toyota, Volkswagen etc. participated in this alliance. The motive of this alliance was to replace the american automobile manufacturers which consisted of only american automobile manufacturers and work together for the common interest and provide credible and good information taking into consideration the standards ( Cisco systems Inc, 2010). Sociocultural: In todays’s society a person is wealthy or not is judged by the car he owns and drives. Today’s society will not admit this but its very true.

No one wants to drive a car which is not attractive and is a piece of junk thinking that what will others think of him/her. Consumer also feel good driving a new car with new dimensions and features and good fuel average. GM took all this perspectives in mind and is constantly driving for achieving what customers feel. Microenvironmental Factors: These are the factors that affects the company to give something in return to the customers. In this context the customers may be the purchaser, company suppliers, market intermediaries, competitors and publics. Each component is described in brief below: Suppliers:

Now GM being a big automobile industry, had many small supplier corporations at their disposals but they sticked to one supplier since 1997 that is the Star Source Management Services. This supplier has worked with GM for more than a decade and has given efficient service in vehicle operations, powertrain and many other divisions. This supplier being the only supplier to GM for years has benefited the company by giving quality service and reducing cost for the company. In todays’s market the potential supplier needs to have quality service and a great trust to whom they are supplying.

Then only they can be a direct supplier of that concerned company which Star Souce proved to be ( Company Profile,GM, 2011). Customers: GM as we know has a long history in producing cars and trucks. They try to provide more and more sustainable cars to their customers. They also created the habit of asking prospective consumers for knowing their values and make their values their responsibility. Publics: GM as a corporate responsibility encourages people to take interest in technology, science and math by creating classrooms, various programs, manufacturing practices, informations etc.

GM takes into considerations factors like plant locations, employment levels, suppliers which they think can have a great impact on the publics by there by giving great importance to health, education, safety, education and adressing needs to the technology and innovations. ( Company Profile, GM, 2011). Employees: There are many employees working in GM under different departments such as finance, marketing, human resource, costing, production, sales and distribution etc. As GM is spread worldwide there is lot of cultural diversity in employees working in the company.

The basic satisfaction GM gives to its employees are to enhance the opportunities that are available in the markets, retention of the employees, giving promotions to the employees who are putting their souls to achieve the objective they have decided. Company also gives opportunity to make networking and succeed in their departments. This will enhance both the employees from increasing their knowledge and their efficiency and from the company point of view, company enjoys with those employees who are highly motivated and have high efficiency. Marketing Strategy:

As company itself is very big, it marketing strategy is also very complex. Strategy of marketing depends on country in which GM wants to increase their sales. Marketing strategy plays an important role in attaining objective of the company. Strategy Development: To reach to consumers, GM uses the most effective tool that is internet for their marketing activities. The company simply uploads is latest news of its products on YouTube which is called viral marketing campaign. It also uses email marketing by sending mails to their existing customers about their new launching of new products.

Market Segmentations is done by the GM as it thinks that whole market is one market for them. So segment are done, these segments are income, age, family and occupation. However marketing in each of its segment differs from time to time as customers’ needs and desires change. Segments can be made according to age, income, family, occupation etc. GM differs its products according to its society groups such as affluent, middle and lower level groups. The positioning strategy which is extremely important in the company is changed from time to time as the requirement and behaviour of the company change.

Thus marketing strategy is extremely important as the whole success of company (GM) is dependent on it (Optimum 7, 2011). SWOT Analysis: Strengths: Branding: GM is producing brands like Chevrolet, Buick, GMC, Opel, Vauxhall, Cadillac etc. which majority of customers buy not only in North America but all over the world. GM brand is known all over the world and considered as strong brand name. Worldwide Presence: GM has flourished its horizon to many countries like Russia, South Africa, Egypt, Germany, China, Brazil, Australia, Spain and Thailand.

As company is flourished all over the company, its operations like manufacturing, distributions, office, assembly, and warehousing are situated nearly around in 55 countries (Marketing Teacher 2011). Weaknesses: Inefficient Liquidity: GM had a low liquidity rate in the year 2008 as it was in 2007. It was around, 14 billion dollars and 27 billion dollars respectively. The reduction or losses are subject to low sales and reduction to working capital. Due to this the relationship which they have with suppliers was hampered a lot. Research and development was also hampered to some extent.

Low Debt Ratings: debt, interest and dividends they pay on principals and securities were very low. All the investors of GM were not satisfied by company’s workings. Opportunities: Demand for Hybrid Vehicles: currently GM produces around six hybrid vehicles in the market, they are: Saturn Vue and Aura Hybrids, Chevrolet Malibu and Tahoe Hybrids, GMC Yukon Hybrid as well as a Cadillac Escalade Hybrid. As every country is suffering from global warming, GM has the opportunities to sell their cars hybrid cars which can grab more market in the coming years.

Market research shows that there will be lot of demand for hybrid cars and cars which runs on plug-ins. Demand in India and China: as India’s and China’s economy is getting stable and there is constant growth in these two countries, the market looks favorable to grab from the perspective of an automobile industry ( Marketing Teacher, 2011). Threats: Global Recession: in the year 2008 every country suffered because of global recession which took place. But by 2010 growth of economy continued to grow. The demand of customers declined rather for cars due to less fuel efficiency, higher interest rate for credit etc.

Intense Competition: there is cut throat competition all over the world in the automobile industry. GM’s rivalry or competitors are Ford, Toyota, Volvo, Nissan, Honda, Hyundai, BMW, Isuzu etc. all these competitors do something innovative like introducing new programs, new technology, curbing their price of the product etc. which intensely affects GM to remain as a market leader. All these packages and incentives reduce the price of the vehicle and thus company runs out in losses (Marketing Teacher, 2011).

Implications: As the company is still surviving from the 2008 global recession and bankruptcy it had in the year 2010, it suffered a huge loss. But company has an optimism to survive in such kind of situations by reducing their brands as part of bankruptcy proceedings. GM lost many dealerships which it has all over the world which is around 100, 000 dealers (CNN 2010). But still company is trying to come out of these situations. The ranking of the company is on 20th position but still far ahead from other companies.

Conclusion: General Motors was, is and will be the market leader all over the world. The reason for this is, GM pays equal attention to all the key factors which it thinks is important. The key factors are marketing, advanced technology, customer relationships, corporate social responsibility, relationships with supplies and distributors etc. As technology is concerned GM identifies the need and requirement both of the customers and takes into consideration the global warming which is taking place due to greenhouse effects.

To that effect hybrid electric vehicles are being introduced in the market as a solution. From competition point of view this particular technology has good demand in the future. REFERENCES: Cisco Systems Inc. , Cisco Public Information, 2010. 50 companies that changed the world "GM History". General Motors Company. Retrieved February 9, 2011. "Company Profile". General Motors. 2010. Retrieved March 26, 2011. http://www. gm. com http://bloomberg. com http://optimum7. com CNN the Big three depression risk View as multi-pages