General Motors’ Strategic Analysis

Automotive IndustryThe automobile industry is the industry involved in the design, development, manufacture, marketing, and also of motor vehicles. In 2007, more than million vehicles, including cars and commercial vehicles were produced. In 2007, a total of 71.9 million new automobiles were sold worldwide: 22.9 million in Europe, 21.4 million in Asia-Pacific, 19.4 million in USA and Canada, 4.4 million in Latin America, 2.4 million in the Middle East and 1.4 million in Africa. The markets in North America and Japan were Stagnant, while those in South America and Asia grew strongly. Of the major markets, Russia, Brazil and China saw the most rapid growth.

In 2008, with rapidly rising oil prices, industries such as the automotive industry are experiencing a combination of pricing pressure from raw material costs and changes in consumer buying habits. The industry is also facing increasing external competition from the public transport sector, as consumers re-evaluate their private vehicle usage. The United States is the World’s largest consumer market for light vehicles, passenger cars and Light trucks. The United States auto industry is dominated by the big three or General motors, Ford Motors and Daimler/Chrysler.

These three account for roughly a little over half of the production of cars and light trucks in the industry. What has currently started to happen in the recent years is that the Big Three accounted for 41.5% of the light vehicle sales when compared to the top three foreign companies which accounted for the 36.6% (Toyota, Honda, & Nissan). Overall the Big Three account for 54.9% of the U.S. market in 2006. This was down from 58.2%in 2005, 60.1% 2004 and 61.8% in 2003. This trend is expected to continue but to taper off in the coming years Factors Affecting the Automotive industry (PEST Analysis)

1. PoliticalLaws and government regulations have affected since the 1960s. Almost all of the regulations come from consumers increasing concerns for the environment and the concern for safe automobiles 2. Economic

The automobile industry has a huge impact on every country’s economy. According to various studies this industry is the major user of computer chips, textiles, aluminum, copper, steel, iron, lead, plastics, vinyl and rubber. The study also showed that for every autoworker there are seven other jobs created in other industries. These industries include anything from the aluminum to lead to vinyl. 3. Socio cultural

Today’s society judges people on the type of car you drive. Society does not like to admit to this but it is very true. Manufactures know this happens and targets their markets by these thoughts. Anyone who drives a nice vehicle is thought to be wealthy. No one wants to be seen driving an unattractive piece of junk because of the other people will think of him or her. Consumers also just feel better when they are driving a nice or new car; it makes them feel better about themselves. 4. Technology

The internet has affected just about every industry in the world and has also had a huge impact on the automobile industry. A study was conducted by J.D Power and Associates in 2002 and involved more than 27,000 new vehicle buyers. The study showed that 60% of the buyers referred to the internet before masking their purchases and out of that 60%, 88% went to the auto websites before going and taking a test drive. Business to business marketplaces has given the industry many opportunities because of the internet, such as more efficiency and lower cost. 5. Demographics

For many years now, the baby boomers generation has been the main target market for just about every product. As their generation is getting ready to retire and spend less money, the automakers are looking at the younger generation. Right now, the focus is turn towards the baby boomers children (generation X) who are in their mid 20’s and 30’s. According to analysts, five years from now Gen X will account for at least 30% of vehicles sales. 6. Global

General Motors, Ford Motor Company, Daimler Chrysler, BMW, Volkswagen, Volvo, Toyota, Mazda, and Nissan Motor Company come together to create a new trade association created the Alliance of Automobile Manufactures. The organization was to replace the American Automobile Manufacturers Association that only consisted of American manufactures, the global of the association were to work together on public policy matters of common interest to provide credible industry information and data, and seek consistent global regulatory standards.

GENERAL MOTORSGeneral Motors Corporation is a multinational automobile manufacturer founded in 1908 and headquartered in the United States. General Motors is the World’s largest automaker as measured by global industry sales and has been the global sales leader for the last 77 years. As of2008, General Motors employs about 266.000 people around the world. It manufactures its cars and trucks in 35 different countries and sells them under the brands of Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall, and Wuling. As of 2008, General Motors is the ninth largest publicly traded company in the world.

In recent years the company has endured significant financial turmoil, including a 38 billion dollars loss in 2007. GM needs a sense of urgency regarding revising a strategic plan that incorporates the next generation of vehicles. In today’s global economy and highly competitive auto industry GM has no time to procrastinate. As Stated, GM has just too much at risk in not becoming an industry leader in alternative fuel technology. Fuel-economy legislation is sparking the race. This is a critical time in auto industry with many threats, but opportunities as well. The next several years will redefine GM.

VISION STATEMENTThe GM vision is as follow: GM’s vision is to be the World leader in transportation products and related services. GM will earn our customers’ enthusiasm through continuous improvement driven by the integrity, teamwork, and innovation of GM people. The proposed new vision for GM is as follows: For GM to become the automotive industry leader in alternative fuelled vehicles and providing superior quality products that global consumers call to mind when they think of quality and innovation my vision for GM is to be the industry leader in innovation and where all other industry competition strives to imitate. MISSION STATEMENT

The current GM mission statement are as follows: Drive improvements inn market share, revenue, brands, people, responsiveness, and cost effectiveness through the implementation of global common metrics and best practice sharing The new proposal mission statement will be as follows: GM will become an industry leader, not a follower. To regain lost market share that was lost to foreign competition and once again be the auto industry leader in sales and market share in today’s global market. VALUE STATEMENT

The auto industry just like the global economy is going through tremendous change, due to rising fuel prices, and environment worries, such as global warming, GM must use these threats as opportunities and take advantage of changing consumer buying habits. GM needs to change consumer perception of the company, from dull, poor quality vehicles to innovative, quality and environmentally friendly company. To do this GM must portray an image that states that GM values what the consumer wants and what the environment needs.

Listen to what consumers are saying directly and indirectly about GM’s current products, and create innovative, green, vehicles that turn consumers into customers. At the same time provide GM stakeholders pride and financial incentives to remain with GM Environmental Analysis GM and the entire auto industry are currently challenged with the perfect storm. The auto industry is being hit by a weak US and global economy rising fuel prices, and social and political environment concerns and issues. In order to overcome these potential threat, GM should consider mass producing a range of alternative fuelled vehicles, i.e. fuel cell, electric, and hybrid.