Political-Legal—The United States government (and governments around the world) enacts laws and regulations regarding vehicle safety and reliability, as well as fuel emission limits, thereby giving GM (and other auto dealers/automakers) the opportunity to spread the word that these vehicles are indeed safe, dependable, and beneficial to the environment. Economic—Day in and day out, we contribute to our economy by making a wide variety of purchases, from groceries to clothing to automobiles.
Huge sales of expensive items (such as cars) may signal an economic boom. So auto firms such as GM need to take into account the current (and future) condition of the economy when marketing its vehicles. Demographic—In my opinion, adults take driving more seriously than do teenagers, so adults are more likely than teenagers to obtain a driver’s license and, in turn, their own car(s). Since GM is always concerned about everyone’s safety on the road, it needs to offer vehicles that meet today’s safety standards.
In addition, as the characteristics of the world’s population continue to change constantly every day, GM should respond favorably by providing an automobile that is not only convenient, but also fits each person’s needs and daily lifestyles. Sociocultural—To combat global warming and satisfy people’s preferences for a “greener” Earth, auto firms have focused on producing environmentally-friendly vehicles such as hybrids (which run on electrical power).
Technological—Advances in technology have allowed GM to include gadgets such as OnStar, GPS, and satellite radio in its vehicles. Innovations such as these enhance autos’ overall quality (safety and performance). Global—Due to events in the Middle East resulting in gas price fluctuations, GM is trying to emphasize selling vehicles that are fuel-efficient (use more miles per gallon than before). 2. How does Porter’s 5 forces model apply to the US auto industry? The threat of new entrants is generally low in the auto industry.
For example, building new manufacturing plants can cost millions of dollars. New firms may have little or no venture capital to invest. Governments have to approve policies dealing with safety and environmental issues. People who purchase automobiles have substantial bargaining power at their disposal. There is a lot of competition and demand in the market for autos—customers can select from a large number of models from different brands at various prices. The amount of suppliers’ bargaining power in the auto industry can’t be clearly determined.
Automotive firms have to continuously satisfy the needs of their unions/assembly line workers. There does, however, exist a handful of small suppliers, some of which serve only one auto manufacturer. Automotive industry firms such as GM can and do compete with industries that provide substitute (similar) products and services. Therefore, the threat of substitute products and services is likely high if buyers are able to substitute one vehicle for another comparable vehicle. Rivalry among competitors in the automobile industry is high.
Firms use tactics such as price competition, advertising, product introductions, and increased customer service. 3. What are your specific recommendations for GM to do? With my answers to questions 1-2 in mind, I recommend that GM acquire vehicle brands that it does not currently own, such as Ford, Volkswagen, and Infinity, as these cars possess similar features to the Brands that GM does own. I also believe that GM should compete in new automobile markets (like the electric car market) and produce automobiles that are safe, reliable, and fuel-efficient.
GM is truly committed to creating the best vehicles in the world and to fulfilling everyone’s needs! INTERNET WEBSITES CONSULTED: http://www. infobarrel. com/Macro-environmental_Factors_Affecting_Todays_Auto_Industry http://www. gm. com/company/aboutGM/our_company. print. html? print=text http://aspnet. cob. ohio. edu/mis400/ASPPub/ESP/Documents/General%20Motors%20Stratey%20Report. doc http://www. ukessays. com/essays/business-strategy/the-automobile-industry-value