Gm – Strategy Analysis

General Motors Company is an American global auto-manufacturer with its headquarters in Detroit, Michigan. It is world’s second largest automaker after Toyota. GM is conducting business in more than 157 countries, employing over 209,000 people. It manufacture cars and trucks in 31 countries and sell, service its product through these divisions-Buick, Cadillac, Chevrolet, GMC, Opel, Holden and Vauxhall. It was established in 1908. It has led global sales for continuous 77 years from 1931 to 2007. In recent years GM has faced many financial losses i. e. 103. 7 billion loss from year 2005-2009.

In 2009 it was reorganized by US government under bankruptcy protection program. It was re-listed on major stock exchanges in 2010 with the world’s biggest IPO. German government helped to save GM’s European unit with finance. It has earned around 4. 7 billion in 2010 but still has a huge debt to pay-off. VISION & MISSION STATEMENT: – The proposed new vision for GM is as follows: For GM to become the automotive industry leader in alternative fueled vehicles and providing superior quality products that global consumers call to mind when they think of quality and innovation.

“The new proposed 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” PEST Analysis of General Motors: – Political Factors: – GM is affected by political factors as US govt. has financed it through bankruptcy protection. So, government interference in nominating board of directors and framing policies has increased considerably.

As GM is a big player in global auto industry, it is subject to various government regulations in the countries it operates. Increasing concern for environment and safer automobiles has led to these regulations. Economic factors: – GM has been suffering losses for many years in a row with exception of 2010 where it had a profit of 4. 7 billion. There has been a set back at the global front with its major investments failing except for Daewoo. Socio-Cultural: – Socio-cultural factors affect GM as with changing demographics, there is a change in preference of consumers.

GM has an image of producing gas-guzzling cars, which will hamper as people are more concerned about environment and economic products. Technology: – GM’s production facilities in North America and Europe are relatively old whereas in Asia-pacific it has newer plants. To renovate these plants it will require huge capital which is a problem as it had already invested a lot in its R&D programs to develop fuel cells. There is also pressure on the company to undertake austerity measures to cut cost. Porter five model of General Motors: Production Strategy: – Earlier GM duplicated engineering works from one country to other.

But now GM has developed a production strategy which focuses on sharing basic components and work together to build automobiles which with few changes can be sold globally. American facilities handle big trucks and sports segment, Europe focus on midsize and compact models whereas South Korea plant handles small segment. GM has customized its production according to country specific requirements. Global Strategy:- Auto industry has been hit by global recession particularly weak US economy, environmental concerns, rising fuel prices and growing emphasis of consumers on cost efficient products.

GM also has a tough competition from North American companies like Ford and Chrysler as well as foreign companies like Toyota, Honda and Nissan. To re-launch its image of a world player GM has pinned its hope of positioning Chevrolet as its main global brand. To start this process GM made a strategy to re-launch Chevrolet in various parts of globe depending on consumer demographics. It chose its famous model Cruze to begin with. General Motors chose Paris Motor Show to launch one of its most important models on October 4th 2008. Chevrolet Cruze is a compact sedan which went on sales in March 2009 in the China.

It was part of their Global Strategy as Cruze was General Motor’s first global small car. According to Chevrolet’ European Chief it is sleek, it has a high tech interior and arched roofline and most importantly it was Chevrolet’s first global product that would be the future of where the brand will be. Before launching the Cruze, General Motor had been trying very hard for many years to make Chevrolet as its main global brand.

This is because they are very different from their main competitors i. e. , Honda and Toyota, General Motor has a huge brand portfolio in different countries. For example, Chevrolet dominates in US, Opel in Europe and Buick in China. They also took over Daewoo in South Korea in 2002 and after rebranding some of their models GM started selling them in Asia and Europe under the name of Chevrolet. There was a huge strategy of GM behind launching Cruze. With a brand new design, Cruze was launched when GM needed the most.

The major reason behind it was there was a huge downfall in the auto sales of GM in US. That is why GM planned to launch a global product that would help them to recover losses that they suffered. RISKS INVOLVED: – Besides a vision to gain profit there were some risks involved as well with the launch of Cruze.

The first risk was tough competition from the rivals and another was low fuel economy. Cruze was expected to give a fuel economy of around 40 plus miles per gallon which was good enough to impress Americans but not Europeans as the fuel prices were rising day by day and moreover Europeans mainly drive cars like Volkswagon, Ford and Mercedes which give them a fuel economy of 50 to 60 miles per gallon. There was another challenge that GM had to face. Cruze was launched in Europe in order to replace the existing Chevrolet Cobalt which was relatively compact so it was difficult for Cruze to stand out in front of stylish European car models.

And many Western Europeans prefer hatchbacks whereas Cruze was a 4-door sedan. In India mostly people prefer fuel efficient diesel cars, whereas in China looks and features were more important. STRATEGY TO CONTINUE SUCCESS: – As mentioned earlier in order to come out of the hard financial period GM was relying most on its mainstream brand Chevrolet. GM launched this new version in a step by step process starting with China then India, Europe and eventually in American continent with Brazil and last was North America. They banked on the success of their product in one region and used it as a promotional tool for new regions.

Only diesel version was launched in India whereas for Chinese market they developed innovative cabin features to attract customers. In European markets sedan version was launched. And their strategy for Chevrolet to cater the desires of each market really worked as with the help of new models they received an increase in their sales. This was because of Cruze as it took the global market by storm and gave an impressive sale all around. So in order to continue their good run GM came up with another strategy to fulfill the demand of the Europeans, i. e. , launch a special model Chevrolet Cruze Hatchback.

Therefore, it was a very simple decision for GM to launch Chevrolet Cruze Hatchback because of the popularity of hatchbacks in the European continent. PROMOTIONAL STRATEGY: – GM adopted an attacking promotional campaign against its competitors in North America being its home turf but when these couldn’t provide results, they started to highlight their product and its features. GM in an attempt to target youth at a global level, its cars were featured in a big Hollywood flick- TRANSFORMERS. This strategy reaped good results for the company as it was very popular worldwide.

GM has decided to place Cruze price tag slightly more than its competitors in small car segment like Honda civic and Toyota corolla. In China Cruze cars come with a Chinese display. Chinese government is issuing a discount of 3000 RMB and cars are leased without any term interest. GM’s website is available in all major global languages to facilitate consumers. Strategies designed by GM to promote its products have been successful so far. CONCLUSIVE RECOMMENDATIONS: – All strategies that GM has implemented in recent times have been successful and reaped good benefits for them.

To continue the momentum they have gained it is better to concentrate more on their global operations rather than only North America. China, India, Russia, Brazil are the most promising and growing markets in the world. GM should also strive to promote its alternative energy products like Hybrid and Chevy VOLT at a global stage. With growing concern for environment and rising fuel cost, these segments offers can be next big money maker for automotive industry. APPENDIX: – www. gm. ca www. wikipedia. org www. scribd. org www. gm. com www. nytimes. com