General Motor’s Strategic Analysis

General
Motors’
Strategic
Analysis
By Cyriac Thomas
(cpg07bm025)
Amrita School of Business
General Motor’s Strategic Analysis
 Automotive Industry
The automotive industry is the industry involved in the design, development, manufacture, marketing,
and sale of motor vehicles. In 2007, more than million motor vehicles, including cars and commercial
vehicles were produced worldwide.
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 pressures 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 are starting to lose market share to other rivals within the industry. In 2006 the Big Three
accounted for 41.5% of light vehicle sales when compared to the top three foreign companies which
accounted for 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. Political
Laws and government regulations have affected this industry since the 1960s. Almost all of the
regulations come from consumers increasing concerns for the environment and the concern for safer
automobiles.
2. Economic
Amrita School of Business
General Motor’s Strategic Analysis
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 aluminums to lead to vinyl.
3. Sociocultural
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 what other people will think of him or her. Consumers also just feel better
when they are driving a nice or new car, if 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
27,000 new vehicle buyers. The study showed that 60% of the buyers referred to the internet before
making their purchases and out of that 60%, 88% went to the auto websites before going and taking a
test drive. Business-to-business marketplaces have 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 generations. Right now, the focus is starting to 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 vehicle 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 Manufacturers. The organization was to replace the American Automobile Manufactures
Association that only consisted of American manufacturers, the goals of the associations 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 Motors
General Motors Corporation (GM) is a multinational automobile manufacturer founded in 1908 and
headquartered in the United States. GM 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 of 2008, 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 dollar loss in 2007.
Amrita School of Business
General Motor’s Strategic Analysis
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 Statement
The GM vision is as follows: 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 fueled 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 statements are as follows: Drive improvements in market share, revenue,
brands, people, responsiveness, and cost effectiveness through the implementation of global common
metrics and best practice sharing.
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.
Values Statement
The auto industry just like the global economy is going through tremendous change, due to rising fuel
prices, and environmental 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 a 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 environmental
concerns and issues. In order to overcome these potential threat, GM should consider mass producing
a range of alternative fueled vehicles, i.e. fuel cell, electric, and hybrid.
Competitor’s Analysis
Amrita School of Business
General Motor’s Strategic Analysis
The major competitors of General Motors are domestic companies like DamilerChrysler &
Ford
Motor and foreign companies like Toyota Motor & Honda Motor.
DamilerChrysler
As the number two auto manufacturer in total revenues DaimlerChrysler has positioned itself as an
industry leader, with this come many strengths. The DaimlerChrysler umbrella covers many well-
known brands such as Dodge, Chrysler, Mercedes Benz, and Jeep. This means DaimlerChrysler has
strong brands that are recognizable in almost every part of the world.
Ford Motor Company
Ford Motor Company is a global company with two core businesses: Automotive and Financial
Services. The Automotive business consists of the design, development, manufacture, sale and
service of cars, trucks and service parts. Ford has been focusing on cutting costs to increase margins
more than its competitors. It has used reverse engineering in the development of their products. Thus
Ford has been an innovator in the auto industry.
Honda Motor Company
Honda motor company is not your average Japanese car manufacturer. Originally know for
motorcycles, Honda has managed to elude the dominate keiretsu system in Japan and become one of
the dominant automobile manufactures in the world. There are many strengths to Honda. Honda has a
reputation for producing high quality products from cars to motorcycles. Honda has won many awards
for initial quality and customer satisfaction. Their automobiles are reliable and generally fuel efficient.
Their research has afforded them competitiveness in innovative products.
Toyota Motor Corporation
The Toyota Motor Corporation was incorporated in 1937 and has many strengths being one of the
industry leaders in the automotive industry. Toyota has three major brands underneath the company
umbrella; Toyota, Lexus, and Scion. By having these three distinct brands, it lets the company reach
many sectors of the globe in a choice of vehicle for customers. Toyota has traditionally also been the
leader in Total Quality Management or TQM. By using the Kaizen theory of continuous improvement,
Japan caught up the U.S. auto makers during the 1980s.
SWOT Analysis
Strengths
1. Large Market Share
Although GM's market share in the US has dropped it is still very much competitive at 26 percent.
They also have an increasing share in the Chinese market. With the right decisions there is no reason
for GM to not become the automotive leader it once was.
2. Global Experience
As explained above even with GM's recent decline they still have the market share and the experience
to bounce back. They have been a worldwide company for nearly a century now and have established
themselves as the global leader for most of them. If you recall I mentioned above that a current
opportunity for GM is to expand globally and as we can see they already have the experience to do so.
It is just a matter of the correct planning and proper implementation of those plans that will decided
whether or not GM's goals are achieved.
Amrita School of Business

General Motors' Strategic

Analysis
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GM Strategic Analysis
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