A Case Study of the Establishment and Current State of General Motors

The company I have chosen to research my case analysis on is General Motors. Its main website is listed under https://www.gm.com/. General Motors industry would be classified as ‘Automotive' primarily but also has financial services. It is a publicly-traded company as of 2010, formerly a private one, that manufactures, designs, and distributes vehicles and parts relating to vehicles/transportation services.

Background and History

General Motors has had a rocky road since its establishment in 1908 and its market share of 50% in 1962 (Knoema, 2018). Its founder, William Durant used GM as a holding company for Buick prior to 1908. William Durant also acquired 30 other car manufacturers by 1910. He was eventually removed due to the amount of money that was spent and the fear of financial instability. Regardless of his removable the company prospered and by 1955 it was making more than 1 billion dollars a year. Over the next two decades, General Motors would fine-tune its standards of quality, producing state-of-the-art driving machines (Davis M, 2019).

General Motors headquarters is based out of Detroit, Michigan with several divisions including Buick, GMC, Chevrolet, and Cadillac. The GM company, according to the sec filing report from Dec 31, 2018, shows that they have a total revenue of $147,049,000 with a gross profit of $14,278,000 (General Motors Company, 2019). These projections show that 2018 was less profitable than the prior 2 years but 14.2 million is still a hefty amount of profit-making. It currently ranks 13 on the Fortunes 500 list (lbelanger225, 2019). General Motors serves several areas around the world in 37 countries including the US and employs 173,000 people across its locations. Some key people to mention in the current leadership spots are Mark Reuss (President), Dhivya Suryadevara (CFO), and its current CEO and chairman Mary T. Barra.

GM filed for bankruptcy in July of 2009 and has had a host of CEOs over the years that have failed to halt its decline despite their resolve. Some noted names are Richard Wagoner (2000), and Frederick A. Henderson (2008). Ultimately Mary Barra, appointed in January of 2014 was the one who led the company to turn around from its past mistakes in leadership and outdated status quos. She faced difficulties at first however, having to deal with a huge recall on an ignition switch flaw that resulted in 139 deaths and bad press. (Dess G, 2019) Since then, she has made GM, despite the non-believers and opposition from internal and external sources, into a more profitable company. As a direct result of her leadership she has made a healthier company image in the eye of the public.

Analysis via Porter’s Five Forces Model

The 'five forces' model developed by Michael E. Porter has been the most commonly used analytical tool for examining the competitive environment. It describes the competitive environment in terms of five basic competitive forces (Dess G, 2019, p. 50). A quick summary and illustration of the five forces model is provided below:

By utilizing the data in General Motors' five forces model, company leadership will have the option to see how various factors under every one of the five factors influence the productivity of the business. A more grounded power means lower benefits, and a more fragile power implies more noteworthy productivity. In light of this, a judgment of the business's profitability can be made and utilized by arranging a good strategy going into the future.

Substitutes

Demographics in regards to the type of substitute accessibility, high oil prices could drive car usage down and force alternative forms of transportation.

Strategy Used

The General Motors company created and continues to sustain its competitive advantage through innovation and modern relevancy in today's changing market. Moving past their bankruptcy, admitting their mistakes, focusing on fewer brands and restructuring product development are all key mentions to some of the strategies that were put in place to improve GM's company and give them a competitive advantage again. In the end, the help of new leadership and critical thinking has led them into this agile formation of what is now a consistent force in the automotive industry. According to (Dess G, 2019) 'Barra has been preparing GM to be a formidable player in the future. She has pushed the firm to be more involved in new developments, such as electric vehicles, ride-sharing, and driverless cars'.

One concept that General Motors uses is the Value-Chain Analysis which 'views the organization as a sequential process of value-creating activities. The approach is useful for understanding the building blocks of competitive advantage' (Dess G, 2019). Some examples are the optimizing of products, finances, and information concerning its suppliers - so GM can provide the best value at a lower cost. This would also directly correspond to selecting premium quality raw materials to possibly develop a better brand identity and client loyalty. Some other examples are backward integration of suppliers, employment developments, and innovations in reliable front-end services.

Another important mention is the emphasis on environment, health, and safety. Reducing waste and increasing operational efficiency are important roles that all companies are taking in modern practices. Safety is so important that it has is only sub-categories, leaders, and departments in today's business world and should be considered especially in this particular industry; for both clients and workers.

Another course concept General Motors utilizes is ensuring coherence in strategic direction. This is best defined by saying that an 'Organizations express priorities best through stated goals and objectives that form a hierarchy of goals, which includes the firm's vision, mission, and strategic objectives.' (Dess G, 2019) The ability of a company to strive toward common goals and objectives lies with its employees and managers. The best way to achieve this is by performing a SWOT analysis of the company and then focusing on the strengths and weaknesses of the company. There are a lot of internal and external factors that play major roles in the altering of a company's strategic direction. Such examples are changes in governmental regulation, emerging technology, economic & financial conditions for both company and customers, and other competition in the same industry. The lifecycle is affected by these factors and thus makes new entrants very low due to the difficulty in managing and implementation of strategies. A key takeaway is that strategic coherence doesn't mean absolute competitive advantage, but it is often a necessary one in the steps taken. In fact, most of the successful strategies rely on a combination of many factors to create and sustain a competitive advantage. (General Motors Company, 2014)

Course of Action Recommended

The course of action I would recommend would be to focus on analyzing the competition thoroughly and boosting the advantage it has over those competitors. Porter's five forces analysis of GM shows that the automotive business has high-intensity competition and competitive advantage is the only real protection to counter the negative effects of this. One of the many ways to address these conditions is the development of technological innovation and value creation. This statement is backed by GM's mission statement, vision statement, and furthermore in there about section stating, 'Our future depends on responsible stewardship of the earth, and we continually seek creative and innovative solutions for the environment' (General Motors, 2019). To achieve these breakthroughs, they could put more funding into their research and development departments and improve the customer's knowledge and perception of their products. Having an underlying tool for key assets and administration is vital for creating a lasting and strong brand which in turn will ultimately provide GM with the strength they need to maintain a competitive advantage.

Opinions

My opinion of this company has changed for the better as a result of this case analysis. There was so much the GM company went through to make it to the point that they are today. The company restructuring and many leadership positions that changed make you wonder if the industry and the timing played a role in the outcome or if companies in similar circumstances would have made it out alive. Based on a SWOT of GM I believe that innovation and research from a top-level will be their greatest strength but following customer reviews and better financial programs or incentives would be great to build upon some more in the future.