The Consumer and Production Analysis of Chevrolet of General Motors

General Motors

General Motors dates back to 100 years ago when it was founded by William Durant and later on acquired it using the Chevrolet becoming president of the company in 1918. The purpose of this study is to evaluate the Chevrolet history and future according to the sustainability, business strategies, what failures they have encountered and what led to the failures of the General Motors. The plan to reinforce and ensure sustainability even after the difficulties encountered. The analysis will also touch on the operations of the company globally (Cesiel & Zhu, 2017).

Chevrolet History

The company was originally known as the Chevrolet Motor Company founded by William Durant in 1911. Chevrolet was a name derived from car racer of that time; Louis Chevrolet, who was in partnership with Durant. In 1915, Chevrolet sold his share of stock to Durant and went to continue with racing though Durant retained the Chevrolet name. However, there was a disagreement between Durant and Chevrolet whereby one wanted vehicles produced for the general population while Louis wanted the company to produce luxurious cars only (Davis, 2012). Durant became the president of the General motors after he acquired it and Chevrolet became part of General motors which was founded by Durant. In 1950’s and 1960’s Chevrolets had a great influence in the American automobile market. In the 1970’s, the impala series of Chevrolet became one of the best-selling automobiles in America history.

Modern Times of Chevrolet

Since the re-launch of General Motors in Europe in 2005, Chevrolet has become popular and as well supply vehicles version in Korea known as Daewoo. Chevrolet went through a downturn at some point in time and recovered from it between 2007 and 2010. The recovery focused on creating trucks and cars that consumed fuel efficiently allowing them to compete with oversees automakers. Hence, they ended up launching new vehicles. Chevrolet Volt is a plug-in hybrid top selling electric vehicle in the American sales up to date (Tamai, 2019).

Business Strategy of Chevrolet

Chevrolet uses a business strategy of demography and geographic segmentation so as to meet and understand the needs of customers specifically. Targeting strategy of differentiation used by Chevrolet is for making products and providing services as per the customer’s requirement (Cesiel & Zhu, 2017). Therefore, the company focuses more on comfort, providing automotive products and services to the customer which in turn creates more loyal customers due to the good services they offer.

Failure of General Motors Chevrolet

In the GM efforts to expand its market to India, the company failed due to lack of gaining traction to its benefit. At first it started successfully by launching Opel cars but later, on launching Chevrolet, the company failed to sustain its momentum. The failure occurred due to its lack of consistency in the brands, models and leadership in India. The competition in the Indian market of the Maruti Suzuki and Hyundai dominance led to the GM not selling more than 1% of its cars in that country leading to its exit in the Indian market (Davis, 2012). Many employees were at a risk of losing their jobs due to the failure of GM in India. This came as setback in the company rendering them bankrupt and was forced to close down some brands like the Hummer, Saturn and Pontiac in 2009.

The Chevrolet plans on unifying the brands strategy globally as one not depending on some countries ways of doing. The company has developed a slogan that states; “Find New Roads” which is easy to translate and understood by any person (Tamai, 2019). Although, there is little consistency in the Chevrolet Company and plans for improving and making it efficient globally, website efficiency is also one of the plans to be implemented. The presence of the Chevrolet in more than 130 countries helps the company to optimize various functions and services through its channels.

Supply and Demand

To understand general motors trends in demand over time the company’s market demand can be examined. What factors influence General Motors market demand? A few of these factors include income of the consumer, prices of related goods, and tastes. The findings of this examination of the market demand for General Motors Company are listed below:

Income: General Motors passenger vehicles are classified as normal goods and are not a frequent or bulk purchase for average consumers. The relationship between the consumer's income and GM passenger vehicles is positive when consumer’s income rises, the demand for General Motors products increases. Inversely, General Motors also has some inferior goods like models of their vehicles that were not popular or desirable to consumers for different reasons resulting in customers not buying those GM vehicles, such as, Pontiac Aztec, Hummer H3 and Saturn.

Price of Related Goods: General Motor’s passenger vehicles are a product that can be substituted and has many competitors with equal substitutes for GM’s products such as, Ford, Dodge, Nissan, and Toyota. As the price of a substitute changes the demand for a competing substitute also changes, signifying an increase or rightward shift in the demand curve increasing the passenger vehicle demand. General Motors products are also complementary with fuel and gasolines shifting the demand curve the other direction when the price of fuel/gas increases the demand for GM’s products decreases.

Tastes: Consumers have a preference in with vehicle types such as cars, trucks, crossovers, or SUV’s. One deciding factor for consumers is their concern for gas mileage and moving towards using electric cars. GM is an innovator in this field and has recently responded to concerns with gas mileage and the environmental impact. GM released the Chevrolet Cruze. These concepts offer assistance to the administration to find out perfect levels of supply and demand that are fundamental in accomplishing economical company revenues (Boyes &Melvin 2012). Within the period running from May to July 2012, the Chevrolet brand sold 496,533 models. The volume of deals expanded from 177,943 in May to 180,098 in June. In any case, the volume for July dropped to 138,945 vehicles. On the other hand, the costs of Chevrolet Cruze shifted from $ 19, 816 per vehicle in May to $ 21,151 per vehicle in July. The cost of the same car model stood at $ 17,443 in June (General Motors Company, 2012).

Equilibrium Quantity and Prices

The equilibrium point is a point whereby the amount requested of items is equal to the amount provided within the market at a specific cost. This point shows that a company is proficiently distributing its assets within the production of its items. Equilibrium conditions portray to each market member that its client and provider are fulfilled with the winning market or economic conditions (Arnold, 2011). The equilibrium cost from the graph above is around $ 18,500 vehicles. At this cost, the company anticipates to supply around 179,000 Chevrolet Cruz vehicles. From this, the company can effectively designate assets within the production of the vehicle.

Elasticity of Demand

Price elasticity of demand refers to the responsiveness of quantity demanded of a product or service to changes in prices of the quantities offered. It gives the percentage change in the quantity demanded due to the price change (Boyes &Melvin 2012). Price elasticity of demand can either be inelastic or elastic. Inelastic demand is a circumstance whereby a change in cost will result in a small change within the amount requested. On the other hand, elastic demand is a circumstance where a little alter in cost comes out to a large impact on the amount of that specific item. (Boyes &Melvin 2012). Lion's share of items that have elastic demand is solid merchandise. The automotive product belongs to this category and hence we expect it to have elastic demand.