Changing Strategy of General Motors Essay

General Motors Company, commonly known as GM (listed General Motors Corporation before 2009), is an American multinational automotive corporation headquartered in Detroit, Michigan, and the world’s largest automaker, by vehicle unit sales, in 2011.Earlier GM used to dump their old and unsold models into developing countries and they used to neglect markets in developing nations thinking that they are not profitable, and also they don’t have any R&D centres outside Detroit, US. So there is no way of new innovative models entering into developing markets. But now they slowly started penetrating developing nation markets by introducing their new models in those markets as there are huge untapped potential customers. Automotive Industry Analysis using porter’s five forces model: 1) Threat of New Entrants: The threat of new entrants is very low in the automobile industry. The industry is very mature and it has successfully reached economies of scale. In order to compete in this industry a manufacturer must be able to achieve economies of scale. 2) Threat of Substitute Products: There are no direct substitutes for automobiles. 3) Bargaining Power of Suppliers: The bargaining power of suppliers is very low in the automobile industry. There are so many parts that are used to produce an automobile, that it takes many suppliers to accomplish this. When there are many suppliers in an industry, they do not have much power. 4) Bargaining Power of Buyers: The bargaining power of the buyers is moderately high. The buyers being consumers purchase almost all of the industries output. The manufacturers depend on them to stay in business. The buyers also are a significant portion of the industries revenue. If they cannot keep their buyers happy then they risk losing them to their competitors . 5) Competition among rivalries: Rivalry among the competitors is very strong in this industry. The major competitors are so closely balanced that it increases the rivalry. In order to gain market share in the automobile must gain market share by taking it from their competitors. One of the other reasons there is such high rivalry is that there is a lack of differentiation opportunities. Strengths of GM: They include the high brand image and its worldwide presence of being one of the biggest automotive industries. Weakness of GM: * Diminishing Dealer Network. * Working capital is going down because of low sales volume and it led to negative effect on R&D. And also suppliers are losing their trust. * Inadequate performance among some business segments and low debt ratings are other weaknesses. Strategies of GM in Future: 1) As I mentioned above they will be concentrating on developing nations where there is huge untapped potential customers, which will help their situation which includes them in further growth and improved financial situation. 2) They will leave behind their Detroit centric view and try to change according to the changes in the Automobile Industry. 3) Try more to invest in R&D so that they will have a competitive advantage in future. References: www.gm.com/ www.wikipedia.com/ International Business Competing in the Global Marketplace Charles WL Hill Arun K Jain