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Executive Summary

According to Porter 1978 A strategy means every business has its own strategy of their

market. Strategies varies from company to company, the causes for this is the company long

term goals, short term goals, size of the company, liquidity of the company and many more.But end of the day one thing is certan, that is, every company wants to be the market leader in

their own specific way.

General motor is a leader in automobile industry This Company is also one of the largest

leaders in the UK and in the world. So accordingly this academic report demonstrates the

strategies and their applications. The author also mention about the various people involved

in strategies, which are used by other companies, company mission; vision statement and

how they influence the way members of that company work, strategies based around

customer satisfaction and many more.

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Chapter 1: Introduction to Automotive Industry in UK

In the case of manufacturing, Britain directs Europe as the most various and productive

vehicle manufacturing site and as a worldwide centre of brilliance for engine development

and production. More than 40 companies manufacture vehicles in the UK arraying fromglobal volume car makers, van, truck and bus builders, to expert niche players. The industry

is carried by a active supply chain as well as many of the worlds major Tier 1 component

manufacturers, technology providers, design and engineering consultancies; and it advantages

from a world renowned knowledge base. No other European country has anything like this

series and number of automotive players. The industry in the UK is typified by important

foreign direct investment and high exports, equivalent to 12.4% of the UKs exports of

goods.

The automotive industry is at the front position of process development setting standards for

other sectors, such as aerospace and is exemplified by economies of scale and low unit costs,

in spite of the increasing complexity of its products. In 2005, 1.6 million cars equivalent to

the peak number of fully assembled cars that rolled off the production lines in the early

1970s1 and just over200,000 commercial vehicles were produced in the UK. Of these, more

than 73% of the cars and 62% of the commercial vehicles were exported. The UK accounts

for some 3% of international vehicle output and 9% of European assembly, ranking it fourth

in Europe and ninth globally. (autonews,2010)

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1.1 Factors affecting Automotive Industry

1. Political

Laws and government regulations have an effect on this industry since the 1960s. Almost allof the regulations approach from consumers raising anxiety for the environment and the

concern for safer automobiles.

2. Economic

The automobile industry has a vast impact on every countrys economy. In line with various

studies this industry is the key user of computer chips, textiles, aluminium, copper, steel, iron,

lead, plastics, vinyl, and rubber. It also demonstrated that for every autoworker there are

seven other jobs created in other industries. These industries comprise anything from the

aluminium to lead to record.

3. Socio cultural

Nowadays society moderators people on the type of car you drive. Society does not like to

disclose to this but it is very true. Manufactures know this occurs and targets their markets by

these thoughts. Anyone who makes a nice vehicle is thought to be wealthy. No one desires to

be seen driving an unpleasant piece of junk because of what other people will think of him or

her. Consumers also just feel better when they are driving a new car, if creates them feel

better about themselves.

4. Technology

The internet has influenced just about every industry in the world and has also had a huge

collision on the automobile industry. A study was conducted by J.D. Power and Associates in

2002 and involved more 27,000 new vehicle buyers. It 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 since the internet as more efficiency and lower cost.

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5. Demographics

For many years now, the baby boomers generation has been the major target market for just

about every product. As their generation is acquiring arranged to give up work and spend less

money, the automakers are looking at the younger generations. Right now, the focus isstarting to turn towards the baby boomers children (Generation X) who are in their mid 20s

and 30s. Consistent with analysts, five years from now Generation X will description 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 jointly to produce a new trade associationcreated the Alliance of Automobile Manufacturers. The organization was to put back the

American Automobile Manufacturers Association that only comprised of American

manufacturers, the goals of the associations were to work together on public policy matters of

common interest to supply credible industry information and data, and seek consistent global

narrow standards (Auto news, 2010)

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Chapter2: Introduction to General Motors

General Motors, one of the world's largest automakers with its global headquarters in Detroit,

GM occupies 204,000 people in every major region of the world and does business in some

140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and selland service these vehicles through the following brands: Buick, Cadillac, Chevrolet, GMC,

GM Daewoo, Holden, Opel, Vauxhall and Wuling. GM's largest national market is the

United States, followed by China, Brazil, Germany, the United Kingdom, Canada, and Italy.

GM's On Star subsidiary is the industry leader in vehicle safety, security and information

services. General Motors acquired operations from General Motors Corporation on July 10,

2009, and references to prior periods in this and other press materials refer to operations of

the old General Motors Corporation.

GM needs a sense of pressure regarding revising a strategic plan that includes the next

generation of vehicles. In nowadays global economy and highly competitive auto industry

GM has no time to delay. As stated, GM has just too much at risk in not becoming an

industry head in alternative fuel technology. Fuel economy legislation is flashing the race.

This is a significant time in auto industry with many threats, but opportunities as well.

(general motors,2010)

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2.1 Mission Statement in General Motors

A mission statement is a statement that defines the essence or purpose of a company what it

stands for. The mission statement also designed as a means by which potential shareholders

and investors could understand the purpose of the company that they were consideringinvesting in. General motors has a dynamic mission which reflects why they are in the

business which shows in figure 1.

"G.M. is a multinational corporation engaged in socially responsible operations, worldwide.

It is dedicated to provide products and services of such quality that our customers will receive

superior value while our employees and business partners will share in our success and our

stock-holders will receive a sustained superior return on their investment."

Figure 1: Mission statement in General Motors, (generalmotors.2010)

This mission of GM expresses that market vehicles developed and manufactured and that are

world leaders in quality, cost, and customer satisfaction through the integration of people,

technology, and business systems and to transfer knowledge, technology, and experience

throughout its technology.

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2.2 Vision of Strategic Intent

A vision statement is sometimes called a picture of your company in the future but its so

much more than that. Vision statement is the inspiration, the framework for all strategic

planning.

Figure 2: Frame work of vision, Field work

The three components of the business vision can be portrayed as shown in figure 2.A vision

statement may apply to an entire company or to a single division of that company. Whether

for all or part of an organization, the vision statement answers the question, Where do we

want to go?What you are doing when creating a vision statement is articulating dreams and

hopes for business. It reminds of what you are trying to build. Following figure 3 shows the

vision statement of GM.

"GMs vision is to be the world leader in transportation products and related services. We

will earn our customers enthusiasm through continuous improvement driven by the integrity,

teamwork, and innovation of GM people."

Figure 3: Frame work of vision, Field work

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Chapter 3: Stakeholder Analysis

A stakeholder is a person who has something to gain or lose through the outcomes of a

planning process or project. In many circles these are called interest groups and they can have

a powerful bearing on the outcomes of political processes. It is often beneficial for researchprojects to identify and analyse the needs and concerns of different stakeholders, particularly

when these projects aim to influence policy.

In bridging research and policy, stakeholder analysis can be used to identify all parties

engaged in conducting the research, those who make or implement policy, and the

intermediaries between them. It can help define a way to engage stakeholders so that the

impact of research on policy can be maximised.

It can also be used later in the research, when results are available and the team may want to

use the evidence to create policy impact. Then it can be a useful tool to consider who needs to

know about the research, what their positions and interests are and how the research should

be presented and framed to appeal to them. In this way it becomes an essential tool for

assessing different interest groups around a policy issue or debate, and their ability to

influence the final outcome. (Gerry, 2007)

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3.1 Stakeholder analysis of GM

There are four major facts in stakeholder analysis which are the stakeholders position on the

particular issue, the level of influence they hold, the level of interest they have in the specific

issue, and the group/coalition to which they belong or can reasonably be associated with.These characteristics are figured out via various data collection methods which are interviews

with experts who have more knowledge about stakeholders.

Co-ops

stakeholders

Government

CustomersEnvironment

Employees

InvestorsExtended organisation (funeral

care, banking, travel)

Industry

associates

External stakeholders

Others internal stakeholders.

Figure 4: GM stakeholders, (field work)

Figure 4 depicts the stake holders involved in within the General motors. The main stake

holders can be employees and customers. They have interests on the company to know how

company runs and what kind of improvements to take. The government and investors does

not always get involved in the functions of the General motors unless there nationally

important fact occurred and investors may have the same right as others but no special

powers.

General

Motors

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3.2 Stake holder mapping

It is significant that a company meets the needs of their stakeholders. But the importance of

stake holders can be broken into four categories as shown in figure 5. Mapping stakeholders

is a strategic business tool which identifies and assesses the effect of a different individual or

group of stakeholders on a company. It observes the power stakeholders can exert, the

relative likelihood of them using that power, and their level of interest regarding the

company's activities. Stakeholders are classified on a graph rating their level of interest

against the power they possess to exercise those interests

Keep satisfied

1) Investors

2) customers

Manage clo ely

1) Employees

2) Extended

organisation

Keep informed

1) Government

2) Environment

Two waycommunication

1) Industry associates

2) Suppliers

HIGH

POWER

LOW

LOW INTEREST HIGH

Figure 5: stakeholder mapping (field work)

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High Influence, High Interest

The company must try to satisfy this group first and foremost as they have the power to effect

the company and a high degree of likelihood that they will use their power

High Influence, Low Interest

This group may or may not realise the degree of effect they have over the company and

therefore must be kept satisfied. However, because of their low interest in events, they are

unlikely to cause significant disruption.

Low Influence, High Interest

This group, although having a high interest, has little power to exercise control so they can be

maintained through the management of information to keep them informed of company

events.

Low Influence, Low Interest

The company may require little or no effort to be focused on this group. The stakeholders

pose no threat due to a lack of both interest and power.

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Chapter 4: Environmental and organizational Strategy

Environmental and organizational audit is more significant in the case of examining the

organizational behaviour. There are some techniques which can be used in a fairly

sophisticated way, particularly when it is combined with risk Analysis, SWOT Analysis, animportance grid and expert knowledge about the organisation and its external factors. So

these tools are normally used to help organisations identify and understand the external

environment in which they operate and how it will operate in the future.

GM and the entire auto industry are at present challenged with the perfect storm. The auto

industry is being hit by the global economy, rising fuel prices, and social and political

environmental concerns and issues. In order to conquer these potential threat, GM should

consider mass producing a range of alternative fuelled vehicle such as fuel cell, electric, andhybrid. (Craig, 2010)

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4.1 Competitors Analysis

The major competitors of General Motors are Damiler Chrysler & Ford Motor and foreign

companies like Toyota Motor & Honda Motor. This is clearly explained in the figure 6.

4.2 Core Competence

The core competence of General Motors is innovation. This is the driving force behind its

$190 above turnover. General Motors has been utilizing innovation in service ad technology

to secure itself a dominant position in the automobile industry, since 1908. In 1911, it

conceptualized, engineered and commercialized the self-starter engine for the first time. Then

in 1926, its product Cadillac was the pioneer in devising a nationwide service strategy. In

1996 General Motors introduced OnStar satellite technology which allows equipped vehiclesto be tracked in case of an emergency or theft and allows the passengers to communicate with

OnStar personnel. Other new car concepts include minicars such as Chevy Aveo.

However in the case of hybrid vehicles, General Motors was unable to keep up to the pace of

the market demand.

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Damiler Chrysler

As the number two auto manufacturer in

total revenues DaimlerChrysler has placed

itself as an industry leader, with this come

many potencies. The DaimlerChrysler

umbrella envelops many well-known

brands such as Dodge, Chrysler, Mercedes

Benz, and Jeep. This denotes

DaimlerChrysler has strong brands that are

familiar in almost every part of the world.

Unique engine, high performance,

Ford Motor Company

Ford Motor Company is a worldwide company

with two core businesses which are automotive

and financial Services. The automotive business

includes of the design, development,

manufacture, sale and service of cars, trucks

and service parts. Ford has been centring on

cutting costs to boost margins more than its

competitors. It has utilized reverse engineering

in the development of their products. Thus Ford

has been a leader in the auto industry.

Durability,

Honda Motor Company

Honda motor company is not a standard

Japanese car manufacturer. Initially know for

motorcycles, Honda has administered to escape

the dominate system in Japan and become one

of the leading automobile manufacturers in the

world. Honda has a status for producing highexcellence products from cars to motorcycles.

Their automobiles are dependable and usually

fuel efficient. Unique engine, user-friendly

Toyota Motor Corporation

The Toyota Motor Corporation has many strengths

being one of the industry leaders in the automotive

industry. Toyota has three main brands below the

company umbrella that they are Toyota, Lexus, and

Scion. By having these three different brands, it lets

the company attain many sectors of the globe in achoice of vehicle for customers. Toyota has

conventionally also been the leader in Total Quality

Management using the theory of continuous

improvement. Good fuel consumption, user friendly

Figure 6: Competitor analysis, Craig 2010

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4.3 SWOT Analysis of General Motors

SWOT analysis is an instrument for auditing an organization and its environment. It is the

primary stage of planning and assists marketers to centre on key issues. This is very crucial

for General motors to decide their position among competitors and it is clearly explainedbelow

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 0globally 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.

3. Variety of Brand Names

GM as I mentioned has been the automotive leader for the majority of the last century. A

large reason for that is the wide variety of quality brand names that appeal to all target

markets. The current GM brands include: Chevrolet, GMC, Cadillac, Buick, Pontiac, Saturn,

Hummer, Saab, Daewoo, Opel, and Holden.

4. Satellite Technology

Developed in 1996 OnStar currently has over 3 million subscribers and is standard on all GM

vehicles. This technology allows the vehicles to be tracked in the event of an emergency or

theft. It also allows the driver and or passengers the ability to communicate with OnStar

personnel at the click of a button.

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Weaknesses

1. Behind on Alternative Energy Movement

This is GM's biggest weakness. The alternative energy/hybrid trend has begun to take place

in the automotive industry and GM has been one step behind the competition in terms of

alternative energy vehicles. This has led to many problems including loss of market share and

a decrease in company profit. In order for any automotive company to be successful from this

point forward they must be Hybrid friendly and fuel efficient.

2. Poor Organizational Structure

As we can see in exhibit 1 of the case GM's organizational structure seems to be too

vertically integrated. This causes a lack of communication between employees from top to

bottom and may have played a part in GM falling behind on the alternative energymovement.

3. Stagnant Profitability

Looking at GM's profit we see that they are certainly struggling with respect to the size of

their company. Their profit margin was about 1.5% and the ROE has dramatically decreased

over the recent years dropping to 10% in 2004. This is a situation that shareholders will not

be pleased with.

4. Overly Dependent on US market

GM has become too dependent on the US market and must take advantage of the opportunity

to expand globally. The competition is becoming too strong to focus on just one country.

5. Overly Dependent on General Motors Acceptance Corporation (GMAC) Financing

GM has become too dependent on its financing program. Granted it is a great strength for

GM, however they once again cannot rely solely on financing in order to turn profit,

especially if they want to compete with Honda and Toyota who are rapidly growing.

6. Poor Credit Status

GM's credit status has like everything else has been steadily declining. Their current ratio is

just barely above 1 and their acid test is even lower. Although, I don't see them getting denied

based on their credit at this point, the seriousness of the matter is certainly apparent.

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Opportunities

1. Alternative Energy Movement

It is obvious that GM was behind its competition with regards to the research anddevelopment of hybrid vehicles. However hybrid technology is still very much new giving

GM the opportunity to once again become the automotive industry's leader in innovation and

technology.

2. Continuing to Expand Globally.

Recently GM saw an increase in the Chinese automotive market, which proves their needs to

be more emphasis put on foreign markets. If GM can infiltrate these markets and successfully

grow along with their continuing focus on the US market they will be headed in a positive

direction.

3. Low Interest Rates

With the right marketing strategy the low interest rates have the potential to generate an

immediate increase in sales.

4. Develop New Vehicle Styles and Models

This is an opportunity that will never be satisfied, meaning that GM should always be

attempting to develop the automotive world's most popular vehicles, and as we know, what is

in today will be out tomorrow.

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Threats

1. Rising Fuel Prices

With GM being a large producer in both trucks and SUV's, sales have drastically decreaseddue to the lack of fuel efficiency. The rise in fuel prices has played a significant role in

creating the opportunity for development of both hybrid and more fuel efficient vehicles. As

you will find with most threats, an equal opportunity will usually emerge as is the case here

with GM's opportunity mentioned above.

2. Growth of Competitors

GM no longer has the luxury of being the known leader in the automotive industry and faces

the reality that they are in serious trouble. As I mentioned earlier Toyota took the first step in

the direction of hybrid technology and has since drastically grown and become the

questionable automotive frontrunner to start the 21st century.

3. Pension Payouts.

Part of this threat is their own doing and the other is simply unavoidable. GM is responsible

for providing generous pension benefits to its employees, which at the time seemed like a

great idea, however they are now experiencing problems as more and more people begin to

collect.

4. Increased Health Care Costs

GM, like many large companies with quality employee health care benefits, is experiencing a

large financial hit that only gets worse as time continues.

5. Rising Supply Costs, i.e. Steel

Once again this threat affects the entire automotive industry and forces each company to cut

manufacturing and production costs as much as possible, without taking away from the

quality of the product.

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4.4 Porters five forces model

Michael Porter described a concept that has become known as the "five forces model". This

concept involves a relationship between competitors within an industry, potential

competitors, suppliers, buyers and alternative solutions to the problem being addressed. Weused the five-force model as a basic structure and built on it with concepts from the works of

many other authors. Following figure 7gives a fundamental to this concept clearly.

Figure 7: Porters Five forces, porter( 1985)

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4.5Application of Porters five forces model to General Motors

The strategic business manager of general motors seeking to expand an edge over rival firms

can exercise Porters five forces model to better understand the industry context in which the

firm operates. This is clearly explains in following figure 8.

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RIVALRY

DEGREE OF RIVALRY

y -Exit barriers

y -Industry concentration

y -Fixed costs/Value added

y -Industry growth

y -Intermittent overcapacity

y -Product differences

y -Switching costs

y -Brand identity

y -Diversity of rivals

y -Corporate stakes

Figure 8: GM analysis, Field Work

SUPPLIER POWERy Supplier concentration

y Importance of volume tosupplier

y Differentiation of inputs

y Impact of inputs on cost ordifferentiation

y Switching costs of firms inthe industry

y Presence of substitute inputs

y Threat of forward integration

y Cost relative to total

purchases in industryBARRIERS TO ENTRY

y Absolute cost advantages

y Proprietary learning curve

y Access to inputs

y Government policy

y Economies of scale

y Capital requirements

y Brand identity

y Switching costs

y Access to distribution

y Expected retaliation

y Proprietary products

THREAT OF SUBSTITUTES

y -Switching costs

y -Buyer inclination to

y substitute

y -Price-performance

y trade-off of substitutes

BUYER POWER

y Bargaining leverage

y Buyer volume

y Buyer information

y Brand identity

y Price sensitivity

y Threat of backwardintegration

y Product differentiationy Buyer concentration vs.

industry

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1. Rivalry between existing competitors

With the rise of foreign competitors like Toyota, Honda and Nissan in the 1970's and 80's,

rivalry in the American auto industry has become much more intense. Firms compete on both

price and non-price dimensions. The price competition erodes profits by drawing down price-cost margins while non-price competition (e.g., new car rebates and interest free loans) drives

up fixed cost (new product development) and marginal cost (adding product features). One of

the other reasons there is such high rivalry is that there is a lack of differentiation

opportunities. All the companies make cars, trucks or SUVs. The competitors are compared

to one another constantly. In recent years there has been significant market share variation,

another indication of rivalry and its very strong threat to profits.

2. Threat of entry by new competitors

The presence of new firms in an industry may force prices down and put pressure on profits.

There are, however, barriers to entry that tend to protect established firms. One would expect

the production of automobiles to require significant economies of scale, an important barrier

to entry. The new entrant would have to achieve substantial market share to reach minimum

efficient scale, and if it does not, it may be at a significant cost disadvantage. While the

evidence suggests that economies of scale in the auto industry are substantial, there are also

indications that large size may not be as important as commonly assumed. Nevertheless,entry would represent a large capital investment to any new firm and the body of research

still indicates that economies of scale represent a substantial barrier to entry. Consequently,

entry is currently a weak threat to profitability.

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3. Price pressure from substitute or complementary products

While five-forces do not directly consider demand, it does consider two factors that

influences demand and substitutes and complements. Although new cars generally are

slightly price elastic, suggesting few real substitutes (e.g., bus and rapid transit), the demandfor a particular model is highly sensitive to price because of the availability of close

substitutes for a given model. A change in the price of a complementary product (e.g.,

gasoline, batteries, and tires) could have a significant impact on the demand for automobiles.

The rising price of gas, an important complementary product, is likely to affect some firms

more than others depending upon the vehicle composition. Recent rising fuel prices are likely

to have a greater impact on the big three (GM, Ford Motor and Daimler-Chrysler) whose

most profitable models are energy inefficient pick-up trucks and sports utility vehicles. On

balance, the overall impact on "industry" profitability from substitutes and complements is

weak to moderate.

4. Bargaining Power of Buyers

Buyer power refers to the ability of individual customers to negotiate prices that extract profit

from the seller. Individual consumers have some influence over price within a given

dealership, but little power over manufacturers. Customers can easily, and with little cost,

switch to other auto dealers. Furthermore, customers now have access to market information(prices and costs) from the Internet that enhances their negotiating power. But when you have

many individual customers, each representing a small proportion of total sales, they will have

little bargaining power with manufacturers and therefore pose a weak threat to industry profit.

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5. Bargaining Power of Suppliers

Auto manufacturers require inputs-labor, parts, raw materials and services. The cost of these

inputs can have a significant effect on profitability. Whether the strength of suppliers is weak,

moderate or strong depends on how much bargaining power they can exert. The automanufacturers have large supplier networks that appear to exert little bargaining power.

Nevertheless, the United Auto Workers (UAW), the only supplier of labor, has historically

exerted a great deal of leverage over the benefits and wages provided by the big three.

Because of this historical dominance by the UAW and the uncertain results of their current

negotiations with the big three, one has to characterize supplier power, at least in this

segment of the American market, as a strong threat to profits.

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4.6 The val e Chai (Internal Anal i

Mi hael Porter in 1985, proposed that activities within the organi ation add val e to the

service and products that the organi ation creates, and all these activities should be run at

finestlevelifthe organi ation is to gain any real competitive advantage.

General motors gains its competitive advantage through core competencies which arethe

uni ue set of skills, knowledge, and expertise thatlets General motors to remain competitive

and provide value to customers. Michael Porter suggested that the company is fallen into

primary and support activities.

Figure 9: The value chain of GM, (Porter 1986)

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Chapter 5: Business portfolio

Business portfolio analysis is an enterprise strategy development tool based primarily on the

market share of business and the growth of market in which business exists. Business

portfolio analysis as an organizational strategy formulation technique is based on the philosophy that organizations should develop strategy much as they handle investment

portfolios. There are most popular business portfolios tools are the BCG Growth-Share

Matrix, the GE Multifactor Portfolio Matrix.

5.1 BCG matrix for General motors

The Boston Consulting Group (BCG) Matrix is a simple tool to assess a companys position

in terms of its product range. It helps a company think about its products and services andmake decisions about which it should keep, which it should let go and which it should invest

in further. ( Figure 10)

Figure 10: BCG matrix, (Porter 1986)

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STARS (High Growth Rate, High Market Share)

These are the future of the General motors. The high growth rate requires heavy investment,

but according to the experience curve it is highly likely that stars will reward the attention by

producing high margins and strong cash flow. While stars grow, at least some of the profitsgenerated should be invested in further growth. When growth slows as they enter first

maturity and then the declining phase of the service life cycle, they become cash cows.

Investment in them stops and they become the funders of new emerging stars.

CASH COWS (Low Growth Rate, High Market Share)

Investment in cash cows is directed only at protecting market share and cash flows. Because

of their maturity, cash cows typically do not require much development capital anyway. Cashcows are an extremely valuable asset to the General motors. Without them, the general

motors would need to rely far more heavily on external capital for funding the growth of

stars, or troubleshooting question marks. Innovation in cash cows is typically aimed at

increasing cash flow, for instance by reducing transactional costs so as to increase margins.

DOGS (Low Growth Rate, Low Market Share)

Because dogs have a poor growth, it is unlikely that efforts to increase market share of

general motors will yield value. Also, low market share suggests an uncompetitive cost

structure. Unless one chooses to accept the lack of profitability prospects and allow cross

subsidization, for instance where the "dog" provides an indirect and important support

function for one of the profitable areas of general motors.

One of the problems with General motors that its units do not comprise manufacturing

equipment but people, and there would be some sensitivity to them being termed "dogs." The

model is not intended to accommodate inter-personal niceties or collegiality, though simply

to analyze the general motor's business portfolio, coldly and objectively.

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5.2 General Motors Lifecycle

Businesses should manage their products carefully over time to ensure that they deliver

products that continue to meet customer wants. The process of managing groups of brands

and product lines is called portfolio planning. The stages through which individual productsdevelop over time is called commonly known as the Product Life Cycle".

The classic product life cycle has four stages (illustrated in the figure 11 below): introduction;

growth; maturity and decline

Figure 11: The Product life cycle, Porter 1986

General Motors have entered the late stages of maturity, and will most definitely enter the

decline stage if the company does not implement relevant strategies to turn the company

around. The Current External environmental which is the economic downturn and the rigid

management practices has made the companys current situation quite difficult to turn

around. They either have to change their selves accordingly using the feedback received from

the external environment and change their strategies or face demise.

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Chapter 5: Application of strategies to General motors

There are various strategies that companies can use to make sure they come out on top in this

fierce competition but companys main rationale of using strategies are to enable them to

achieve its long-term objectives.

There are 3 levels of strategies that companies use, ( Figure 12)

Functional

Strategy

Corporate

Strategy

Business

level

Chart 12: Company strategies (Field work)

Accordingly general motors adopt in to functional strategy

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This concept includes many management theories. Such as Scientific Management theory

(Fredric Tailor). The main view of these management theories was to reduce production cost

by improving efficiency. For example Fredric Tailor strongly believed that by replacing all

work procedures by strict rule of thumb methods, productivity can be improved. General

Motors in early years did not focus that strictly on these areas whereas to standardize the

work procedures. They started to implement these in the early 1980s. If one automaker

deserves praise for its overall 1999 manufacturing performance, it's General Motors. In the

past, most industry analysts never would bring up GM in any discussion of premier

manufacturing. The company was bloated, inefficient and arrogant. (Harbour.R, June, 2000)

This change in efficiency made it possible for general motors to reach its top stop in the U.S

automating industry. By implementing these changes into processes and mainly through

standardization general motors were able to increase labour efficiency. They used to method

that was uniform in all its plants. All the plants focused on the same cost, quality, safety and

objectives enabling them to have unique standardized quality and the systematic approach

encouraged continuous improvement. It made a huge progress in labour productivity in all its

plants.

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Here the author describes about strategies General motors can use to compete with its

competitors. When these above explained strategies are implemented General motors has to

ensure to manage six key supporting factors which are action planning, organization

structure, human resources, the annual business plan, monitoring and control and linkage

which show in figure 13.

Action pl

n

Organizationa l

structure

Human

resources

Annual

business plan

Monitoring

and

controll ing

Linkage

Figure 13: Supporting factors, ( St Patricks lecture notes 2010)

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5.1 Action plan

An action plan is a written document (figure 14) that describes a business, its objectives, its

strategies, the market it is in and its financial forecasts. It is essential to have a realistic,

working business plan so that it can be achieved. In a business plan the following subjectsshould be addressed.

Action Benefits Time scale Responsibilities Resources Measurement

Reducefuel wasteby 12%

-Increased profits.-Less pollution.

By end of2012

-Develop trainingprograms

-Introduce totalqualitymanagement

-Measure progressvia monitoring

Increasemarketshare to20%

-Increase profits-Enhancedreputation.

By end of20110

-Increase thecustomer experienceon brand image

-enhancedadvertising-Increasing theskill of

employees-change theproduct lineaccording to thearea

-Increase of 40%have been seen

Becomelargestautomobilecompanybusiness inUK

-Enhanced profits-increase themarket share

By end of2015

-increaseparticipation inexhibition to enhanceawareness amongpublic.

-Increasedpromotions,advertising.

-market share hasincreasedconsiderably since2009. This meansthey are heading inthe right direction.

EnterEuropean

market

-Increase profits-Introduce ethical

policies

By end of2020

-Carry out theresearches on needs

and wants, behavior

patterns and lifestyles of the people oftheir new market

-Increasedpublic

awareness via

conductingpress releases

-have starteddiscussion and

Strategies and

marketing strategiesfor entering.

Figure 14: General motors action plan , ( Annual report,2009)

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5.2 Organization structure

Good organisational structure does not by itself produce good performance But a poor

organisational structure makes good performance impossible, no matter how good the

individual managers may be. To improve organisation structure will therefore always

improve performance. Drucker (1985). There are two types of structure (flat and tall) and

can change from organization to organization and also when a merger or an acquisition

happens the structure can be affected as well.

When taking General motors into consideration, the structure they follow is the flat structure.

( Figure 15)

Figure 15: Business structures, (Mind tols,2010)

The above chart gives an idea of the differences between flat and tall structure. General

motors has flat structure, in which span-of-control is greater and there are fewer levels of

management and more flexible and better able to cope with changes in the external business

environment. General motors adopts the flat structure which enables them to react to market

situation faster and also employees will be happy as well because their problems and queries

will be attended to faster as well. So as a whole adopting the flat structure will benefit

General motors and will help them in the long run.

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5.3 Human resources

Theorists in this concept are mainly concerned with releasing social constraints that limit

human potential. They see the current dominant ideologies as separating people from their

"true selves". They use this paradigm to justify desire for revolutionary change. It's largely

anti-organization in scope. (Burrell.G & Morgan.G, 1979)

General Motors is a diversified business. Its manufacturing operations are in over 50

countries which are producing 15% of the world's cars and trucks. GM has a massive global

workforce of approximately 315,000 hourly and salaried employees. The business pays more

than 465,000 pensions and touches 1.2 million lives with benefits in the United Kingdom

alone.Like many other multi-national organizations General Motors has multiple HR groups -

one at the corporate level and many other Hr groups for each business unit within the

corporation. These HR groups are not information centralized and lacks a coordinated

communications infrastructure.

As a result, the HR processes of are inefficient. In addition, the sheer number of third-party

vendors used by an HR department to handle discrete functions makes management of the

process difficult and challenging. These departments have focused on administrative

functions and typically don't have the time or the resources to devote to strategic planning. At

the same time, many are facing a dramatic reduction in resources, and cost-cutting efforts

primarily have focused on reducing staff, rather than re-engineering service delivery.

With the recent economic crisis the situation has worsened. General motors in the year 2006

adopted a new policy which provided health care to all its employees, in that year they spent

a thumping amount of $4.8 billion on health care in the US alone. But since the health care

inflation rate increased by 6.5 percent in 2007, fighting the costs of providing health care has

become a never-ending uphill battle for GM. As health care costs continue to climb, GM has

been forced to go back to the drawing board with its union workers.

General Motors Retiree are also provided with a wide array of benefits. However GM's

pension liability at the end of2005 was $10.92 billion, according to its balance sheet.

Therefore they had to reduce traditional pension benefits for veteran salaried employees and

shift newer staff to a defined contribution plan as part of a move to cut high labor costs.

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5.4 Annual business plan

An annual business plan provides a clear plan for the future of a company. It may include

strategies for existing and upcoming products and services that can be made for an existing

business, or before starting up a new business. The financial status of the company is set out

in the business plan, alongside the projected financial forecast of the company.

figure 16 shows what should include in annual business plan,

an outl

ne of changes thatthe business wants to make

potential changes to the market;

customers and competition,

objectives and goals for the year

, any issues or problems

, any operational changes,

information aboutthe management and people,

financial performance and forecasts,

details of investment in the business

Chart 16 : Elements of a annual business plan,(Mind tols,2010)

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5.5 Monitoring and controlling

This is where the company looks back to see if they are on the right path. By doing this, if

the company is off course, they can find out where they went wrong and change their plan

and also learn from their mistakes and become stronger. include changing the schedule,

changing the action steps (tactics), changing the strategy or (as a last resort) changing the

objective.

General motors has dealt with this matter in a very simple way. They have appointed a team

which comprises of experts of various fields and their job is to compare the business to other

businesses also known as benchmarking and so that the company knows what the competitors

are up to and how to counter their strategies. This team also report on the key performance

indicators so that the company knows what they need to do in order to be on track with the

company long term goals

5.6 Linkage

This can be done in two different ways. They are horizontal and vertical linkage.

Horizontal linkages establish coordination and cooperation to get the organizational units "all

playing in harmony." Horizontal linkages can help reduce transaction costs, create economies

of scale, and contribute to the increased efficiency and competitiveness of an industry. eg -

across departments, across regional offices, across manufacturing plants or divisions. Forexample, if General motors is calling for a computerization of manufacturing, this would

require the collective (and cooperative) efforts of production, human resources, and R&D.

Vertical linkages establish coordination and support between corporate, divisional and

departmental plans. eg - corporate objectives, company growth, resources, capital resources,

human and technological resources in the R&D department. The best example for Vertical

linkages is, without a proper human resource management at General motors its not possible

for the team to performance well, without strong organizational structure its not possible to

monitor and control the activities, If the company cannot monitor and control their activities

the they wont be able to succeed on achieving annual business plan.

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Conclusion

The academic report reveals many factors to be considered before a company implement its

business strategy. These factors are business mission, vision, goals, budget, assets and many

more. By selecting a business strategy is not a simple task and lot of research anddevelopment and time has to be invested to develop up a right strategy to achieve company

goals. And also through constant learning process major mistakes can be avoided and also

can develop a stronger strategy to make the company more stable. This report also

demonstrates the change management. The author also explains about the plans General

motors should be drawn up to enter the market and also reflects that the best ways for a

company to grow is by acquiring since its the most gainful method of enhancing the hold on

the market by controlling over the company.

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Recommendation

General motors should have changed their management style from being completed

autocratic to a more flexible one which would have enabled them to gain different

perspectives into the ever changing business environment. And GM should have altered theiremployee benefit programs in such a way that they would be in line with their competitors

policies. Because of the reason that they spent pounding amounts on the health and pension

funds it became a great liability to the organization. B

esides GM should have analyzed the changing customer demands and the changing consumer

decision patterns which would have enabled them to alter their production processes in order

to fulfil the emerging customer demands. GM should have paid more attention to its external

environment for any signs that could have warned them about threats that they might the facefrom their external environment. Any organization should be extremely cautious about their

internal as well as their external environment no matter how sound their business structure is

and no matter how much experience they have in the industry.

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