Marketing Case Project: General Motors
Marketing Case Project: General Motors
Executive Summary
General Motors is one of the largest motor vehicle manufacturers in the world and
has been a market leader for over 75 years. The company itself has been going through
changes especially in the way that they are creating products and on an internal basis,
however, there are some changes that the company still needs to overcome.
One of the changes that General Motors has promoted is its’ Flexible Fuel
Vehicles which do not run on solely petroleum, rather Ethanol 85. These vehicles cost
only $150 more than a normal vehicle, however, the lacking of E-85 fueling stations
throughout the nation are making it harder for consumers to take advantage of this
“greener” technology while also saving money.
The company has also decided to implement a widespread corporate restructuring
initiative to help alleviate company debt as a result of rising costs of employee
healthcare, benefits, and pensions. Such a plan includes the closure of over a dozen
North American plants and manufacturing lines, as well as making substantial job cuts.
This three-year endeavor is necessary in keeping General Motors in line with
competitors.
General Motors is struggling to keep up with its competition in hybrid
technology. In order to become a major competitor in the automotive market GM needs
to penetrate the hybrid market. In the past few years this market has more than doubled
and GM has done nothing to obtain market share. The suggestion is that General Motors
needs to implement a strategy to produce hybrid automobiles and take market share away
from its Asian competitors.
Table of ContentsIntroduction........................................................................................................................4Company Background.......................................................................................................4Situational Analysis...........................................................................................................5
Industry Analysis...........................................................................................................5Competitive Analysis.....................................................................................................6Economic Analysis.........................................................................................................7Social Analysis................................................................................................................7
Problem, Opportunities, and Decision.............................................................................8Problem...........................................................................................................................8Opportunity....................................................................................................................8Decision...........................................................................................................................9
Alternative One (Company Provided): Ethanol 85-Flexible Fuel Vehicles.................9Marketing Mix Strategy................................................................................................9Financial Analysis........................................................................................................10Pros................................................................................................................................11Cons...............................................................................................................................12
Alternative Two (Company Provided): Corporate Restructuring.............................12Marketing Mix Strategy:............................................................................................13Financial Analysis:.......................................................................................................14Pros................................................................................................................................14Cons...............................................................................................................................15
Alternative Three (Company Provided): Hybrid Initiative.........................................16Marketing Mix.............................................................................................................16Financial Analysis........................................................................................................18Pros................................................................................................................................18Cons...............................................................................................................................18
Conclusion and Recommendation..................................................................................19Conclusion....................................................................................................................19Recommendation.........................................................................................................19
Implementation and Control Issues...............................................................................20Implementation............................................................................................................20Control Issues...............................................................................................................20
References.........................................................................................................................21Appendix...........................................................................................................................22
Introduction
Christopher James is from Seattle, Washington and currently owns a GMC Denali
and has owned GM vehicles throughout his entire lifetime. His son Pallab recently turned
16 years old and Christopher wanted to buy him a new car while also teaching him to be
environmentally and economically considerate. Christopher has had a brand loyalty to
GM vehicles but is having trouble with GM because the only vehicles that they offer that
are environmentally friendly are flexible fuel vehicles.
The problem that he came to with these types of vehicles is that out of 170,000
total fueling stations there are only 50 fueling stations that support flexible fuel vehicles
and most of which are in the Midwest. Ideally Christopher would like to purchase his son
Pallab a hybrid vehicle but GM currently does not offer any type of hybrid and he is
having problems switching to another brand of car.
Company Background
The General Motors Corporation was founded in 1908 and is currently the
world’s largest producer of automobiles. Currently, the United States holds the “largest
national market” for General Motors. China, Canada, the UK, and Germany follow the
United States for GM’s largest markets. General Motors, also known as GM, currently
employs people from all parts of the world with an employee population of 326,999
(General Motors).
The current headquarters of the company resides in Detroit, Michigan. Some of
the brands that GM encompasses consist of: Buick, Cadillac, Chevrolet, GMC, GM
Daewoo, Holden, Hummer, Oldsmobile, Opel, Pontiac, Saab, Saturn, and Vauxhall
(General Motors). Within all of these companies, GM produces vehicles in 33 countries
and in 2005 9.17 million GM cars and trucks were sold globally (General Motors).
Along within the vehicle aspect of GM, the company also owns a financial company
known as GMAC Financial Services. This sector of GM offers residential and
commercial financing and insurance (General Motors). Another sector within General
Motors is a subsidiary company known as OnStar, which provides vehicle safety,
security, and information services (General Motors).
General Motors has “purchasing collaborations” with such companies as Suzuki
Motor Corporation, Isuzu Motors Ltd of Japan, Toyota Motor Corporation of Japan,
DaimlerChrysler AG, and BMW AG of Germany (General Motors). The company as a
whole also has manufacturing ventures with several automakers around the world,
including Toyota, Suzuki, Shanghai Automotive Industry Corporation of China,
AutoVAZ of Russia, and Renault SA of France (General Motors).
General Motors also offers vehicle accessories and parts through GM owned
brands such as GM Goodwrench and ACDelco. GM brand engines and transmissions are
marketed through the GM Powertrain line.
On June 30, 2006, Kirk Kerkorian, whose Tracinda Corporation is the third-
largest shareholder of General Motors, proposed a global alliance between GM and the
Renault-Nissan group (General Motors). Since GM has recently had financial issues,
Carlos Ghosn, the CEO of both Renault and Nissan, expressed interest in possibly
acquiring a stake in GM (General Motors). After months of negotiating between both
parties, the end decision could not agree on the perceived benefits of acquiring a massive
shareholders position within GM and an announcement was made to end the discussions
about an alliance (General Motors).
Situational Analysis
Industry Analysis
Threat of new entrants: The threat of new entrants is low in the automobile
industry since the industry is very mature and has reached great economies of scale.
Some common entry barriers new automobile manufacturer’s face include insufficient
start-up capital, difficulty accessing distribution channels, lack of dealership availability,
and extensive research and development costs necessary for product innovation.
Power of suppliers: The bargaining power of suppliers is very low in the
automobile industry as they saturate the automotive market. There are many more
automotive part suppliers in relation to automobile manufacturers; thus, giving
manufacturers the power to switch suppliers if necessary.
Power of Buyers: The bargaining power of buyers is relatively high in the
automobile industry because individual consumers purchase the majority of the industry’s
output, which constitutes the largest source of revenue. Therefore, manufacturers must
recognize consumer needs and wants, and conform to changing consumer trends in order
to boost sales volume.
Availability of substitutes: The availability of substitutes in the automotive
industry is moderately low. Possible alternatives to automotive transportation include
walking, riding a bike, or access to public transportation such as a bus, subway or train.
The availability of such alternatives depends heavily upon the geographic location of the
consumer. In cities such as Chicago or New York City, a car is not necessary due to easy
subway access; however, a non-urban dweller may seek automobile access as a more
viable means of transportation.
Competitive Rivalry: Competition within the automotive industry is very strong
due to a lack of product differentiation and opportunities. All manufacturers produce
similar products, cars, trucks, or SUV’s; thus, making price, quality and durability, the
primary and weak basis for differentiation. In attempts to increase sales and gain more
market share, automobile companies often use comparative advertising to emphasize
areas where it outperforms its competitors.
Competitive Analysis
The automobile industry is highly competitive. The North American automobile
industry is dominated by what’s known as the ‘Big Three’: General Motors,
DaimlerChrysler, and Ford Motor Company (General Motors, 2006). The two largest
foreign competitors include both Toyota and Honda. General Motors, once the leading
car manufacturer in the industry, is now struggling to keep up with competition. Since
Toyota’s introduction of the Prius, an innovative gas electric hybrid car, many other
manufacturers followed suit changing the direction of the automobile industry (Toyota
Hybrid Synergy Drive, 2006). Ford has also introduced a line of new environmentally
friendly cars in Europe boosting company sales. However, GM’s failure to keep up with
changing market trends has left the company behind its competitors; thus, losing a great
deal of market share (See Appendix A for list of competitors and market share).
Economic Analysis
Since the attacks of September 11, 2001, the nation’s economy suffered from a
drastic decline in consumer spending. However, the overall economy is now on the rise
and continues to remain strong. The real after-tax income per person has risen by 9.8%
since President Bush took office, the U.S. economy has grown a solid 2.9% over the past
four quarters, productivity has grown at an annual rate of 3% since the first quarter of
2001, and the employment rate continues to increase (Jobs and Economic Growth, 2006).
In addition to the other economic improvements, gas prices have fallen almost 82 cents a
gallon since early August (Jobs and Economic Growth, 2006). Since the boom in the
economy, GM has gradually started making more profit. GM’s worldwide vehicle sales
for 2005 were 9.2 million units compared to 9.0 units in 2004 (General Motors
Corporation, 2005). And over the past five years, the global automotive industry has
continually risen year-to-year growing approximately 13% from 2001-2005 (General
Motors Corporation, 2005).
Social Analysis
For many years, the baby boomer generation has been the primary target market
for automobile manufacturers. However, as this generation nears retirement, and is
spending less money, automakers are shifting their focus to younger generations;
generation Y in particular. This generation is reaching a point of greater financial
stability; thus, contributing greatly to the amount of consumer spending on luxury
products such as automobiles (Baki, 2004). According to analysts, it is projected by 2011
generation X and generation Y combined will account for roughly 40% of total vehicle
sales (Baki, 2004). Consumer trends are also shifting from oversized passenger vehicles,
such as trucks and SUV’s, to smaller more economic, fuel efficient automobiles (Baki,
2004). Therefore, marketing efforts must shift to meet changing consumer demands.
Such marketing efforts, however, depend heavily on geographic location of the
consumer. For example, marketing a convertible in a cold climate is not as economical
as marketing it in a warmer climate; therefore, the company’s marketing mix must be
adjusted accordingly to geographic conditions.
Problem, Opportunities, and DecisionProblem
General Motors’ dramatic decline in sales and stock market activity is largely due
to a variety of both internal and external factors. Such factors include rising energy
prices and consumer resistance. As a result of changing fuel prices, many consumers are
purchasing smaller, more fuel efficient automobiles consistent with current market trends.
Another factor causing the decline of General Motors is related to a deteriorating internal
structure on both the management and supply chain levels.
Opportunity
General Motors’ has several options for alleviating an overall decline in sales.
Such alternatives include offering consumers the choice of new product lines which
consist of smaller and more fuel efficient hybrid vehicles. Secondly, the company has the
option of restructuring management strategies by focusing on their marketing, social,
situational, and psychological influences.
Decision
After analyzing the various alternatives, the most appropriate action for General
Motors is to offer consumers a new line of innovative energy efficient vehicles, while
also restructuring General Motors’ internal management method.
Alternative I (Company Provided): Ethanol 85-Flexible Fuel Vehicles
Marketing Mix Strategy
According to the US Department of energy, E-85 is an alternative fuel source that
has superior performance characteristics (http://www.eere.energy.gov/afdc/e85toolkit/).
The composition of ethanol 85 is basically 85% ethanol and 15% petroleum based. One
of the perks to the use of E85 and ethanol as a whole is that it is a “domestic,
environmentally friendly fuel that enhances the nation's economy and energy
independence” (http://www.eere.energy.gov/). It is also completely renewable. Also
governmental tests have proven that not only is it renewable but in terms of the
environment it results in the reduction of harmful benzene and hydrocarbon emissions.
This fact is solely based on comparisons with that of gasoline. E85 can also reduce
carbon dioxide, and in-turn reduces the greenhouse effect. Ethanol also degrades quickly
in water and, therefore, poses much less risk to the environment than an oil or gasoline
spill. (See Appendix B for E-85 Alternative Fuel Diagram).
General Motors has seen the benefits to this alternative energy source as many
consumers are switching to this method of fueling. According to its website, as of right
now some of the car lines that General Motors has implemented this to include: 2007
3.5L Chevrolet Impala and Monte Carlo Sedans, 2005-2007 5.3L Chevrolet Avalanche
SUV’s, 2002-2007 5.3L Suburban, Tahoe, Yukon, and Yukon XL’s, 2002-2007 Sierra
and Silverado Trucks, All 2000-2002 Chevy S-10 Trucks (after 12/99), All 200-2002
Sonoma Trucks (after 12/99). Many of these models however, also come with standard
petroleum fueling options.
In terms of General Motors and its method for promoting greater usage of E-85,
"GM will work with VeraSun to add E85 at 20 gas city locations in the Chicago area, and
a pilot program by GM and shell oil products U.S. will test consumer interest in E85 at
six Shell Chicago locations" ("Growing Together to Fuel" 1). The main issue dealing
with E-85 and General Motors promotion of this alternative is "The limited availability of
E85 means that most consumers don't use the alternative fuel even though the [General
Motors] said they have a combined 3 million vehicles on the road capable of using E85."
("Growing Together to Fuel" 1). The General Motors North American Vice President for
Marketing and Advertising reportedly said that they would start to place yellow caps on
their Flexible Fuel Vehicles so that consumers can start to associate their vehicle with this
alternative fuel. He also reported "the company's in-vehicle On-Star help system "will
help people find E85 fueling."" ("Growing Together to Fuel" 1). The main reasoning
behind this is because "many consumers may not know whether or not their vehicles can
run on E85” ("Growing Together to Fuel" 1).
Financial Analysis
Financially it is not a huge cost to convert vehicles to have E-85
capabilities. In terms of consumers, "These vehicles, [cost] about $150 more than
standard models, [but] have not been advertised in the past, probably due to the shortage
of stations handling E85" ("Fence Post" 16). For General Motors the shortage of Flexible
Fuel Vehicles that have been purchased is a direct correlation with the shortage of fueling
stations, which financially probably has not been good for the revenue of the company if
one were to look specifically at sales of these types of vehicles.
General Motors may want to market these vehicles from a standpoint of the prices
of E-85 versus gasoline. This is because the price comparison for consumers is dramatic.
As of Sunday, May 21st, 2006 in Greeley, Colorado E85 was priced at $1.99/gallon
whereas regular unleaded fuel was priced at $2.80/gallon. Although $1.99/gallon is still
somewhat pricy when looking at what prices for gasoline used to be it is also almost a
dollar cheaper than that of conventional gasoline. This price difference is quite significant
(http://afdcmap2.nrel.gov/Website/Stations/viewer.htm).
Pros
There are many pros for the company with this alternative. Some of these include
creating an image to the public that General Motors is trying to promote a movement to a
“greener” method of transportation. One of the perks to the use of E85 and ethanol as a
whole is that it is a “domestic, environmentally friendly fuel that enhances the nation's
economy and energy independence” (http://www.eere.energy.gov/). It is also completely
renewable. Also governmental tests have proven that not only is it renewable but in terms
of the environment it results in the reduction of harmful benzene and hydrocarbon
emissions. This fact is solely based on comparisons with that of gasoline. E85 can also
reduce carbon dioxide, and in-turn reduces the greenhouse effect. Ethanol also degrades
quickly in water and, therefore, poses much less risk to the environment than an oil or
gasoline spill. These facts may seem attractive to consumers and may also draw a new
customer base. Also, by offering these types of vehicles General Motors will be able to
break into a different market because they aren’t solely going to be using petroleum for
its vehicles.
Cons
Some of the cons to this alternative include the fact that many consumers who do
have a General Motors Flexible Fuel Vehicle do not actually know that they have this
type of vehicle. Also many of the fueling stations are based mainly in the Midwest and
"there are more than 170,000 gas stations nationwide, only 500 offer E85. About 100 are
in Illinois." ("Growing Together to Fuel" 1).
Another potential con is that this new alternative is really only a temporary
alternative. There is a worldwide rush and initiative to find an alternative source of
energy. E-85 still is partially based off the production of petroleum and these vehicles as
are the current petroleum based vehicles will only be around for so long and consumers
know that.
Alternative Two (Company Provided): Corporate Restructuring
General Motors, along with many other American-based companies, suffered a
decline in stock market activity and overall company finances following the attacks of
September 11, 2001. The company’s rising costs of retiree health care, pensions and
benefits have exceeded expected rates of return, impelling GM to develop a corporate
restructuring initiative (General Motors, 2006). Following a $10.6 Billion loss in 2005,
General Motors decided to carry out its three year restructuring strategy, which includes
the closure of nearly a dozen manufacturing plants, making substantial job cuts,
introducing new automobile lines, and redeveloping General Motor’s overall marketing
strategy (General Motors, 2006). Most recently, General Motors announced it would
consider a joint enterprise with competitors Renault and Nissan; however, efforts to form
the alliance failed. Overall, the company still trusts it is on track with the new plan and
CEO Rick Wagoner believes that both job cuts and plant closures are “necessary for GM
to get its costs in line with other major global competitors” (Maynard, 2005).
Marketing Mix Strategy:
Product: General Motors has established a reputable name in the automotive industry,
which is widely recognized for both reliability and affordability. If GM restructures,
consumers may start to view the company as undependable and lose trust if they see GM
as a declining company. On the other hand, corporate restructuring could result in a new
brand image that increases sales because consumers are more drawn to General Motors
knowing new and more qualified employees have been hired.
Price: Price is an important component in consumers’ assessment of value.
Consumers often seek reasonable cost in relation to quality; GM offers fair prices and
maximum quality. Price will not likely be affected by corporate restructuring. If
corporate restructuring costs the company substantial capital then car prices may rise;
however, if General Motors can maintain the brand image it has established for itself,
then consumers will continue to believe that the product is worth the financial sacrifice.
Place: Place is important in business because the product must to be easily accessible
to consumers. Corporate restructuring would not affect where GM dealerships are
located, just the distribution of manufacturing lines; therefore, it would not significantly
affect profit loss or gain.
Promotion: A company cannot sell a product if they do not competitively advertise
in magazines, television commercials, billboards, or other forms of media. The
advertisements must cater to an appeal and convince the consumer they need to product
being advertised. If General Motors advertises its automobiles as coming from a newly
restructured corporation, GM can convince customers the product is improving along
with internal company motives.
Financial Analysis:
Through the implementation of long-term corporate restructuring, General Motors
plans on developing promising new product lines; thus, increasing market share,
improving product quality, and strengthening company finances. During the first quarter
of 2006, GM earned nearly $400 million in sales revenue indicating the potential long-
term benefits of such a plan (General Motors, 2006). General Motors was also able to
slash its annual dividend from $2 per share to $1 per share, saving the company nearly
$565 million a year (General Motors, 2006). With recent company cutbacks as well as
health care benefit reductions taking effect, General Motors could potentially reduce
company costs of up to $7 billion by the end of 2006, $1 billion more in savings than
previously projected, which constitutes nearly one-sixth of GM’s annual spending of $42
billion (Maynard, 2005).
Pros
There are many long-term financial advantages associated with corporate
restructuring. GM earned $400 million in the first quarter of 2006 alone providing
promising evidence about the future financial success of the restructuring program
(General Motors, 2006). In 2006, many GM workers agreed to company buyouts well
over the company goal, greatly reducing GM’s operating costs and future liability
(General Motors, 2006). GM was able to slash the annual dividend from $2 per share to
$1 per share, saving the company nearly $565 million a year (General Motors, 2006).
Shutting down plants, assembly lines, and reducing employee numbers will greatly
reduce additional company costs, allowing the money to benefit greater product
development. With improving sales, GM can open new plants and modify existing plants
to maximize the quality and efficiency of output.
Cons
The Primary disadvantages of GM’s corporate restructuring relate to both internal
and external factors. GM runs the risk of losing consumer loyalty because consumers
may begin to question the strength, reliability, and dependability of the company during
its time of corporate crisis. Corporate restructuring is very expensive; therefore, such an
initiative is a huge risk for a company already suffering the consequences of financial
debt. Job cuts will have a negative effect on unemployment rates, especially Michigan
which currently has the highest rate of unemployment of 6.4 Percent in contrast to the
national average of 5.1 percent. (Maynard, 2005). Many standout plants and assembly
lines, ranked among the company’s best in quality surveys, are scheduled to shut down
(See Appendix C for a complete list of plant closures). Such plants include the Saturn
plant in Tennessee, which is known for superior labor-management, as well as plants in
Oklahoma City and Oshawa, Ontaio (Cervone, 2006). This plan allows for major foreign
rivals, such as Toyota, to expand and build more manufacturing plants in North America;
thus, increasing Toyota’s market share and further decreasing GM’s (Maynard, 2005).
Alternative Three (Company Provided): Hybrid InitiativeMarketing Mix
General Motors needs to modify its business strategy and focus on producing
hybrid automobiles. There are many reasons for General Motors to shift towards hybrid
vehicles but the principal justifications involve the statistics of the fuel costs, fuel
efficiency, and money. General Motors should also consider the global and national
factors that have less impact.
Hybrid sales have risen consistently in the U.S., from 9,350 cars in 2000 to
20,287 in 2001, 35,000 in 2002 and 47,525 in 2003 (Getting There: a Guide to Planet-
Friendly Cars, 2004). Automotive analyst J.D. Power and Associates foresees annual
sales totaling 350,000 by 2008, accounting for two percent of all car sales (Getting There,
2004). This estimate indicates that demand for hybrid technology is increasing
substantially and General Motors has to start manufacturing hybrid vehicles in order to
regain the market share it has lost in the United States.
Today, having a fuel-efficient vehicle is important because of the benefits it has
for the environment as well as lower cost for gas. As fuel prices increase and with the
sales of sport utility vehicles declining, General Motors needs to penetrate the market and
compete head on with its competitors. Hybrid cars dominate the list of the most fuel-
efficient vehicles for 2007 (Fuel Economy Guide, 2006). Toyota leads in sales for
automobiles in America while Ford remains on top for SUVs. A generation ago, General
Motors produced half of the vehicles sold in America, but today it’s just over one quarter.
General Motors can’t keep up with the automobile market and it lost over one billion
dollars last year (Industry Giant Falling Behind, 2005). This trend will continue if they
don’t start producing what consumer’s want.
Hybrid vehicles provide drivers with an innovative, efficient, and affordable
option. After years of 'on the road' development, the new hybrids have become a practical
choice for consumers. Hybrid technology, compared to alternative fuel technologies, is
gaining a considerable amount of interest from consumers and other manufacturers. The
difference between hybrid and standard fuel vehicles is that hybrid vehicles use two or
more power sources, namely an electric motor and an internal combustion engine.
The electric motor kicks in during slow speeds, such as with city traffic driving,
saving on gasoline and reducing emissions. Consumers around the world are concerned
with saving their money as well as the environment and the hybrid vehicles are the
logical decision to accomplish those goals. As consumer demand for hybrid vehicles
continues to rise, prices are expected to stabilize and become more affordable for average
consumers.
General Motors will boost its image by supporting the environment through
manufacturing hybrids and will lower the United States dependence on foreign oil. The
reasonable use of hybrid vehicles will conversely decrease the dependence on foreign oil.
This is an especially important point in today’s political climate. General Motor’s
production of hybrid cars will help strengthen the hybrid revolution and eventually help
America become independent from foreign oil sources. For consumers, buying a hybrid
sends a message that says, 'I am willing to fund fuel efficient technology.' This message
is especially aimed at automakers that have contributed to America's yearly increase in
foreign oil consumption.
Financial Analysis
The revenues in United States market totaled $373.2 million in 2005 and expect to
reach $851.9 million in 2012 (Growing Demand for Hybrid Vehicles, 2006). As gas
prices rise consumers are more meticulous about which type of vehicle they will
purchase.
Hybrids are cost companies roughly $2,000 dollars to produce in factories while
they sell for around $25,000 (Slim Fast). By the end of the decade the cost of purchasing
one of these vehicles will decrease dramatically. The consumers will save $200-$1500 on
fuel costs each year if they purchase a hybrid (Fuel Economy Guide, 2006).
General Motors can establish a platform to build a wide variety of fuel-efficient
vehicles. The cost of producing a hybrid vehicle is much lower than the selling price of
the automobile that the company grosses a substantial profit.
Pros
General Motors will increase its revenue, over a period of time, by producing
hybrid automobiles because of the increasing demand from high oil prices. The public
will look favorably upon the company because it demonstrates GM’s compassion
towards the people and the environment. GM’s product mix will increase allowing
consumers to choose from a wide variety of products.
Cons
The negative aspects of creating a hybrid line will be cutting costs from other
automotive lines. Some product lines, that aren’t as successful, will need to be cut in
order to make way for the new hybrid line. Jobs and other automobiles will have to be cut
in order to have the financial security to produce the hybrid vehicles. GM will have to
take a financial hit for a few years until they start to break even. The process of creating
the hybrid automobiles will take time to make money.
Conclusion and Recommendation
Conclusion
To conclude, it is quite apparent that General Motors has been consistently trying
to develop new operations by which they can better the company as a whole. With
problems of a potential merger it has become more and more prevalent that General
Motors must start acting versus waiting to act. The company has been promoting Flexible
Fuel Vehicles, which has been somewhat beneficial to its sales but also to its public
image. Consumers are purchasing “green” products and General Motors has been trying
to follow this trend.
In conjunction with the development of “green” products, General Motors is also
currently undergoing corporate restructuring. In efforts to remove company debt, GM
has implemented a three-year restructuring strategy. The strategy includes: the closure of
nearly a dozen manufacturing plants, making substantial job cuts, introducing new
automobile lines, and redeveloping General Motor’s overall marketing strategy. In order
for GM to remain competitive in the automobile industry, such a strategy is necessary.
Recommendation
The recommended strategy that General Motors needs to implement in order
increase its market share is to produce hybrid vehicles. The hybrid industry is increasing
in sales by each year and General Motor’s competitors are capitalizing on it. If GM can
switch its strategy to implement fuel-efficient vehicles into its product line then
consumers will realize GM’s social responsibility towards the environment. This strategy
will help GM effectively compete with competitors in the future.
Implementation and Control Issues
Implementation
To implement this recommendation the strategy that seems most appropriate
would be to focus on creating a hybrid vehicle product line. The means by which General
Motors should go about this strategy/alternative would be to research its competition to
see what is working and what is not working and also how they could possible make an
even better hybrid than that of its competition. General Motors may also need to cut
existing non-profitable product lines to further the development of hybrid vehicle
production.
Control Issues
One of General Motors control issues deals specifically with its’ competition.
This is because its’ competition is already in the market place for hybrid vehicles. Such
companies known as Toyota, Lexus, and Honda already have these vehicles and already
know how to market them as well as focus on existing vehicle malfunctions and general
vehicle problems. General Motors may initial problems with a new hybrid vehicle line
just as any new product line may have initial malfunctions. Another factor that may be a
control issue is the fact of its’ recent plant shutdowns. This is because this leaves less
room for General Motors to produce vehicles, which also may play a part in the
discontinuation of other non-profitable vehicle lines.
References
http://afdcmap2.nrel.gov/Website/Stations/viewer.htm
http://www.eere.energy.gov/
Automotive Industry. United States Department of Labor. (2005, July 18). Retrieved October 28, 2006 from www.doleta.gov.
Baki, Matt. Automotive Industry Analysis – GM, DaimlerChrysler, Toyota, Ford, Honda. Academic Mind: Kansas State University. (2004, November). Retrieved October 28, 2006 from www.academicmind.com.
Cervone, Tony. General Motors Statement Regarding the Resignation of Jerome B. York From the GM Board Of Directors. General Motors Company Release. (2006, October). Retrieved October 28, 2006 from www.gm.com.
"Fence Post." Daily Herald (Arlington Heights, IL) 5 Apr. 2006: 16. Questia. 1 Nov. 2006 <http://www.questia.com/PM.qst?a=o&d=5014547299>.
"Fuel Economy Guide." www.fueleconomy.gov. 5 Nov. 2006 <www.questia.com>.
General Motors. Wikipedia Online Encyclopedia. (2006 ed.). Retrieved October 28, 2006 www.wikipedia.com.
"General Motors." Wikipedia, The Free Encyclopedia. 13 Oct 2006, 20:15 UTC. Wikimedia Foundation, Inc. 16 Oct 2006 <http://en.wikipedia.org/w/index.php?title=General_Motors&oldid=81272851>.
General Motors Corporation. Annual Report: Financial Highlights. (2005). Retrieved November 2, 2006 from www.gm.com.
"Growing Demand for Hybrid Vehicles - Implications for Motor Manufacturers." http://www.industrialautomation.frost.com. 14 Sept. 2006. 5 Nov. 2006 <http://biz.yahoo.com/prnews/060914/dath012.html?.v=71>.
"Growing Together to Fuel Solutions." Daily Herald (Arlington Heights, IL) 12 Feb. 2006: 1. Questia. 1 Nov. 2006 <http://www.questia.com/PM.
Jobs and Economic Growth. The White House Online. (2006). Retrieved November 2, 2006 from www.whitehouse.gov.
Maynard, Micheline. G.M. Set to Drop 5,000 More Jobs and Shut Plants. New York Times (2005, November 25). Retrieved October 28, 2006 from www.lexisnexis.com/academic.
Motavalli, Jim. "Getting There: a Guide to Planet-Friendly Cars." E. July-Aug. 2004. 5 Nov. 2006 <www.questia.com>.
Schneider, Greg. "Industry Giant Falling Behind: GM Reports $1.1 Billion Loss." Washington Post 20 Apr. 2005. 25 Oct. 2006 <www.washingtonpost.com>.
"Slim Fast: Toyota Aims to Take Size and Weight Out of Its Hybrid System." 5 Nov. 2006 <http://www.edmunds.com/insideline/do/News/articleId=117008>.
Toyota Hybrid Synergy Drive. (2006). Retrieved November 2, 2006 from www.toyota.com.
Appendix
Appendix A: Light Vehicle Sales by Company
WARD'S U.S. Light Vehicle Sales by Company Month Calendar Year-to-Date
October % Share DSR. January - October Vol.
2006 2005 Current Year-Ago % Chg. 2006 2005%
Chg.
Chrysler Group 159,586 164,814 13.2 14.4 0.7 1,787,534 1,955,486 -8.6
Ford 210,249 194,773 17.3 17.0 12.3 2,446,359 2,649,009 -7.7
GM 297,555 253,727 24.5 22.2 22.0 3,438,995 3,794,815 -9.4
Big 3 Total 667,390 613,314 55.0 53.7 13.2 7,672,888 8,399,310 -8.6
Honda 110,624 110,895 9.1 9.7 3.7 1,271,134 1,223,812 3.9
Hyundai 30,479 29,413 2.5 2.6 7.8 389,738 378,608 2.9
Isuzu 855 1,177 0.1 0.1 -24.5 11,191 14,490 -22.8
Kia 20,097 20,631 1.7 1.8 1.3 242,094 236,993 2.2
Mazda 18,843 19,504 1.6 1.7 0.5 228,082 221,366 3.0
Mitsubishi 9,288 9,292 0.8 0.8 4.0 99,392 105,420 -5.7
Nissan 75,115 72,294 6.2 6.3 8.1 851,644 908,439 -6.3
Subaru 15,404 16,774 1.3 1.5 -4.5 164,286 161,562 1.7
Suzuki 5,950 6,246 0.5 0.5 -0.9 87,278 69,732 25.2
Toyota 189,011 173,086 15.6 15.1 13.6 2,117,507 1,887,352 12.2
Asia Total 475,666 459,312 39.2 40.2 7.7 5,462,346 5,207,774 4.9
BMW 24,464 25,635 2.0 2.2 -0.8 254,297 251,276 1.2
Mercedes 20,601 18,390 1.7 1.6 16.5 197,689 175,221 12.8
Porsche 2,355 2,588 0.2 0.2 -5.4 28,766 26,397 9.0
Volkswagen 22,373 23,866 1.8 2.1 -2.5 267,126 246,508 8.4
Europe Total 69,793 70,479 5.8 6.2 3.0 747,878 699,402 6.9
Total Light Vehicles 1,212,849 1,143,105 100.0 100.0 10.3 13,883,112 14,306,486 -3.0
Appendix B: Flexible Fuel Vehicles
Appendix C: List of Plant Closures
Scarborough Assembly van plant Ontario 1993 Van assembly 2,700
Moraine Assembly (3rd shift) Ohio 2006 Mid-size SUV assembly 4,165
Oklahoma City Assembly Oklahoma Early 2006
Mid-size trucks and SUV assembly 2,734
Lansing Craft Centre Michigan Mid-2006 Chevrolet SSR roadster assembly 398
Oshawa Car Assembly No. 1 (3rd shift)
Ontario Mid-2006 Mid-size sedan assembly 3,600
Spring Hill Manufacturing Line 1 Tennessee March 2007
Saturn Ion sedan and coupe assembly
5,776
Doraville Assembly Georgia 2008 Minivan assembly 3,076
Lansing Metal Center Michigan 2006 Metal fabricating 1,398
Portland Distribution Center Oregon 2006 Parts distribution 95
Saint Louis Distribution Center Missouri 2006 Parts distribution 182
Pittsburgh Metal Pennsylvania 2007 Metal fabricating 613
Ypsilanti Processing Center Michigan 2007 Parts processing 278
St. Catharines Engine Ontario 2008 Engine/Transmission parts 1,699
Flint North 3800 Michigan 2008 Engines 2,677