General Motors: SWOT analysis

Company History

General Motors is a US based auto manufacturer  with a worldwide present and broad product range that includes the following global brands; Buick, Cadillac, Chevrolet, GMC, Holden, Hummer, Opel, Pontiac, Saturn, Saab and Vauxhall. Some of these models include passenger vehicles and trucks.

The company was founded in Flint, Michigan in 1908 as a holding company for Buick then controlled by William C. Durant. GM acquired Rapid Motor Vehicle Company of Pontiac, a trend that continued as the company acquired other companies to become one of the most complex global organizations. The leadership of Alfred Sloan in the 1920s greatly expanded the company as he focused on news ways of managing the increasing complex company with special attention of consumer needs to luxury cars which clearly differentiated the company from Ford Motor Company.

General Motors continued its growth and at one time became the largest corporation in the United States in terms of revenue as a percent of GDP. In 1955, it became the first company to make over one billion dollars in a year with the company also being the largest employer of labor. So great was the company’s influence that in 1953, then GM president was named by President Eisenhower as Secretary of Defense.

Operations/Internal Chain: The Company employs 324,000 people globally with half of them based in the US. It has manufacturing operations in 32 countries with a global distribution that ps across 200 countries with the company having a market share of about 30% in the US. Apart from manufacturing, the company utilizes its distribution network to market other brands like GM Daewoo, Isuzu, and Suzuki. The company also reinvented itself by operating one of the world’s leading financial services companies which offers automotive and commercial financing along with an array of mortgage and insurance products. This is extending the company’s value chain and making it more effective globally in the absorption of its cars.

SWOT ANAYSIS

Strengths: GM has been the one of the largest auto manufacturers with several years of experience and human resource and capital. The company’s brands have become known for their quality and attraction to people who desire luxury and quality. The company’s models are becoming globally accepted resulting in increased sales in foreign markets.

Weaknesses: The concept of Lean Production made popular by Toyota and which is globally acceptable as the standard in manufacturing is still a concept GM is struggling with. The company’s broad product ranges also appear difficult to sustain as some of the brands are known to be unprofitable. It is obvious that this presents a difficulty in logistics and the number of parts and production lines are difficult to effectively coordinate. The company’s market share is also being eroded by other companies and economic factors with the company’s stock value going down.

Opportunities: Its recent global partnership with Toyota and expansion presents opportunities for GM. The company has begun to focus on the brands that make it successful which will enhance profitability. The company’s strategy also seems to be paying off in the luxury sector as it is still the preferred brand.

Threats: This has been exposed more as a result of competition with Toyota recently laying hold to the claim of being the largest auto manufacturer in 2005 when it announced it would produce 9.06 million vehicles as against the 8.825 million cars proposed by GM. Apart from Toyota, the company faces stiff competition from other auto manufacturers. International legislation and regulation is also a critical factor that presents a threat as this can affect the company sales.

Global competition demands that the company re-evaluate its strategy, focus on its core brands and eliminate the sources of waste through standardization of most of its parts to ensure profitability. In recent years the company’s market share is gradually being eroded as a result of several factors which show that other companies particularly from Japan are taking more advantage of consumer demands. Customers are increasingly becoming the deciding factor and require responsive auto manufacturers to meet their demands. This is the challenge that GM must meet to restructure its operation.

References

• Charles H. Fine, Roger Vardan, Robert Pethick and Jamal El-Hout (2002). Rapid-Response Capability in Value-Chain Design. MIT SLOAN MANAGEMENT REVIEW  7 pages.
• http://imvp.mit.edu/papers/02/FineValueChain.pdf (assessed on March 26, 2006)
• William Berg (2005), The History of GM – General Motors http://www.freshstartdetail.com/The_History_of_GM_-_General_Motors.html (assessed on March 26, 2006)
• T. Thomas (2006), The Story of General Motors fall, http://www.rediff.com/money/2006/jan/27spec4.htm (assessed on March 27, 2006)
• Case Study – General Motors http://www.compucom.com/wwwimages/Corp/Images/CS_GeneralMotors.pdf (assessed March 26, 2006)