STRATEGIC MANAGEMENT

Strategic Management

Strategic Management

Part A: Strategic Analysis of GM

Introduction

General Motors Corporation (GM) is a multinational automobile manufacturer founded in 1908 and headquartered in the United States. GM is the world's largest automaker as measured by global industry sales. As of 2008, General Motors employs about 266,000 people around the world. It manufactures its cars and trucks in 35 different countries and sells them under the brands of Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall, and Wuling. General Motors is the ninth largest publicly traded company in the world (ranked by revenue on the Fortune Global 500 list). (Warell 2008 356-71)

External Audit

Environmental Analysis

GM and the entire auto industry are currently challenged with the perfect storm. The auto industry is being hit by a weak US and global economy, rising fuel prices, and social and political environmental concerns and issues. In order to overcome these potential threat, GM should consider mass producing a range of alternative fueled vehicles, i.e. fuel cell, electric, and hybrid.

Strategic Imperatives:

In creating an effective strategy for General Motors (GM), GM's external environment was scanned to identify multiple opportunities for and threats against the company (strategic imperatives) for the next several years. In addition, GM's internal environment was analyzed to determine current strengths and weaknesses. GM and the entire auto industry are currently challenged with the "perfect storm.� The auto industry is being hit by a weak US and global economy, rising fuel prices, and social and political environmental concerns and issues. In order to overcome these potential threat, GM should consider mass producing a range of alternative fueled vehicles (fuel cell, electric, and hybrid). As emerging markets develop they will increase their use of oil products creating even greater demand and increased prices. Couple this issue with social and political concerns regarding global warming, and the ever increasing state regulations regarding emissions, will create a potential huge customer demand for these alternative vehicles. (Sengir et al 2004 541-59)

Potential opportunities identified for GM are related to the future demand of the alternative vehicles and increased global market share potential from emerging markets. But first GM needs to turn current internal weaknesses into strengths to achieve the external opportunities. GM's internal weaknesses are the large legacy costs in equipment, facilities, and retirees, that all need to be addressed to compete with relatively speaking new c0ompanies like Toyota. Due to these significant legacy costs, GM has an extra $1,500 per vehicle to incorporate into the price of their vehicles. Another weakness for GM is that because they are so large it takes much longer to roll out new vehicles, and in addition GM has too many similar vehicles that needs to be reduced. For example, GM has similar products in Buick, Chevrolet, and Pontiac. GM needs to reduce structural and operational costs by eliminating product redundancy, removing vehicle platforms, and making each brand unique in its own way. (Sastry 1997 237-75)

Although weak in these areas, GM is positioned to take advantage of the identified strategic ...