FORCES AND TRENDS OF GENERAL MOTORS

Forces and Trends of General Motors

Forces and Trends of General Motors

Introduction

The business environment can be described by a number of variables such as dynamism, change, turbulence and complexity. Every organization must possess the ability to continuously improve itself. These improvements include optimal effectiveness, re-engineering the major processes and functions that can be the source of competitive advantage for the organization. The purpose of the organization is to regenerate, adapt and survive in the business environment.

General Motors (GM) is one of the largest automobile organizations that have an existence in more than seventy countries around the world. General Motors is a leading global automotive group, and historically is among the top U.S. companies by revenue. General Motors Company was born as a group of companies in the year 1908 through the initiatives of C. Williams Durant. General Motors (GM) is principally engaged in the development, design, marketing and manufacturing of automobiles globally. In the year 2010, General Motors produced 8,714,000 automobiles under the brands, including Cadillac, Buick, GMC, Chevrolet, Holden, Daewoo, Jiefang, Isuzu, Vauxhall, Wuling and Opel. The operations of General Motors are spread out in approximately 120 countries around the world. Most of the automobiles that the company produces are marketed by retailers in North America. These distributors and dealers are owned personally by the company outside North America. General Motors consists of more than 15,000 outlets globally. This also includes the dealers, distributors and service, parts and sales outlets. This paper discusses the forces that impact the performance of General Motors and its adaptability to the respective force or trend.

Forces and Trends of GM

General Motors's Cost of Goods is Highly Affected by the Commodity Prices

Steel

Steel is a major component for making cars. Therefore, an increase in the price of steel has a direct impact on the production cost of GM as well as the profit margins. The increase in the prices of steel increase the cost whereas reduces the profit margins. It is difficult for GM to substitute steel for any other material in order to minimize the cost of production. Aluminum is another important material that is used in the production of the automobile; it also has an impact on the profit margins of the organization (Wong, 2010).

Oil Price

An increase in the prices, due to inflation increases the cost of ownership. Since cars are luxury items, the consumers do not buy cars frequently. Therefore, the rising oil prices only have a limited impact on the sales of General Motors. As the economy is in the recovery phase, it is expected to remain stagnant in the future. GM has always focused on the fuel efficiency of it cars. It also pays attention to the external problems, for example, a constant increase in the prices of gasoline has diverted the attention of many consumers to the cars that are fuel efficient. Unlike other leading automobile companies, General Motors lacks in adapting to the fuel-efficient technology. Catching up with the fuel-efficient technology would also ...