Strategies for promoting excellence in a time of scarce resources essay
GM is one of the largest US car manufacturers, which holds a leading position not only in the US but also in the world. In spite of the steep decline the company has faced since the economic recession in the US in 2008, the company is on its way to recovery. At any rate, GM still holds a strong position in the US as well as in the international market being one of the largest car manufacturers in the world. In spite of the steep decline and bankruptcy run under Chapter 11 in 2009, the company has undergone consistent reorganization and has started the recovery to regain its position as the world leader in the car manufacturing industry.
The vision, mission, and stakeholders of a firm and their impact on the firm’s overall success
The vision of the company is the creation of the brand number one car manufacturer in the world that brings customers high quality vehicles that match their expectations and are manufactured in accordance with GM traditions. The company is also involved in socially responsible operations and serves to interests and needs of its employees and local communities (GM Investors, 2014).
The mission of the company is to design, build and sell the world’s best vehicles that leads to a healthy balance sheet of the company and world-class products that are winning in the market place (GM Corporate Strategy, 2014).
Key stakeholders of GM involve employees of the company, managers, top executives, share holders, suppliers, customers and members of local communities, where production facilities of the company are located.
PESTEL
The political environment is positive for GM because since 2009, when the company ran bankrupt under Chapter 11, the company relies heavily on the government support, while the government accelerates the reorganization of the company that leads to the enhancement of the marketing position of the company in the US as well as the global market (McCracken, 2009). At any rate, the government backup turned out to be crucial for the survival of the company in 2009 and, at the moment, the company has started revival through the complex reorganization.
The economic environment is still quite challenging because the global economy faced a considerable downturn in the late 2000s but the early 2010s have brought the steady recovery, while at the moment the car manufacturing industry in the US is growing fast and has already regained its position as car sales have reached one of the highest levels within a decade (DePamphilis, 2012). However, GM as well as other American car manufacturers face the tight competition from the part of Japanese and other leading car manufacturers, such as Toyota and others.
The social environment is also quite challenging because, on the one hand, the company attempts to bear the social responsibility with regard to its employees, while, on the other hand, the company has to save costs that means the reduction of spending on social programs to optimize the marketing performance of the company. In addition, the company faces the pressure from the part of local communities, which grow concerned with environmental issues as well as economic ones (Gustin, 2008). In this regard, one of the main concerns of communities, where American production facilities of the company are located, involves the economic impact of GM and employment opportunities the company creates for those communities.
The technological environment is positive and friendly in relation to GM because the company traditionally focuses on innovations. Technological innovations allow GM to introduce new products and improvements that make its vehicles more attractive to customers than products of rivals. However, at the moment, the company focuses on the introduction of innovations oriented on the enhancement of fuel efficiency of GM’s vehicles and their minimal impact on the environment (Breneman & Taylor, 2009). For example, the company develops new cars, which use alternative fuels, including hybrid vehicles using gasoline and electricity, or all-electric vehicles, or hydrogen vehicles, or flexible-fuel vehicles, which use either ethanol, or gasoline, or both.
Environmental issues have become particularly important today and the company has to deal with them effectively to preserve their strong position in the global market. In fact, customers in well-developed countries grow more and more concerned with environmental issues. This is why the company has to match demands of customers but the problem is that GM was traditionally oriented on manufacturing of large vehicles, which have never been fuel efficient. As a result, today, the company has to change its production and introduce innovations to make its vehicles fuel efficient and, therefore, less harmful for the environment.
The legal environment is basically favorable for the successful business development of the US. GM is the US-based company but the company operates globally. The US legislation is stable and does not raise barriers on the way of the company to its successful business development. Problems may and sometimes emerge, when GM enters new markets, where the company has to deal with the new legal environment. As a rule, the company respects the corporate standards and enters markets, where legal norms and rules are clear and transparent. Nevertheless, the international market expansion may raise certain legal difficulties, when the company has to create partnerships, for example, to enter new markets. Nevertheless, the US and other major markets have the stable legal environment that contributes to the successful business development.
Five forces
The bargaining power of suppliers of GM is basically high since the company uses reliable suppliers, which have the extensive experience of cooperation with GM. The major suppliers of the company are reputable and reliable companies, which are, to a significant extent, dependent on GM.
The bargaining power of buyers have started to increase and reached the high level recently, although in 2008-2009, the company faced a considerable downturn in its sale rates.
The threat of substitutes is growing to be higher today, as other car manufacturers tend to develop new vehicles using alternative fuels, instead of gasoline and fossil fuels, which prevail among cars manufactured by GM.
The threat of new entrants is relatively low because the world car manufacturing market is saturated and the competition is tight. This is why new entrants will face extremely high barriers to entry, which they may not be capable to overcome. Therefore, the threat of new entrants is low. In addition, GM and other US-based car manufacturers count on the government support, which helps them to keep barriers to entry high.
The industry rivalry is high and this is probably the major threat for the position of the company in the US and global market today. In fact, the development of the rivalry in the industry resulted in the difficult position of GM, when the company has faced the downturn in its business development in 2008. However, the company used to be the world leader among car manufacturers. Prior to the crisis of 2008, GM was the largest car manufacturer in the world. But after 2008, the company has lost its leading position and Toyota has outpaced GM and become number one car manufacturer in the world.
The external environment for opportunities and threats
In spite of the considerable downturn in the economic development of GM, the company still has considerable opportunities to expand its business and maintain the leading position in the US and global market. The company has huge production capacity and can keep growing, on the condition of the development and implementation of the successful marketing strategy that allows the company to optimize its marketing performance and enhance its position globally.
In addition, the company can enhance its brand image and become the multinational corporation that promotes environment-friendly policies and conducts the policy of social responsibility for its employees as well as local communities.
On the other hand, the company faces the threat of the tightening competition and increasing the public pressure because of the environmental issues. The tightening competition can undermine the position of the company in the global market.
The internal environment of a company for strengths and weaknesses
The internal environment of GM contributes to the enhancement of its competitive position in the global market. The company has the experienced personnel and well-developed research and development department which contribute to the steady and successful development of the company.
In addition, the company has a solid production base along with the extensive network of reliable suppliers at the domestic and international level.
On the other hand, the company has a number of weaknesses which need immediate elimination. One of the main weaknesses of the company is the production of large vehicles with low fuel efficiency. As a result, the company needs to develop new vehicles, which are fuel efficient that may be achieved either through the reduction of size of vehicles or introduction of technological innovations to save fuel and make them more fuel efficient.
Furthermore, the company has to enhance its brand image through the development of the positive attitude of customers. For example, the US customers are not always confident in GM vehicles, which they consider to be unreliable compared to Japanese cars, for instance.
Various levels and types of strategy in a firm
The company has several layers of levels and respective types of strategy. At this point, it is possible to distinguish three major levels: local, national and global. At the local level, the company focuses on the development of the production line, identification of local suppliers or supply of required parts from other units of the company. As a rule, this is the plant level, when the plan manufacturing GM vehicles develops its operations and operates in accordance to the corporate strategy.
At the national level, the company develops the marketing strategy for the national market, like the US, for example. Operations and strategy at the national level involves the large scale business plan and long run strategy oriented on the development of the company within the national market. In this regard, the US market is the major target market for GM but, today, the company attempts to enhance its position globally and expands its operations entering national markets of other countries, including the EU, South Africa, Asian countries and others.
At the global level, the company elaborates the global strategy oriented on the international market expansion and taking the leading position in the global market. At the moment, GM attempts to regain its leading position in the global market and to reach this goal the company has to have the global strategy which determines the global development of the company.
Ways in which corporate governance will affect strategic decisions
The corporate governance has a considerable impact on strategic decisions taken by the company. For example, the centralized corporate government implies that strategic decisions are taken by the board of the company at the top level. This way of the corporate governance is not effective in case of GM because the excessive centralization slows down the decision making process and raises the problem of the low effectiveness of strategic decisions taken by the company. For example, if the company needs to take a strategic decision at the national level, the outlet of GM located in this country could take a faster and more effective decision than the decision taken by the board in the US. Similarly, the local management can take decisions at the local level more effectively and successfully than the board.
Another way of the corporate governance focuses on the decentralization of the corporate governance, which is more effective in case of GM. To put it more precisely, the decentralization of the corporate governance implies the autonomy of outlets of the company located in different parts of the world. Their autonomy allows them to take strategic decisions autonomously in response to the changing business environment and particular challenges that they face at the national or local level. This corporate governance strategy is more effective because it makes the corporate governance and strategy more flexible. The board determines the strategic framework within which all outlets and departments of the company operate and they use their autonomy in the decision making process to maximize their effectiveness and to match the corporate strategy and strategic goals determined by the board.
The relationship between strategy and organizational structure
The company’s strategy depends on the organizational structure. The corporate strategy is grounded on the organizational structure but, at the same time, the corporate strategy influences the organizational structure. The complex organizational structure of GM forces the company to develop flexible global strategy which grants local outlets of the company wide autonomy to make the entire corporation flexible and capable to confront changes in the business environment.
In addition, the company has undergone reorganization since 2009 to optimize its marketing performance. The reorganization mirrored the new marketing strategy of the company oriented on the improvement of its financial and organizational performance. The company discontinued some brands and sold others, as was the case of SAAB, for example. Instead, the company focused on those brands which were popular and had the greatest marketing opportunities.
Conclusion
Thus, GM is a strong company operating in the car manufacturing industry. The company is recovering after the steep decline, which GM faced in 2009 and which led the company on the edge of survival. However, after restructuring and reorganization the company is regaining its position fast not only in the US but also globally.
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