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Swot Analysis of General Motors’ New Division

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Background Information

Apart from being the world’s largest automobile company, General Motors is also one of the most valued automobile organization and has been for a very long time. To further this amazing success story, a new division which produces cars using alternative sources of energy- solar and electricity is proposed. Since the future of the automobile industry is green, General Motors must move towards using lean sources of energy to produce cars.

Also, the car manufacturer understands that with Tesla producing electric cars, there is going to be a lot of competition in the automobile industry hence the need for the newly created division. Charged with furthering research on producing cars which use leaner sources of energy, the new division will largely focus on producing cars that operate on rechargeable lithium ion batteries or solar energy or both.

External Environmental Forces

Global and Industry Changes

Globally and in the United States, the auto industry is going through rapid changes that present opportunities and threats to major players like General Motors. According to Elon Musk, CEO of Tesla, the auto industry is going to experience massive changes especially in the next decade. Firstly, according to trends already being seen, more than 50 percent of new car production in the United States will be electric in the next ten years (Calabrese, 2016).

From the current statistics, Americans are embracing the new electric car technology and therefore companies in the industry must adjust to get a share of the shifting customer demographics. Secondly, almost all the cars produced in the next decade and a half will be autonomous. Companies should embrace this change and should already focus on producing cars that will have this quality. Thirdly, in the next two to three decades, there will be no steering wheel for the motor vehicles. A lot of changes will have happened that will make driving cars be like driving horses.

Economic Forces

Firstly, the high growth rate of the developing markets is an external economic opportunity for the new division. The high growth rate of the developing creates an opportunity for the new division to grow and expand into these new horizons (Pound, 2013). For instance, Indonesia and India are presenting a viable market for the new division.

Secondly, the economic stability of major markets like United States, Europe and China is a major opportunity for the growth and expansion of the new division. The major markets are relatively stable and therefore the new division and General Motors as a whole is not likely to face major challenges (Pound, 2013). However, rising competition in the developing markets especially from Tesla is like to be a massive challenge.

Legal and Regulatory

The legal environment is likely to present opportunities and threats to the newly created division. Firstly, expanding regulations on the safety of automobiles is an opportunity for the new division. Secondly, stricter emissions regulations is another opportunity for the new division. The new division is focused on making the environment safer in product design and development and hence will boost GM’s brands. Thirdly, expanding environmental regulations is an opportunity in the legal environment. The new division will benefit largely from intensified efforts for end-of-life considerations in product design, supply chain sustainability and business sustainability.

Environmental Forces

For the newly created division, environmental trends and changes can impact availability or resources, product usage and supply chains (Ili, Albers, & Miller, 2010). The following opportunities will boost the performance of the new division: rising interest in business sustainability and rising concerns on the air quality effects of automotive emissions. The new division is developing automotive solutions that promote pollution-free air and business sustainability.

By enhancing its electric or hybrid automobiles, the division is addressing the rising concerns on the air quality impacts of automotive emissions (Ili, Albers, & Miller, 2010). This way, the organization improves its sustainability position, brand image and corporate image, based on the rising interests in business sustainability.

Technological Factors and Innovation

Three factors are at play here. Firstly, the high rate of technological change is both an opportunity and threat. The high rate of technological change is presenting a great opportunity for the company to enhance its automobile’s technologies but also threatens the new division in terms of the potential rapid obsolescence of the technologies currently being used.

Secondly, increasing automation is an opportunity since the new division has great growth opportunities through further automation of the business processes. Thirdly, the increasing popularity of the online mobile systems should prompt the new division to increasingly integrate these systems into the automobiles.

Social Factors

There are three social factors that are likely to present opportunities or threats to the newly created division. Firstly, the increasing popularity of low-carbon lifestyles is an opportunity for the new division. People are increasingly shifting to low-carbon lifestyles and hence the division can tap into it (Deyo, 2016). Secondly, there is increasing preference for renewable energy especially in the automotive industry. People are caring more for clean energy and the new division can tap into this potential. Thirdly,

Competitive Analysis

The automotive industry is crowded. Over the years, several automobile manufacturers have into producing electric car batteries and electric cars. In fact, today, people are not asking about companies which produce electric cars. They are rather interested in companies producing the best electric cars. Elon Musk’s Tesla is the major competitive threat to GM’s newly created division. Considered to be one of the best innovative technology company, tesla produces high quality, cutting edge cars with creative and high-end features. Tesla is best known for Tesla Model X and Tesla Model S.

Secondly, BMW, the German’s car marker has entered the electric car market with its all electric luxury SUV BMW i3. The model is already changing the market. Nissan’s Nissan Leaf is probably the most popular electric vehicle in the world produced by Japanese based Nissan Company. Ford’s Ford Focus Electric and Volkswagen’s Volkswagen e-Golf is likely to give the company a run for its money.

Internal Forces and Trends

Structure and Culture

General Motors has a regional divisional organizational culture. Business activities are grouped into areas of operations or geographical segments (Helper, & Henderson, 2014). The structure is characterized by: regional segments, business-type divisions and corporate functional groups. Firstly the regional divisional structure allows for flexibility in responding to regional market variations (Helper, & Henderson, 2014). Secondly, the structure allows the division to separately focus on automotive business and financial services business hence optimizing its effectiveness in the global market.

However the structure has limited support for branding consistency at the global level. The new division has an organizational culture of agility just like the parent company. The agile organizational culture in the new division is based on five important pillars: freedom and opportunity to grow, learn and evolve; fast thinking for continued success; innovation and emphasis on quality; responsibility and accountability; and positive relationships for operating success.

Strategy and Strategic Capabilities

General Motors has a generic strategy that ensures competitive advantage even with the rising competition in the global automotive industry (Goolsbee, & Krueger, 2015). The company’s generic competitive strategy is based on cost leadership and this has been taken up by the new division. The new division’s competitive strategy emphasizes on the opportunities created through economies of scale.

The new division’s automobiles will be offered at lower prices to attract customers. Three strategic capabilities support the generic or overall business strategy: fast market penetration, automated and efficient product development; and market development (Goolsbee, & Krueger, 2015). However, limited product diversification may limit the ability of the new division to take on the industry giants.

Processes, Technologies and Innovations

The new division will benefit from technologies and innovations that have been embraced by the company. The division is focused on delivering IT and other innovations faster, help in shortening the time from design of the vehicle to its manufacturing. One of the best innovation is the Detroit-based Social Center of Expertise where members of a team can monitor and contribute to social media conversations about the organization.

Through the use of GM’s Oracle-based Social Media Management system, new division’s CoE agents are capable of tapping into the organization’s databases to record ongoing interactions with customers and sales leads. Secondly, the company has improved and sped up back-end processes with several tech innovations. The company’s engineering team for instance has ramped up its high performance computing capabilities to improve wind tunnel, crash, combustion and many other simulations.

Thirdly the manufacturing branch of GM is applying monitoring and data analytics to different processes to evaluate the quality of a plant’s pant jobs in real time. This helps in spotting problems before the vehicles can get to final inspection. The company also has a vision for autonomous driving. Tightly connected to the future of urban mobility is the concept of autonomous driving where the vehicles equipped with sophisticated software and sensors navigate themselves without the aid of a person in control of the wheel. As a move towards autonomous driving, the company has acquired Cruise Automation to accelerate the development of autonomous –vehicle innovative technology.

Leadership

Transformational leadership at General Motors is a strength that will transform the new division into a performance- based outlet. Mary Barra’s transformational and exceptional leadership has changed how things are done at the company and the same is likely to be experienced in the new division (Colby, 2015). Barra has brought in three transformational leadership qualities that will be significant for the new division.

Firstly she is team oriented. Mary Barra and her team believe that collaboration yields results and so they have invested in teamwork. Secondly, she is decisive. Transformational leaders must take decisions in the most difficult moments (Colby, 2015). Thirdly, together with her team, they have built a culture of respect and persevering attitude at General Motors.

Summary of the SWOTT Analysis

Strengths · Economies of scale · Strong brand and corporate image · Highly innovative processes and control on vehicle production · Transformational leadership exhibited by CEO Mary Barra and the rest of her team. · Rapid technological development including autonomous –vehicle innovative technology · Organizational culture of agility optimizes the success rate of strategic implementation in the auto market. · Regional divisional structure allows for flexibility in responding to regional market variations. · Structure allows great focus on automotive business and financial services business hence optimizing its effectiveness in the global market	Weaknesses · Limited market presence especially in the developing countries. · High prices · Limited supply chain · Inherent bureaucracy in the organizational structure and culture. · Limited product diversification may limit the ability of the new division to take on the industry giants.
Opportunities · Increasing automation in business · Increasing popularity of online mobile systems  · High growth rate of the developing markets. · The economic stability of major markets like United States, Europe and China. · Expanding regulations on automobile safety. · Expanding environmental regulations is an opportunity in the legal environment. · Rising interest in business sustainability. · Rising concerns on the air quality effects of automotive emissions.	Threats · Rising competition in the developing markets. · High rate of technological change. · Intense competition from Tesla, Nissan, BMW and Ford. · Dealership regulations
Trends · Increase in strategic partnerships with external tech companies. · Rapid momentum gain on connected and autonomous vehicles. · Increased research and development on par with the globe’s most innovative firms. · Shift in recruitment needs as computer scientists and engineers lead the way. · Consumers increasingly browsing online and demanding digital solutions to their cars.

References

Calabrese, G. (Ed.). (2016). The greening of the automotive industry. Springer.

Colby, L. (2015). Road to Power: How GM's Mary Barra Shattered the Glass Ceiling. John Wiley & Sons.

Deyo, F. C. (Ed.). (2016). Social reconstructions of the world automobile industry: Competition, power and industrial flexibility. Springer.

Goolsbee, A. D., & Krueger, A. B. (2015). A retrospective look at rescuing and restructuring general motors and Chrysler. The Journal of Economic Perspectives, 29(2), 3-23.

Helper, S., & Henderson, R. (2014). Management practices, relational contracts, and the decline of General Motors. The Journal of Economic Perspectives, 28(1), 49-72.

Ili, S., Albers, A., & Miller, S. (2010). Open innovation in the automotive industry. R&d Management, 40(3), 246-255.

Pound, A. (2013). The Turning Wheel-The story of General Motors through twenty-five years 1908-1933. Edizioni Savine.