General Motors Co. engages in the designing, manufacturing, and selling of cars, trucks, and automobile parts. It also provides automotive financing services through General Motors Financial Company, Inc. It operates through the following segments: GM North America, GM Europe, GM International Operations, GM South America, and Corporate.
The historical company went thru an internal financial crisis several years ago, however have turned around their luck, dividedness, and regenerated their bottom-line. Their advancements in automotive technology advancement has garnered much publicity for the car giant, as General Motors offered a sneak peak of the future this fall, briefly revealing three models that could be among 20 new all-electric vehicles it will launch by 2023 (Muller, 2017). While these new models showed a glimpse of GM's next-generation electric vehicle platform, the strategy moving forward will focus on electronic crossovers and SUVs, the current heart of the market. GM executives provided an important glimpse of the company's future strategy, however, saying its "all-electric path to zero emissions" will require both battery-electric vehicles and fuel cell vehicles - which is being developed from the ground up (Muller, 2017).
Degree of Rivalry
There is a level of intensity for developing and producing the next car of the future. There are not only two competitors (Ford Motor & Fiat Chrysler) near GM, but there are more across the country, and the globe as many European models are favored luxuries. There is a plethora of car models to choose from. Special features and limited-edition models keep the marketplace active between auto competitors.
Threats to Substitutes
Threats to substitute vehicles for different models is high. From the ability to get different amenities and features to perk the buyers interest there are multiple varieties to choose from for each type of car or SUV.
Buyer Power
Consumers may have power at the local dealership to bring down costs of a used car, however if a buyer wants a new car with all the bells and whistles you can expect the dollar tag to go with it. In recent years, the demand has increased year over year, has bumped up sales. Also, if environmental laws are put back in place for 2020, consumers will be at the mercy of the auto giants to have qualified and emission friendly vehicles.
Supplier Power
Suppliers come in by the dozens for parts across the globe. That is an entirely different competitive field itself. That said, with the auto industry evolving and more tech focused cars are being produced, a higher quality of supplies will be needed, and although there are many tech suppliers raising their hands for this role, GM will still have the power to weed out those questionable suppliers in order to find the right one to partner and invest with for priority patent rights.
Potential New Entrants
This threat is low as the cost and financial support to build a competitor to the size of GM would be gargantuan. That said, there are foreign manufactures that are trying to do just this, however for them to break into the US market will take time and plenty more of money.
GM has invested in new analytic tools that help them analyze the risks associated with suppliers and catastrophic events. In addition, they hold Blind Spot Workshops to identify and measure top risks and builds a mitigation plan - many of these risks must contain detailed resumption planning in their contingency plans (Banker, 2016). In my opinion a few contemporaneous core issues for GM to address are:
1) Change in Customer Needs: Smart cars, increased safety standards, internet convenience, and functionality
2) Eco-Friendly/ Green Cars and Hybrids: Sustainable energy, global warming, environmental laws and policies
3) Tech Suppliers/Partnerships: Have designated tiers of suppliers and seek to own the technology before a competitor. Work and partner with already established and trusted tech companies for special features and auto advancements.
4) Dealerships/Customer Service: Make sure the funnel knows what it is selling and that they are servicing customers with appropriately. They should have all the approved parts ready from suppliers to use.
References:
Banker, S. (31 May 2016.). General Motors Embraces Supply Chain Resiliency. Forbes. Retrieved from https://www.forbes.com/sites/stevebanker/2016/05/31/general-motors-embraces-supply-chain-resiliency/
Muller, J. (2 Oct. 2017.). GM Plots All-Electric Future With 20 New EVs and Fuel Cell Vehicles Coming By 2023. Forbes. Retrieved from https://www.forbes.com/sites/joannmuller/2017/10/02/gm-plots-all-electric-future-with-20-new-evs-and-fuel-cell-vehicles-coming-by
Week 3 Discussion Response – Strat Mgt
BY: S,J
The Porter model shows how industries are influenced by five factors to show differential risk adjusted rates of return and profitability (Young, 2017). General Motors is one of the oldest and most widespread car companies in the world. They originated in 1908 and have business operations in 40 countries around the world (Young, 2017). They have nine sub-brands including Buick, Chevrolet, and Cadillac. I personally drive a Chevrolet. In 2016, GM generated 166 billion U.S. dollars in revenue and sold 10 million vehicles. They have hold a 4.5 percent automobile market share worldwide. They have not been resistant to challenges however and had to be bailed out in 2009 by the U.S. Government. In order to continue to boost its competitive advantage, GM needs to tailor to their current patrons while also investing in R and D for new technological features to outperform smaller companies looking to find a niche in the automobile industry.
Supplier Power (weak): There are a significant number of sellers in the automobile industry but not necessarily brands. Vehicles can be purchased directly from the manufacturer and essentially design their own vehicle or go through a retailer. Raw materials are widely accessible. There is a moderate population of steel producers so there is not very much bargaining power for the suppliers due to the high overall supply. Because of this, if there is a change in individual supplier’s production there will not be a significant change in the automobile industry.
Threats of Substitutes (moderate): Substitutes can reduce the revenues of firms and limit the opportunities (Young, 2017). There are a moderate number of substitutes but not a lot of differences between those substitutes, so customers are less likely to choose another automobile provider.
Buyer Power (moderate): There are a large number of buyers including individuals purchasing vehicles as well as companies, and government entities that may purchase and manage fleets of vehicles. The individual buyers have a weak force on purchasing power. Both can have relative bargaining power with the business and governments having more so. Buyers are definitely price sensitive, but there is not a significant cost differential between switching brands. The brand loyalty usually comes from the degree of value they receive from their purchase and their overall happiness with the experience. For example, my truck is a Chevrolet and my husband’s is a Dodge. Both were around the same cost, but I have had less upkeep issues with mine. Overall, I will stay with GM. GM has multiple brands with different prices for those that are price sensitive. There is moderate substitute availability and switching cost. For example, my Chevrolet truck was basically the same as the GM model but at a 5% discount. GM also allows their patrons to have a GM card that they can earn money towards their next vehicle.
Degree of Rivalry (strong): The automotive industry is large with a moderately high number of firms with each firm’s size varied. There is always the possibility in the automobile industry of getting acquired by a competitor so there is high aggressiveness of firms as well as high exit barriers. Customers do tend to be loyal and patronize specific brands routinely but that doesn’t stop the massive market campaigns and rate of innovation. GM holds a large concentration ratio of market share but they must compete with global, regional and domestic firms (Young, 2017).
Barriers to Entry (moderate): There are high barriers of entry into the automobile industry because of the length of time that manufacturers have dominated. It also takes extreme capital investments and rigorous legal barriers to comply with in order to start in the market. While there are foreign competitors, the industry leaders including GM should not have too much to worry about due to brand loyalty, and reputation. However, if entrants are available to cultivate technology to provide a differentiated product, then there is the possibility for some entry niches.
Value Chain
GM needs to increase research and development funds to dedicate into expanding their current line and incorporating new technology. Another focus should be on expanding safety techniques and truly implementing successful recalls. They can expand their market beyond their current strongholds to places like Latin America. They need to ensure that they do not have a repeat of “old GM” and need the bailout of the U.S. Government.
Young, J. (2017). General Motors Five Forces Analysis (Porter’s) & Recommendations. Retrieved from: http://panmore.com/general-motors-five-forces-analysis-porters-recommendations
Week 3 Discussion Response – Managerial Acct
By: K,T
Based on the identified six key areas above, there are a couple points I feel are the main factors that create the gulf between planning and attaining performance objectives. One of the first important points includes having a clear link between strategy and the operating budget. A company with a strategy can help to motivate employees. Budgets are also advantageous to ensure resources and responsibilities are assigned properly, helps to identify potential constraints, facilitates congruence between organizational and personal goals, and lastly helps to define organizational goals (Crosson & Needles, 2014). Both the strategy and operating budget go hand-in-hand. Another factor that seems to be important is obtaining solid data and systems to make these decisions. A company that has access to this information can then create an appropriate budget and develop a strategy for success.
I think the growth in global competition can definitely help a company to accelerate the process even further. Companies would be encouraged to develop objectives including short-term and long-term goals to grow. A successful planning process looks to find company priorities and address many of the key areas as mentioned. Overall, in my opinion, defining a clear link between strategy and the operating budget along with solid data/systems to make decisions is vital.
Reference:
Crosson, Susan, Needles, Belverd. (2014). Managerial Accounting (10th ed.). South-Western, Cenage Learning, Mason, OH
Week 3 Discussion Response – Managerial Acct
BY: I,H
The most important factor in a failed plan would have to be a poorly defined strategy. This is actually something that is occurring in the division I am currently working for. In essence, when a poorly defined plan is put in place, goals are not attainable and you are setting yourself up for failure. Particularly when working with financials, accuracy is very important. Setting the proper budget and sales targets will help define a good plan, but when the wrong information is provided when setting the goals for the upcoming year this hurts the firm and particularly the individuals that would benefit from good numbers.
Along with the poorly defined strategy, as mentioned a lack of solid data is also very impactful. Not having the proper systems set up also feeds into a failed planning process. These two points work hand in hand and can especially hurt a firm working with large amounts of data. Without the proper tools to manipulate large data sets being able to make decisions becomes difficult. From the lack of precise information firms can develop poor plans, hence the opinion that these are the two points that result in a failed plan process.
rengonap
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