swot analysis

Management 303 SWOT Analysis of General Motors Company

Section I – Organizational History

General Motors has been in business for over a century and has seen many changes and

experienced much upheaval in that time. It was founded in 1908 and celebrated 100

years of business in 2008. They employ over 200,000 people and conduct business in

over 150 countries, truly a global company. Unfortunately, in 2009 GM was forced to

declare bankruptcy due to an economic downturn and continuing quarterly losses. The

company had to seek government aid to stay afloat and save millions of jobs. GM is now

called the General Motors Company (previously known as the General Motors

Corporation) and is referred to as the ‘new GM’. The company is in a much better

position financially since the bankruptcy, and has filed paperwork for a proposed initial

public offering. GM’s vision is to design, build and sell the world’s best vehicles.

Section II – Strengths and Weaknesses

I would consider two strengths of GM’s to be technology and their current financial

situation. Two of GM’s current weaknesses are the constantly changing leadership and

dissatisfied employees.

Strength #1 – Technology

GM has made great strides in technology and keeping up with the latest social

media trends. The greatest example of their advanced technology will be

available this year in the Chevrolet Volt. This vehicle will run for up to 40 miles

without using a drop of gas, but it does have a fuel tank like a normal vehicle. If

you are planning a longer trip you can just fill up with gas like in any other

vehicle and do not have any ‘range anxiety’ as associated with purely electric

vehicles.

Another great technological feature of GM is the OnStar system that is standard

on all new vehicles. This system allows you to contact a service representative 24

hours a day at the touch of a button. They can help you with anything from

directions to vehicle questions. The system also allows you to buy minutes for

your vehicle to place hands-free, voice dialed calls any time you are in the car.

GM is shortly going to tie in the OnStar system to your Facebook account as well

so you can hear new status updates, and also hear your text messages from your

phone. There is also a new app for Smartphone that allows owners to check the

statistics of their vehicle and perform functions such as remotely starting their car.

The most important feature of the OnStar system is the automatic crash response.

Any time a crash situation is detected and an airbag is deployed, the center is

automatically called from your vehicle and a live person speaks to you to verify

that you are alright, and if not they immediately call for help. No other company

has such a platform in effect, making this a distinctive competence for GM.

Strength #2 – Current Financial Situation

After losing money for years and going through bankruptcy proceedings, GM is

now looking much better financially than it has in a long time. GM has posted a

profit for the last two quarters, something it has not done in a great many years.

The company had the opportunity to shed many locations, assets and equipment

that it no longer needed through the bankruptcy. They also negotiated many

concessions from the union that will benefit the company far into the future

including lower starting wages, taking over responsibility for union employee’s

retirement funds and fewer vacation days. GM benefited from the decision of the

government to save it, along with the help of the UAW and CAW and in turn this

advantage gave it a distinctive competence. Chrysler also received some financial

help through bankruptcy as well as UAW and CAW concessions, but not the

amount that GM did. Their financial picture does not look nearly as good as GM

right now.

Weakness #1 – Revolving Door Leadership

As noted in the article, “GM outlines risks to buying stock, including

inexperienced management” by G. Gardner (2010), “GM has substantially

revamped its management team and will have a new CEO who has no automotive

experience, Dan Akerson, on Sept. 1.” This is the 4 th

CEO GM has had in the last

few years, and in addition to changes at the top spot in the corporation, each new

CEO brings a cascading reorganization of the company that leaves heads spinning

as to who is currently in charge. The new CEO must stay in place for at least the

next few years to exude a feeling of stability to both employees and investors. I

would also recommend that further leadership changes be very thoroughly

evaluated to make sure it is the best decision, and we are not moving people

around without a definite need to.

Weakness #2 – Dissatisfied Employees

Due to the instability experienced over the last few years, many employees are

still experiencing uncertainty and turmoil in their work situation. Many plants

were closed, causing massive layoffs, job losses and relocations of employees. A

great many of these employees are not happy about having to move to a different

state or plant to retain their jobs. In addition, many benefits were also taken away

and wages were frozen. There is still a prevailing feeling of uncertainty

concerning the company as well, with employees second guessing whether they

want to stay and continue to weather the storm, and if there is opportunity for

advancement or global training in the new GM. These opportunities were also

frozen through the bankruptcy, and many individuals were demoted to retain their

jobs.

The company has already made some moves to improve on this weakness,

reinstating raises based on performance and reinstituting some of the previous

programs such as tuition assistance and 401k matching. I believe the company

could help the uncertainty by reassuring employees that their future with GM will

include possible promotions or personal growth initiatives.

Section III – Opportunities and Threats

Two opportunities that are currently presented to GM are international growth and the

timing of their two new vehicle launches this year. Two threats to GM are the economic

slowdown and the current political environment.

Opportunity #1 – International Growth

Although the North American vehicle market has slowed down recently, GM has

been making great strides internationally. In the first six months of the year, GM

sold a little over 1 million vehicles in the U.S., but GM’s international sales

totaled almost 3 million vehicles. In China alone, GM vehicle sales are increasing

faster than any other car manufacturer, and it looks like the rise will continue.

In China, in part due to the last emperor owning one, Buick has an image of

luxury and class in contrast to its older generation appeal in the U.S. GM is trying

to alter this perception in the U.S., but it has a long history here and will have

difficulty swaying customers’ opinions. Car and Driver magazine recently

featured a new Buick on its’ cover for the first time in 50 years, declaring, “Buick

Is Back!” This assures me that GM is on the right track, but it will not be an

overnight transformation in North America. In China, GM’s vehicles have a

shorter history and a good reputation, giving GM a great opportunity to grow in

this market. This opportunity arises from growing sales internationally, and this

is a force in the international dimension of the general environment.

I think this opportunity for growth also exists due to the numerous Toyota recalls

experienced this year because consumers are taking a good look at other options

and noticing that GM’s quality has steadily been improving over the years and the

company has garnered many awards recently in this area. Due to the multiple

Toyota issues this year, GM has a real opportunity to flaunt the company’s

improvements in quality and lack of recent large recalls.

Opportunity #2 – New Vehicle Launches

GM has two very important vehicle launches in the second half of the year, the

Chevrolet Cruze and Volt. The Cruze will get up to 40mpg but the Volt can run

up to 40 miles on a battery, and subsequently use gas for fuel just like any other

vehicle. These launches will appeal to consumers whose tastes have been leaning

in the last few years towards more fuel efficient vehicles due to high gas prices

and a deeper environmental concern. This force of consumer preference changing

exists in the sociocultural dimension of the general environment.

Threat #1 – Economic Slowdown

Even though GM has had the chance to shed many of its operations and

employees through the bankruptcy, the economic slowdown in North America

threatens the profitability of the company just when things seem to be looking up

for them. This force due to high unemployment rates and more cautious

consumer spending exists in the economic and sociocultural dimensions of the

general environment.

Threat #2 – Current Political Situation

Due to the financial support GM received from the government, there are many

people that are not very supportive of the company, including many politicians

who felt that the government should have left GM to fail. Although GM has paid

back the government loan it received, it still bears the moniker of ‘Government

Motors’ due to the 61% stake the government still owns. With the IPO offering

approaching in the coming months, the government will be able to start ridding

itself of this investment and hopefully not just recoup the costs but make a profit

as well, but that remains to be seen.

Many criticize Obama and his administration for making the financial decisions

they did and providing so much support to GM, and this negative opinion of the

current administration is a strong force in the political-legal dimension of the

general environment.

Section IV - Summary

GM is a strong contender in the technological field, especially due to OnStar and the

launch of new electric vehicles such as the Chevrolet Volt. Their current financial

situation looks better than it has in decades and with the elimination of excess facilities,

employees and brands, the future looks positive for the company.

GM needs to improve on its employee retention and satisfaction, and focus on keeping

leadership more stable over the coming years.

The company’s opportunities that exist from their international growth must be grasped

and acted on quickly so the growth does not stagnate due to unavailability of vehicles.

GM needs to direct as much energy and personnel as it can towards international sales,

especially in China.

GM’s new vehicle launches need to be successful and advertising needs to focus on the

environmental and financial benefits of the new vehicles so frugal and environmentally

conscious customers will be aware of these factors and more inclined to purchase them.

The threat presented by the economic slowdown will have to be monitored closely and

GM will have to react with production cutbacks or less expenditure to keep a positive

financial flow in slow times. It is a critical time for the company, and it will have to stick

with the belt-tightening policies it implemented throughout the bankruptcy proceedings.

The current political situation and the threat it poses will have to be handled very

cautiously. GM will have to tread lightly to keep from making any more enemies, and

hopefully regain some friends through the IPO process.

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