|External Factor Evaluation Matrix (EFE) |
|Key External Factors||Weight |
0.0 to 0.9
1 to 4
|Strengthen presence in emerging markets||0.15||2||0.30|
|Increasing demand for electric vehicles||0.14||3||0.42|
|Increasing demand for autonomous vehicles||0.12||3||0.36|
|Rising fuel efficiency||0.08||2||0.16|
|Changing customer groups and lifestyle||0.09||2||0.18|
|Rising global competition||0.10||3||0.30|
|Auto market slowdown||0.07||3||0.21|
|The rising U.S. dollar exchange rates||0.04||2||0.08|
General Motors is an American international organization whose headquarters is in Detroit, Michigan. The corporation mainly specializes in designing, manufacturing, selling, and distributing automobiles and vehicle parts. Apart from being the leading American car manufacturer, it is also recognized as one of the world’s largest motor vehicle makers. The company produces cars in several countries, and its leading brand comprises Cadillac, GMC, Buick, and Chevrolet.
Strengthen Presence in Emerging Markets
General Motors has an opportunity to grow by increasing its presence in emerging markets. The company has a small market share and limited availability in Africa and Asia despite the organization operating there. These emerging markets can provide significantly high growth potential, and therefore the organization should focus more on improving its presence (LeClair, 2018). General Motors recently identified $1.3 trillion in new market opportunities, which will complement its main business and offer it a growing opportunity (LeClair, 2018). The company stated that it aims to increase its market by utilizing its assets to find solutions for problems facing its current and potential customers. Additionally, General Motors can offer various types of automobiles in developing countries to increase revenues.
Increasing Demand for Electric Vehicles
Currently, the automobile sector is facing a high demand for electric vehicles. This need provides General Motors with an opportunity to grow through the development, increase in production, and sale of electric cars. General Motors has been developing strategies to produce and sell electric vehicles since the 1990s, and the required technology has now been incorporated into the company’s operations (Tanç et al., 2019). Moreover, the world is moving towards using zero-emission vehicles, which will assist in conserving the environment. For instance, the United States showed an acceptance of this change when the President, Joe Biden, issued an executive order on climate change. The global market value of electric vehicles in 2019 was $162.34 billion.
These numbers are projected to rise to $802.81 billion in the next seven years (Tanç et al., 2019). The top revenue generators are the Asia- Pacific region and North America. In addition, through the manufacture and distribution of electric automobiles, General Motors can penetrate new and emerging markets. This development will guarantee the growth and success of the company.
Increasing Demand for Autonomous Vehicles
Many companies, including General Motors, Tesla, Ford, and Google, are currently establishing plans to develop autonomous vehicles. These vehicles can operate themselves without a human driver present. General Motors launched its test on self-driving automobiles last year, 2020 (Raviteja, 2020). The possibility of these cars being available as a commercial product soon is very high, thus allowing the company to grow. Moreover, autonomous vehicles currently have a global market share of over $700 billion, which is expected to rise to $1.6 trillion by 2025 (Raviteja, 2020). Thus, the company has an excellent chance of capitalizing on this occurrence.
Rising Fuel Efficiency
General Motors can primarily benefit from the current improvement in fuel efficiency in automobiles. The progress of fuel economy and reduction in greenhouse gas emissions relies on enhancements in the efficiency of internal-combustion-engine vehicles (Robinson et al., 2019). Currently, automobile industries can utilize technological advancements to produce fuel-efficient cars, which will significantly improve the fuel economy and reduce harmful emissions. Furthermore, the current standards call for about 54.5 miles per gallon for new passenger vehicles and 40 miles per gallon for minivans and utility vehicles by 2025 (Robinson et al., 2019). The high demand for these low fuel-consuming automobiles provides General Motors with a unique opportunity to acquire more profit and increase its potential for growth through the production of these fuel-efficient vehicles.
Changing Customer Groups and Lifestyle
There are various issues to consider during the development and manufacture of vehicles in the automotive industry. Consumer demands are usually shifting according to their interests and current trends (Candelo, 2019). For instance, currently, there is an increase in nuclear families, leading to a significant rise in demand for compact cars and two-wheelers. Therefore, General Motors can grow through the production of vehicles that suit the customers’ specific requirements. Furthermore, there is potential that the demand for cars that fit individual needs is going to grow further in the next few years.
Rising Global Competition
General Motors is currently facing increased competition from emerging car manufacturing companies. The companies which directly compete with General Motors include Tesla and Google since they both intend to acquire a large share of the global market for autonomous vehicles. Furthermore, fending off relentless competitors such as Toyota, Volkswagen, and luxurious BMW is not easy (LeClair, 2018). In addition, automotive production globally exceeds the demand; hence the market share for General Motors is constantly under threat. Nonetheless, the company is being threatened in China, providing it with the second largest revenue. China is a threat since car manufacturers in that country offer identical vehicles at much lower prices.
The current COVID-19 pandemic has prevented the growth of the economy for most countries globally. The continued spread of this pandemic has led to increased unemployment rates, a decline in imports and exports, and countries struggling with an increase in debt. Consequently, the disruption in the economy has caused the automotive industry to lose billions of dollars, with plans to recover these losses being projected several years into the future (Roberts, 2021). For instance, in the beginning of 2020, the sales of General Motors in China dropped by above 40% year over year. Notwithstanding the decline in sales and revenue collected, automobile production companies have also impeded manufacturing since acquiring essential parts has become problematic.
Many companies situated in the U.S. with customers based in China are at risk of becoming victims of tit-for-tat tariffs. There is a threat because the trade tension between the United States and China remains unresolved (Boylan et al., 2021). General Motors is mainly being threatened since it has many auto plants in China and is highly dependent on the U.S. market. The company has four main manufacturing bases with four powertrain plants and eight vehicle plants in China.
Auto Market Slowdown
A slowdown in the market threatens the profits and existence of companies in a specific industry. Low trade volumes characterize a slow market, reduced prices, and low volatility. The revenue of General Motors is facing a decline due to the slowdown of the global automobile market (Deese et al., 2020). Currently, the vehicle manufacturing industry is facing challenges, including a decline in sales since the purchasing power of consumers has been reduced by the continued spread of the COVID-19 pandemic. Also, there is a possible decline and slowdown in new vehicle sales soon because of an oversaturated market.
The Rising US Dollar Exchange Rate
Most of General Motors’ income is collected from the global markets, which means the corporation’s currency rates are volatile, and its revenue and profits are largely dependent on fluctuating rates. This inconsistency is present because the company needs to convert the foreign cash to U.S. dollars to enable them to determine revenues and send the proceeds back to United States (Roberts, 2021). Since the company has no control over currency exchange rates, they risk a significant decline in profits if the U.S. dollar exchange rates start to rise.
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Deese, B., Shafran, S. M., & Jester, D. (2020). The rescue and restructuring of General Motors and Chrysler. In First Responders (pp. 359-384). Yale University Press.
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Raviteja, T. (2020). An introduction of autonomous vehicles and a brief survey. Journal of Critical Reviews, 7(13), 196-202. Web.
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Robinson, A. L., Taub, A. I., & Keoleian, G. A. (2019). Fuel efficiency drives the auto industry to reduce vehicle weight. MRS Bulletin, 44(12), 920-923. Web.
Tanç, B., Arat, H. T., Baltacıoğlu, E., & Aydın, K. (2019). Overview of the next quarter century vision of hydrogen fuel cell electric vehicles. International Journal of Hydrogen Energy, 44(20), 10120-10128. Web.