General Motors Business Analysis

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Introduction

General Motors is one of the largest and most successful automobile manufacturing companies, which has been at the top of sales for decades. Its activity in the United States is large-scale, and the company has accounted for a quarter of investments made by automakers in the US since 2010 to the development of society (“GM,” n.d.). This paper will analyze General Motors USA, its goals and mission, as well as corporate social responsibility and internal and external environment using well-known business analysis tools to identify its main features.

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Overview of General Motors

General Motors is a leader in the US automotive industry and an example of social responsibility and innovation. The vision and mission of the corporation are consistent with its reputation and aim at creating quality products for its customers and improving global society. General Motors defines its vision as creating “a future of zero crashes, zero emissions, and zero congestion” (“GM,” n.d.). This vision is about creating innovations in vehicle design and manufacturing that help reduce accidents, emissions, and road congestion. Today, one of the ways to realize this vision is to create electric cars and change the method of production that reduces the use of resources.

This mission and vision also determine the objectives and goals that the company sets for itself. These goals are often changed and adjusted due to internal and external needs, but their general direction remains unchanged. These objectives include reducing resource usage and CO2 pollution, increasing drivers’ safety, transforming mobility, earning customer trust, supporting supplier responsibility, developing talented people, and promoting diversity and equity (“Driving sustainable,” 2019). General Motors tries to implement all these goals by its own efforts in the development, production, and sale of cars, and by investing in social projects and initiatives. This approach contributes to the reputation of the corporation and wins the trust of customers, as well as makes a significant contribution to the development of society.

Corporate Governance

The corporate governance of General Motors has developed an elaborate system that has features of stewardship theory. Eleven Board members are elected by the shareholders of the company, and are independent and, accordingly, work in the interests of the shareholders (“Corporate Governance,” n.d.). Besides, each of the government members is the head of a different department and has a status indicating their rights and responsibilities. Therefore, this system belongs to the stewardship theory, since the work of the Board aims at the satisfaction and profit of shareholders, and their profit depends on the success of the company. In addition, the independence of 10 out of 11 shareholders complies with the Sarbanes-Oxley Act, which ensures transparency in the audit and financial operations of the company. Therefore, the corporate governance of General Motors is in the interests of the company and the laws of the state.

Corporate Social Responsibility of General Motors

General Motors Corporation has significant resources, reputation, and power to influence the environment in which it operates and contribute to the development of society. Their initiatives, charities, and social programs demonstrate that their approach to social responsibility is in line with Archie Carroll’s ideas but not Milton Friedman’s. Friedman said that the main goal and responsibility of a business is to make a profit and create a fair, competitive environment (Popal, 2019). General Motors’ practices are consistent with this idea, but the corporation is also socially responsible.

All the features and activities of General Motors correspond to Carroll’s ideas since the company not only complies with legal rules and obligations but also voluntarily contributes to the solution of social issues. According to Carroll, a socially responsible company has responsibilities such as economic, legal, ethical, and discretionary (Popal, 2019). Economic responsibility is to create products that benefit stakeholders and creditors, and General Motors’ 2019 annual revenue was $ 137.2 billion, demonstrating fulfillment of this responsibility (“GM,” n.d.). Legal obligations are also met by General Motors, as despite several lawsuits, the company generally complies with the laws of the country and the states. The history of the company also had ethical and legal lacks and problems, for example, recalling cars in 2014 due to ignition problems, but the company paid a fine and apologized for its mistake (Wald & Ivory, 2014). The corporation also fulfills ethical responsibility as it promotes equality, diversity, and a good working environment for all employees. Moreover, in 2020, The Ethisphere Institute named General Motors, one of the 2020 World’s Most Ethical Companies (James, 2020). Therefore, despite some shortcomings, General Motors fulfills its primary responsibilities.

Moreover, the corporation is also actively involved in the creation of various social initiatives and their financing. Carroll calls this approach a discretionary responsibility expressed in the company’s volunteer contributions (Popal, 2019). These initiatives include caring for the environment, involving school and college students in developing new approaches and offering education for them, as well as supporting the local community through the introduction of technologies and providing assistance to projects (“Social investment,” n.d.). Consequently, General Motors is a socially responsible company that strives to improve the world through its products and sponsor social projects.

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Analysis of External and Internal Environment

External Environment

General Motors is a multinational corporation with a strong market position; therefore, it can effectively adapt to the external environment without severe losses. This statement is justified by the company’s profit numbers and the analysis, according to Porter’s five forces model. The first parameter of this classification refers to the competitiveness of the environment in which the company operates, and in the case of General Motors, the market tension is high. In addition to competing with other powerful automobile companies, the transportation sector also changes by adding more convenient public transport or other vehicles such as bicycles, electric scooters, or gyro boards. However, the volume of General Motors’s sales and production and its innovativeness allow the company to remain an industry leader. In addition, although other modes of transport increase competition in the market, the threat of substitutes, which is another Porter’s force, is moderate since these vehicles cannot replace the convenience of cars. More threatening alternatives are taxi services and well-developed transport infrastructure since they allow customers to refuse to use cars. However, General Motors offers affordable, compact, and sustainable car models that increase demand for the company’s products instead of substitutes.

Another Porter’s forces are the bargaining power of suppliers and buyers. In the first case, this power is insignificant, since the scale of General Motors’ activities and its financial capabilities allow the company to gain access to raw materials or parts from suppliers around the world. In other words, in the event of a problem with one supplier, the corporation has enough power and ability to find another supplier that agrees with their terms of work. At the same time, buyers have high bargaining power due to high competition and the availability of substitutes, as well as socio-demographic trends in the states. Since car prices are on average quite high, General Motors must strive to offer a better product and maintain a relatively high price because, in the absence of advantages, a customer will find a replacement. Besides, if the country is in a difficult financial situation, the demand for cars falls due to buyers’ lack of money, so the company is also forced to lower prices for its goods.

Another aspect of the environment is the threat of new entrants, but it is low for the automotive industry. Large corporations and conglomerations have created a competitive environment in which a new company has a small chance of developing and occupying a niche in the market. Hence, few entrepreneurs are willing to take such a risk. Consequently, the main threats of the external environment for General Motors are high competition and dependence on the interests, capabilities, and requirements of buyers, since negative changes in these aspects threaten to lead to losing profits. At the same time, General Motors can expand the range and improve its products in the context of ecological transport development, and an extensive network of suppliers contributes to this process. Thus, Porter’s five forces model shows that the external environment has barriers and obstacles for General Motors, but the capacity and scale of the company allow it to overcome them.

Internal Environment

The internal structure and organization of General Motors, in general, are conducive to the company’s activities, although it has some weaknesses. The main strength of General Motors is the use of the organizational principles developed by Sloane that are manifested in a multi-division structure united by a central control (Layton, 2018). In other words, all General Motors brands have autonomy and perform all necessary functions for production, which ensures competition within the company, but the central policy of General Motors limits their actions. In addition, some developments are also common to all brands, which contributes to their continuous development. At the same time, this structure has a weakness, since the scale of work and internal competition reduces the organizational culture and makes it more bureaucratic. Consequently, General Motors requires more attention and effort to track features of each division’s work and implement solutions at all levels.

Conclusion

Therefore, the analysis of General Motors demonstrates that the company has many organizational and financial advantages that allow it to remain the leader in the US automotive industry. The innovative vision and goals aimed at the development of the company and society enable General Motors to gain the trust of users. In addition, the creation of initiatives and projects aimed at preserving the environment and solving social problems strengthen its image as a responsible and reliable company. These features, along with the corporation’s technological development, attract stakeholders and investors, allowing the company to expand opportunities for the development of new products and innovations. However, like any other company, General Motors depends on changes in the external environment that determine its strategies. Nevertheless, the company’s stable and flexible internal structure, the scale of its work, and financial capabilities help it withstand challenges and hold leading positions in a competitive environment. Consequently, a comprehensive analysis of General Motors’ operations demonstrates that the company carefully evaluates risks and uses its strengths to build business strategies.

References

Corporate Governance. (n.d.). 2020, Web.

GM in the United States: By the numbers. (n.d.). 2020, Web.

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James, J. (2020). General Motors was named one of the 2020 World’s Most Ethical Companies by The Ethisphere Institute. General Motors Corporate Newsroom. Web.

Layton, C. (2018). Ten innovations: An international study on technological development and the use of qualified scientists and engineers in ten industries. Routledge.

Popal, P. (2019). Small to medium-sized enterprises and Corporate Social Responsibility: The role of international networks. Routledge.

Social Investment. (n.d.). 2020. Web.

Wald, M. L., & Ivory, D. (2014). G.M. Is fined over safety and called a lawbreaker. The New York Times. Web.  

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BusinessEssay. 2022. "General Motors Business Analysis." January 5, 2022. https://business-essay.com/general-motors-business-analysis/.

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