Almost everyone worldwide who owns a car or even those who do not but have an interest with automobiles are familiar with the Corporation, General Motors. General Motors Corp. has been in the business of manufacturing automobiles for the past 77 years and is listed in the New York Stock Exchange (GM News, 2008). Founded in 1908, it is currently employing 266,000 people around the world (GM News, 2008). With these statistics at hand, any businessman knows the company had came a long way in the automotive industry, hence an indept research and discussion of GM’s strategic management, something that is so integral to making it what it is today would be interesting.
The global headquarter of GM is based in Detroit, but the company is producing cars and trucks in 35 countries. It has a vast array of cars and trucks which included the famous brands we all are familiar with today like Chevrolet, Hummer, GMC, and Cadillac, to name a few. GM’s subsidiary, the OnStar is now the leader in the industry of information and security services and of vehicle safety. Record shows that in 2007, around 9.7 million units of GM automobiles were sold worldwide. (GM News, 2008).
General Motors has been a leader in the automotive industry which over the past few decades has continued to lose market share to foreign competition. Ten years ago, when U.S. economy was weak as fuel prices kept rising, and there are heightening political pressures regarding global warming, several challenges abounded GM and the entire auto industry. These challenges provided exciting opportunities for an automotive company capable of quickly developing and producing alternative fueled vehicles (Smith, 1998).
A firm is competitive if it can leverage its strengths, correct its weaknesses, capitalize on golden opportunities, and deter potentially devastating threats. With regard to General Motors, its strengths can be seen in it being known and recognized globally since it is operating in 35 countries. As an evidence of its renowned name, General Motors is ranked no. 573 in 2008 Forbes 2000 List (Smith, 1998). With this kind of standing, potential investors would be confident to get involved with the company. As a critical advantage for the company, GM also has a global presence in the emerging markets. This is very advantageous, since it is anticipated that the global automotive industry will continue to grow, in which 80% of it from now until 2012 would come from emerging markets (Smith, 1998). Moreover, it has the knowledge and expertise in alternative vehicle technologies required in beating the other companies and get ahead (Smith, 1998).
For its record, GM is the only manufacturer that has been consistently improving year-over-year overall in the history of its annual report. The company’s Toledo, Ohio, transmission plant was the most productive transmission plant in North America consecutively for two years at 2.37 hours per transmission (GM News, 2008). GM’s efficiency gains have also been fueled by the company’s continued improvements in product quality (GM News, 2008).
However, GM possesses also some weaknesses as with every other company. Foremost, it has several internal issues regarding legacy costs, unions, and the development of a wide range of alternative vehicles that consumers deem are must have” vehicles it which it has to address immediately (Smith, 1998).
When consumers think of the innovative technology in the auto industry they think immediately of GM. Though challenging at times, this offers GM a lot of opportunities. In this situation, GM can no longer be a quick follower, but must be an industry leader in technological advances in the auto industry. GM must offer a variety of alternative vehicles that meet consumer demands and government regulations. Other opportunities lie on its acquisition of other companies like the Specialized Bicycle Components wherein the boards of directors of both companies have already approved early this year. In fact, in 2006, GM acquired 19 Specialized Concept Stores, a retail formula launched in that same year (Business Journal, 2008).
One of the threats is the slowdown in economy, already quite evident but could still possibly get worse. Of course this could affect the whole automotive industry. In the past because of this, GM made an announcement of closing its Janesville plant by 2010, throwing more than 2,000 local employees out of their jobs (Wineke, 2008). Threats could be altered into opportunities if the company is quick and efficient enough. GM, in the wake of an economic downturn, could make big investments in gas-saving technology that would put it in good position when the price of oil exceeded $100 a barrel (Wineke, 2008).
General Motors’ Marketing Strategy
General Motors employs the Employee Discount for Everyone” as its pricing strategy. It started this on 2005 and since then had decided to either extend the strategy or cancel it, on and off. The strategy was successful in selling out all the leftover 2005 vehicles and let in the new vehicles for the year 2006. Such incentives though cannot be sustained by the industry. After employing the strategy, the company would have to restore profitability. But it would not be easy to do so anymore if the consumers are already accustomed to discounted prices and they are taking advantage of the internet to source price comparison in the internet (Howard, 2005).
General Motors Corp. is continuously and simultaneously broadening its multicultural marketing efforts. Not long ago, it chose Sanders or Wingo Advertising to do the marketing promotion for Chevrolet. GM hoped that Sanders or Wingo will give additional possible opportunities for Chevy’s elevation in the market. Simultaneously, the service of Carol H. Williams Advertising was also considered to do the marketing of other brands such as Cadillac, Hummer, Saab and other luxury brands. For others like Buick, Pontiac and GMC brands, Translation Marketing will be the agency in charge. This is a brand marketing firm which is based in New York City. This agency will continue to do the promotion for those (GM News, 2008).
Through these marketing companies they contract to do their promotions for them, the GM saved a lot on marketing expenses that they would incur if they would do all of these alone and yet, it does not sacrifice on the quality and the end result aspired: huge sales and a lot of profits. GM deems that by having the services of these various known and excellent advertising agencies, it will increase the sales of its products. Its target market may change preferences but GM would still find ways to satisfy customers. Its market share in automobile industry proves that it had been successful in its effort in advertising and improving the quality of its product. As it understands the importance of addressing quality planning through a global approach, it is leading the way by unifying its entire global engineering and manufacturing community, giving the consumer a shared quality specification that can be managed from product concept through product retirement (Forbes, 2008).
General Motors employed segmented product mix, allocating a specific product in a market segment. General Motors allocated the Chevrolet and Cadillac as the company’s only brands that would offer the full lineup of vehicles. The other six brands would focus on narrower selection of segments. GM would also keep costs down by developing the same basic vehicle for many of its brands and then consolidate also company’s more than 7,000 dealers (Hakim, 2005).
The company sells its products through distributors and dealers, as well as through retail dealers. As of December 31, 2007, it has already 6,776 vehicle dealers all over the US, 729 in Canada, and 330 in Mexico, as well as approximately 14,052 distribution outlets in the rest of the world (Forbes, 2008).
Aside from the four P’s marketing managers’ focus on, in this time and age, every business and industry, included here the automotive industry, should also incorporate another P. Internet is ever-increasingly playing greater role in everyone’s lives. In relation to the automotive industry, consumers are now increasingly using the internet to research for the cars they deem the best for them. From the point of view of the manufacturers, the internet is their means to reach these consumers and to learn from them their different aspects and behaviors. With the advent of this internet age, the traditional P’s are no longer sufficient. A fifth P is needed, which is labeled as the Process.
With this P, the company could make strategic marketing decisions based on online consumer data, and then bolster the four other P’s with it. With process, online data regarding what the consumers prefer and their behaviors could be utilized in order to determine and analyze consumer activities and establish marketing programs that would effectively reduce costs yet increase sales and profits from these vehicles. Marketing executives through Process could rapidly validate if their marketing efforts are really reaching their targets, determine the quantity of consumers they need to reach their sales goals, optimize their advertising efforts, and compete effectively with their rivals. With these benefits at hand, and since this new P could bolster all the traditional Ps and enhance the original marketing mix, General Motors would do well to incorporate this in its marketing strategy (Hakim, 2005).
General Motors would not be in its position today if it had not managed its operations strategically well. Some company focus too much on the finance side of things that they forget that in order to achieve this, a lot of aspects has to be planned properly to achieve optimal desired results. Despite the inherent weaknesses of the company and the various threats it has to face, GM knows how to use its strengths and take advantage of the opportunities around it so that it can still be efficient and become a prime competitor within its industry.
Business Journal. (2008). General Motors to purchase Morgan Hill bicycle company. Web.
Forbes. (2008). General Motors Sets New Standard for Quality in Automotive Industry. Web.
GM News (2008). GM Continues Overall Improvement in Annual Harbour Report on Productivity. Web.
GM News (2008). GM Expands Multicultural Marketing Agency Roster. Web.
Hakim, Danny. (2005). GM shifts gears on product strategy. International Herald Tribune. Web.
Howard, Theresa (2005). GM sees big results from employee discount plan. USA Today. Web.
Smith, John F., Jr. (1998). A New General Motors. University of Michigan Management Briefing Seminar.
Wineke, Bill (2008). What GM did wrong in Janesville. Wisconsin State Journal.