Introduction
This report aims at understanding the theories presented in module 2 ‘Managing Information Technology’ and its approaches which forms part of the subject of ‘Industrial Systems and Environment’. It will determine the strategic planning methodologies for the management of advance information technology of a major organization and provide theories and environmental factors that affect that information. It will define the various factors required for any modern industrial organization. All influences in the organization are identified and illustrated. Also, this assignment defines the accurate system approach to defining problems and the right solution for solving those problems in the scope of modern engineering and technology.
General Motors Description
General Motors or simply known as GM is one of the giant motor vehicle manufacturing companies in the world. Its main branch is located in Detroit with numerous branches across the world. In its huge investments, GM deals with production of cars as well as trucks. Apart from manufacturing cars and trucks, General Motors also offer different services to customers. These include selling and servicing of vehicles. Currently, the company has extended its services to a hundred and forty countries. Last year, the company was ranked in the second position with respect to vehicle manufacture. It was also the United States’ largest vehicle manufacturer in the year 2008.
Other ventures that GM has engaged in include manufacturing of environment friendly vehicles such as those fired by ethanol or gasoline. This is in line with the call by various governments for the motor vehicle industries to take part in environment conservation. Their recent invention was a Chevrolet vehicle that was powered by electricity (Barabba, 2004). To ensure the effectiveness of the vehicle, it was equipped with a support generator which used gasoline.
Having numerous branches responsible for manufacturing its cars, the company was divided into three main organs with its headquarters in Detroit, Michigan. Its largest organ is the GM North America which employs more than a hundred thousand people. Other branches include GM International Operations and Adam Opel GmbH. Its organizational structure comprises of the chief executive officer and some directors who form the board of directors (Barabba, 2004). The company also has presidents who are responsible for overseeing operations in different countries.
The objectives of the company are to increase its market share while at the same time safeguarding its profit. With this in mind, it aims at ensuring that it has effectively established itself in the market by manufacturing strong and quality vehicles. Some of the vehicles the company looks forward to using in strengthening its market grip include the Cadillac, Buick, GMC and Chevrolet. In response to call for environment conservation, GM looks forward to manufacturing electric propelled vehicles as well as coming up with battery packs for the vehicles. This will be achieved through its collaboration with LG Company as well as after it finalizes the construction of a battery laboratory in Michigan.
Current Business Strategy for General Motors
Competition in every business environment calls for organizations to keep on changing their strategies. This is in bid for them to stand out from their rivals and improve their customer attraction and retention techniques. To increase its competitive advantages in the motor vehicle industry, GM has come up with numerous business strategies. It has always been the aim of the company to increase its market share in all areas of its operations. As a result, it has looked for ways and means of overcoming its competitors.
One of the ways being used is mergers and acquisitions. Merging with inferior companies has helped it increase its market share and reduce competition. A good example is its move to buy Proton Car manufacturing (Welch, 2007). Being in the market for a long time, general Motors enjoy a huge supply of financial resources which can facilitate in its expansion strategies. Its popularity and quality vehicles earn the company a superior brand name in the market.
Market and product diversification are other strategies that have been used by the organizations in overcoming competition and increasing their sales volume. Organizations keep on looking for new markets and methods of improving their products in bid to increase their sales volume. General Motors has embarked on using this strategy to increase its market share. The company is in the process of opening new markets and introducing different brands of vehicles in areas where they were not being sold. This has been facilitated by its stable financial resources, brand name as well as competent sales staffs. Recently, the company announced its intention to fully establish itself in South America.
Among the strategies to be used in capturing the South American markets include manufacturing and selling of small cars in Brazil and Argentina. The likelihood of future increase in demand for small cars in South American countries has triggered the desire by the company to expand its production centre in the continent (Klum, 2010). To achieve this, General Motors expects to hire over six hundred engineers for the project. Venezuela and Columbia are other potential markets that the company is contemplating on. With its experienced marketing representatives, the company aims at identifying all the potential markets and establishing itself there. This will allow it to grow together with the markets making it hard for competitors to overthrow it.
Over the past, General Motors has been financially handicapped in North American markets. This has been due to stiff competition waged by competitors. To overcome this, it has embarked on venturing into new markets within the region. This will help it escape competition as well as increase its profit. One of the weaknesses that have made it hard for the company to effectively compete in the region is its inability to develop different products to cater for specific markets. It is with this in mind that the company has embarked on producing vehicles that target specific market based on market analysis conducted by its sales representatives. This will help the company overcome the competition that has for a long time hindered its growth.
‘SW’ of SWOT Analysis Modules
GM has been in this industry for a long period; consequently, it has experienced staffs as well as adequate finance to help it compete for market. This gives the company a good chance to merge and acquire rival companies that seem not to perform well. Its experienced sales team helps the company identify new markets as well as the most appropriate companies to collaborate with. The inability of the company to manufacture its vehicles in all it different production units makes it hard for GM to exploit its markets. Despite the company merging or acquiring rival companies, it will still experience delays in shipping its products to these operation units (Klum, 2010).
Pestel Analysis Modules
Political factors play a significant influence when a company wishes to establish itself in a specific country. For instance, the recent instability in oil prices has affected the mode of buying and using vehicles in different countries. For instance, in United Kingdom, people have stopped buying vehicles with bigger engines as they are attributed to high fuel consumption. They have also ceased buying prestigious cars as most of them are manufactured with big engines. This has led to General Motors coming up with another strategy (Klum, 2010).
The company is now manufacturing smaller and prestigious cars with low rate of fuel consumption. This is to help it counter political factors which have led to its sales volume going down in various markets. The most affected market has been the United Kingdom.
There are numerous economic factors associated with market expansion. With General Motors aiming at expanding its market share through mergers and acquisition, the company is likely to incur more cost with respect to finance and taxes. It is with this respect that management in the company is keen in its expansion activities (Upham, 2002). Currently, they are not venturing into new markets just to increase the market share, the management is ensuring that every market they intend to venture in will be capable of bringing inadequate returns to compensate for the investment made.
Trend in buying of vehicles is significantly affected by social factors. In its production process, General Motors make significant considerations on demographic trend. Desire by most people to buy more modern vehicles have led to GM embarking on redesigning some of its old brands to meet the required standards. For instance, with most people opting to purchase Camry from Toyota Company, GM is now in the process of redesigning its initial Chevrolet Malibu. This is to ensure that they have included more modern features in the vehicle thus increasing its demand.
Technology in motor vehicle industry has significantly changed. Currently, every company is trying to ensure that it has manufactured the best quality of vehicles. There has been an increase in demand for changes in modes and materials used in developing different vehicles. It is with this respect that GM has decided to use a different technology in developing its EV1, electric car (Vasilash, 1997). Despite the company having vast knowledge in development of internal combustion engines, it has decided to use a different technology in producing this brand of vehicle. Unlike other vehicles, this one has been made of plastic body in bid to reduce the weight of the vehicle.
The current rate of environmental pollution has led to different countries setting up legal requirements that all vehicles have to meet. These include use of unleaded fuel among others. To mitigate the effects caused by these environmental requirements, GM has embarked on developing environmental friendly vehicles. The company has launched an electric propelled vehicle. Currently, General Motors is in the process of coming up with vehicles fired by hydrogen. This is in bid to ensure that it is not rocked out of the market for failing to comply with established environmental regulations.
With new markets emerging in Asian countries, GM has an opportunity of grabbing a good market share. As the company’s brand is known across the globe, investing in these markets will help GM increase its market share. The major threat challenging the company is competition waged by superior companies such as Toyota. GM is bound to come up with strong strategies to effectively compete with Toyota Company in the emerging markets. For instance, it has been hard for GM’s vehicles to compete with the Camry manufactured by Toyota (Klum, 2010).
Current Use in General Motors
GM has come up with UGS software. This system facilitates in gathering data on existing body parts and subsequently redesigning the data to suit the different vehicles manufactured within the company. The system contains a library with a variety of vehicle parts. This has eased the work of engineers as they only need to scrutinize the library, select the most suitable parts and redesign them to meet their needs (Sillivan, 2004). Through the system, engineers determine the feasibility of coming up with a specific body part. This has enhanced their efficiency by eliminating time wasted by engineers developing body parts that do not turn out to be useful.
This system has also connected all the numerous production units of the company around the globe making it possible for them to share ideas. This has significantly helped the company cut down on cycle time. The company has been able to cut down on cost associated with having to hire expertise for designing different body parts. One of the factors that have tainted the brand of some motor industries is the recall of its vehicles from the market. Through this system, GM has ensured that all the cars they develop meet the required standards with respect to fuel consumption, speed, braking system and others (Sillivan, 2004).
Computer aided facilities management system (CAFM) is another IS/IT system that has been employed by GM in bid to consolidate its different operation units. This has made it possible for the company to improve its performance through coming up with a single station where all its operations are controlled from. Initially, the different operations units in the company operated autonomously with every unit having its operating procedures and resources. This depicted a company where every branch pursued a different goal. CAFM system has helped the company ensure that all its branches work together towards a common goal. One of the main objectives of General Motors is to increase its production level to be able to compete with companies like Toyota.
The system has helped GM come up with a uniform mode of operations as well as use same production tools. Consequently, the company’s output has gone up remarkably (Drotar & Findlay, 2008). Through the help of the system, managers in the company have been able to manage and streamline the company’s space. Managers can download information from the system into their portable electronic devices and upload changes made in the company into the system. This has made their management processes easier as managers do not have to move from one branch to another to communicate the changes being implemented.
Future Business Strategy for General Motors
Different models have been put forward to help organizations come up with superior business strategies. One of such models is the private sector model. The model emphasizes on three major components which are market demand, company output and operating capabilities of the company. This model will be used to come up with a future business strategy for general Motors. From its experience, the company has been equipped with some of the state of the art equipments. It also has qualified personnel with respect to engineering and sales. Having the capacity to manufacture quality cars, the company ought to embark on manufacturing the most modern vehicles. This should cover even those used for racing. General Motors is known for production of quality trucks. Therefore, the company needs to embark on manufacturing these trucks. This is for it to be able to supply some of the potential markets where it has not extended its services such as in South America.
Since implementation of CAFM and UGS the production output of the company has gone up. Currently, the company produces enough vehicles to supply its current market. There are numerous emerging markets where GM can sell its products.
A few years ago, demand for vehicles in eastern and Central Europe has gone up. The high demand for vehicle in Russia coupled with low labor cost and favorable government regulations makes this a potential market for GM. The company needs to venture into this market by not only shipping its manufactured vehicles to the market but by also opening a production unit in the region. With time Russians are becoming richer. This implies that demand for motor vehicles in the country is expected to go up (Reers, 2005). It is approximated that by the year 2014, more than 1.4 million vehicles will have been sold in Russia. These are from global producers.
Future Requests for General Motors
The current information system being used by the GM has helped it improve its performance as well as streamline its operations. With the management wishing to expand its market coverage, it deserves to upgrade its system. The company needs to come up with a system that will help it come up with production standards that will suit different market demands. This will help it effectively capture the Asian markets. Currently, the company has invested in Plant Floor Control system (PFCN) which has aided in harmonizing production processes in the company. It has also cut down on the number of engineers working in the company thus reducing operational cost.
Due to its expansion strategy, the company ought to upgrade its PFCN system to ensure that it accommodates several IP-based technology projects such as applications intended for improving floor management in the company. The system should also support applications aimed at uniting the frontier engineers with other engineers working in different production units. Changes in production technology in the company call for a close collaboration between production engineers and those responsible for maintaining the company’s IT system. This is to ensure that the system is regularly updated with the most modern manufacturing techniques.
Rather than focusing on incremental growth of its IS/IT systems, General Motors need to come up with a versatile infrastructure that will be capable of supporting new applications aimed at helping the company increase its competitive edge. Some of the applications the company needs to add to its system include the quality of service (QoS) system. This will help it streamline its operations by identifying the most vital processes and giving them priority. In the end, the company will be able to increase its production level thus being capable of supplying the emerging markets with automotives.
One of the initiatives the company has not managed is the ability to manufacture its vehicles in its numerous operation units. This has led to delays as vehicle are produced and shipped to the different selling branches globally. As the company has been able to unit all its different units, it is the high time that it has improved its PFCN system to support production of the vehicles in all its branches. The company should centrally design its models of the vehicles and transmit the data to its different branches for production process to commence.
Governance of General Motors
The current success of General Motors can be credited to its stable IS/IT system. This is because operations within the company have been streamlined as well as information shared effectively. Despite this, the company is at risk of dwindling if its IS/IT is not effectively governed. General Motors has numerous operation units across the globe (Weill & Ross, 2004). To ensure a uniform operation process in all its branches, the company need to ensure that every unit is represented during the decision making process of the company.
The IT system of GM cannot effectively help the company achieve its goals without working in collaboration with other organs of the company. These include organs such as the intellectual property, human resource and financial organ. Consequently, IT governance in the company should incorporate other mechanisms such as executive representatives and planning processes to effectively manage decision making process in the entire company (Ward & Peppard, 2002).
Centralized systems of IT governance have been found to work well for organizations aimed at improving their profitability and cutting down on operational costs. General Motors is such an organization which aims not only to improve its competitive edge but to also improve its profit margin. Therefore, GM’s IS/IT governance ought to assume the centralized approach. Most of the strategies being introduced in GM are aimed at enhancing its efficiency with respect to operations and decision making. This calls for establishment of IT governance system that will help the company come up with uniform standards to be implemented in all its operation units.
Accordingly, General Motors should come up with a team of executive committee that will be responsible for decision making on matters affecting the company. This committee should comprise of members from all its operational units. This is to ensure that decisions made will not adversely affect operations within a specific unit (Turban, Leidner, McLean & Wetherbe, 2006). With such a committee, the company will be in a position to come up with standard operations guidelines that will be implemented in all its branches.
The company should also establish a centralized system for monitoring operations of its different branches to ensure that established guidelines are implemented. Having a centralized process of monitoring all its operations will help the management compare operations in different branches and make alterations on areas found not to be consistent with the established guidelines. This will ensure that the company has effectively streamlined its operations.
To ensure the effectiveness of centralized governance of its IT system, GM also needs to come up with IT investment resolution that covers the entire company. This is to ensure that every branch participates in making the initiative successful and values the contribution made by the system to the company. An official assessment mechanism will go a long way in ensuring that It system works as intended. One area where organizations fail in implementing information technologies in their operations is failure to assess the system to determine if it is being effective in helping them achieve their goals (Weill & Ross, 2004). GM should come up with assessment criteria to be used in determining the effectiveness of the system after it has been implemented. With a centralized IS/IT governance, GM will be able to come up with a consistent IT and business processes for the entire company.
Conclusion
General Motors has gone a long way in achieving its objectives. However, the company still has more strides to make to be at par with companies such as Toyota. The success of the company can be credited to its effective business strategies as well as effective IS/IT system. With its current information technology system, the company is capable of coming up with latest models of vehicles. For instance, it is in the process of developing hydrogen propelled vehicle in line with the call for environmental conservation across the globe.
To increase its sales volume GM should embark on venturing into emerging markets especially in Asian countries where demand for automotives have been found to increase with time. This will relieve it from competition waged in other markets by rival companies. The company needs to come up with a centralized system of governance for its IT. This is to help it achieve its objective of streamlining its operations and cutting down on operation costs.
Reference list
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