The Internal Factor Evaluation (IFE) matrix is a business management tool applied when evaluating a company’s internal environment. The IFE matrix indicates the strengths and weaknesses of the particular organization. It is used as a base to identify and evaluate relationships between functional areas of a firm. The matrix is mainly beneficial during the formation of business strategies (Hitt et al., 2016). Generating an IFE matrix involves identifying vital internal factors, assigning weights and ratings then multiplying them to acquire the weighted score. The total weighted score for the business is acquired by adding the scores of each factor. This paper discusses the IFE matrix for General Motors Company.
Strengths
Brand Positioning
General Motors continues to improve its growth plans and strategies by establishing outlets and creating showrooms globally. Despite the drop in demand for automobiles in 2020, the company has retained its competitive advantage mainly because of its immense brand positioning. Currently, the organization owns many brands worldwide, including Cadillac, GMC, Buick, Chevrolet, Jiefang, Wuling, Baojun, Holden, Vauxhall, and Opel. Besides, General Motors is planning to launch new cars at scale to benefit from their brand positioning.
Moreover, the availability of these diverse and strong brands makes the company uniquely qualified to draw more consumers and sustain brand loyalty. Also, the excellent brand position enables General Motors to attract new customers and exploit new markets (Barabba, 2019). Therefore, the brand positioning factor is a significant strength with a weight of 0.13 and a rating of 4 since the company has a strong brand standing and does not depend on a single product. Furthermore, the company’s car brands are well-known and are showing outstanding performance in the market.
Sustainability
General Motors is among the members of the United States Environmental Protection Agency (EPA) since 2010. According to the company’s sustainability officer, the organization is working towards producing zero-emission cars, which are suitable for the environment. Over the years, the company has consistently been granted the annual ENERGY STAR award. The organization is awarded because it has successfully reduced the energy costs by $237 million and curtailed above 1.7 million metric tons of emissions.
The company joined the EPA challenge and promised to reduce carbon emissions to 20% by 2020, which they achieved by 2017. Now, General Motors is committing to produce 100% renewable energy by 2030, a goal they are pledging to realize (Yarlagadda et al., 2018). Finally, sustainability received a weight of 0.08 and a rating of 3 because the company has produced cars with fewer emissions, hence conserving the environment.
Robust Technology Capabilities
General Motors has been in the automobile industry for a very long time. Therefore, they have acquired unique abilities in designing and developing cars. The company dedicates more than $7.4 billion of its resources to technological research and development to ensure they produce high-quality products for its consumers. General Motors is striving to produce modern products and fulfill customer needs. The company is improving the performance of current vehicles by limiting amounts of carbon emissions, producing low fuel consumption cars, and utilizing technology to ensure the driver and passenger’s safety.
For instance, the Buick brands have rear vision cameras, side blind zone alerts, and lane departure alerts, and offer collision alerts. Moreover, the company is working with NASA engineers to create world-class automobiles. This factor is weighted 0.11 and rated 3 since the company has primarily utilized technology to ensure the consumers of their products have a wonderful experience.
Increasing Expansion into the Chinese Market
General Motors has a considerable retail market in China, but it only has a market share of about 10%. The current growth strategy for the company includes increasing its market share in the Chinese market. Research has shown that the number of cars being sold in China is very high, making its market the fastest growing. General Motors introduced Chevrolet and Buick brands into the Chinese market to increase their consumers and improve brand awareness (Barabba, 2019). Also, the company has a Cadillac plant in China which has enabled them to acquire a large share of the rapidly-growing automobile market. This aspect holds a weight of 0.08 and is rated 4 because General Motors is increasing its presence in the Chinese market.
Excellent Sales Strategy
The amount of revenue and profits collected highly depend on the number of sales. General Motors is the 12th successful company in the United States and 41st worldwide in terms of sales. This success is attributed mainly to their sales strategy, which focuses on serving diverse market segments. The marketing mix strategy is based on the type and quality of the vehicle, the geographical location being served, and competitor prices. The prices also differ depending on the brand and car features. The pricing strategy makes some luxury cars affordable to middle-class consumers. This value costing has enabled the company to attract more customers, especially in Asia. This factor has a weight of 0.17 and a rating of 3 since the company uses a marketing mix pricing technique, which is a great sales strategy.
Weaknesses
Limited Presence in Developing Countries
The company has strong market dominance in developed states, but it has not sufficiently established itself in developing countries. Despite the company’s plans to enter emerging markets including Mexico, India, and South Africa in 2015, they halted most aspects of this strategy in 2017. For example, General Motors stopped the retail sale of cars in South Africa and India, citing profitability reasons (Barabba, 2019).
The organization stated that it wanted to focus on the right markets to increase profits, strengthen its performance, and take advantage of long-term growth opportunities. Moreover, the company did not stop operations only in developing countries but also in the critical markets of Western Europe and Russia. Therefore, this internal factor has a weight of 0.08 and a rating of 2 since the company has not exploited markets in developing countries.
Overdependence on the US Market
General Motors is dependent mainly on the United States market, unlike its competitors, including Ford and Toyota. Even though Ford and General Motors are the major automobile companies in the US, they have different market structures. General Motors receives over 60% of its annual revenue from US markets, while Ford earns only half of its income from the US. Also, Toyota typically receives over 40% of annual revenue from Japan (Yarlagadda et al., 2018). Therefore, the overdependence factor weighs 0.12 and has a rate of 2 since a decline in car sales in the US market can have a catastrophic impact on General Motors. This outcome is possible because the company relies heavily on that market compared to other carmakers.
Bureaucracy of the Organizational Culture
Bureaucracy controls the actions of employees in large organizations and governments. The control is achieved through standardization of procedures, division of responsibilities, hierarchy, and inter-personal relationships. Bureaucracy sometimes reduces interactions between the customer and the managers of the company, which is potentially risky. For example, General Motors filed for bankruptcy in 2009 for various reasons, but the main issue was wrong communication between the company and the customers. As a result, the customers got confused because differentiating the car models produced by the company was challenging. This bureaucratic nature of management is weighted 0.04 and has a rating of 1.
Product Recalls
General Motors has a history of product recalls, which has significantly damaged its reputation. For example, in 2014, the company recalled about 3 million cars, including Saturn lons, Chevrolet Cobalts, and other small vehicles, due to faults in the ignition switches. The switches would shut off while the vehicle was moving hence preventing airbag inflation. Despite the company promising to repair all of the cars, they could not reach the quota. As a result, they used a lot of resources settling claims and reclaiming their reputation.
Furthermore, the company recalled 194 105 cars produced between 2018 and 2020 due to loss of power caused by oil transmission leaks. Chevrolet was mainly affected by the recall, but other brands such as Cadillac and Buick are also included. This factor weighs 0.09 and is rated 2 due to the company’s high number of product recalls.
Negative publicity
General Motors has experienced a lot of negative publicity over the years. Firstly, in 2015 people discovered that the company had been lying about the emission levels of its trucks for four years. This deceit eroded the customers’ trust, and the consumption of their products reduced (Yarlagadda et al., 2018). Also, General Motors was criticized in 2018 when they announced their plans to close five facilities in the United States to restructure and enhance the development of electric vehicles. This announcement caused an uproar since the branches employed over 14 000 workers. Therefore, this factor is weighted 0.1 and rated 1 because the company has high negative publicity.
General Motors has a final internal evaluation score of 2.64, indicating that the company’s internal position is above average. However, there are various internal strengths and weaknesses of the company. The strengths include brand positioning, sustainability, increasing expansion into the Chinese market, robust technology capabilities, and an excellent sales strategy. On the other hand, the weaknesses consist of limited presence in developing countries, overdependence on the US market, bureaucracy, product recalls, and negative publicity.
References
Barabba, V. (2019). Assessing General Motors’ innovation strategy over three decades using the “Three Box Solution”. Strategy & Leadership, 47(2), 34-42. Web.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management: Concepts: competitiveness and globalization. (12th ed.). Cengage Learning.
Yarlagadda, V., Carpenter, M. K., Moylan, T. E., Kukreja, R. S., Koestner, R., Gu, W., Thompson, L., & Kongkanand, A. (2018). Boosting fuel cell performance with accessible carbon mesopores. ACS Energy Letters, 3(3), 618-621. Web.