Analysis of Business and Corporate Levels Strategies
Analysis of Business and Corporate Levels Strategies
Introduction
The increased market competitions at both domestic and global levels have become a major concern of the managements of business organizations. High competition occurs as a result of many companies engaging in the same line of production, leading to the supply of similar products and services to the market. Different organizations adopt various strategies to help them improve their competitive positions and maintain their market share. Primarily, business organizations use strategic pricing methods to enhance their customer base. Also, different marketing strategies such as strategic market mix are adopted to improve the competitive advantage of companies.
The strategies adopted by business organizations can fall under business level or corporate level, depending on the business objectives they are intended to achieve (Gallagher, 2008). Business-level strategies entail the actions and plans adopted to improve the value of services as well as products offered to customers. Also, business-level strategies entail strategic actions that organizations adopt to gain and enhance their competitive positions through the exploitation of their competencies (Gallagher, 2008). Corporate-level strategies involve the adoption of wider strategies that incorporate various business-level strategies to facilitate the realization of the vision of the whole business organization. This essay will analyze both business and corporate level strategies of the General Motors Corporation. The paper will also analyze the competitive environment in the motor industry to determine the most significant competitor of the General Motors Corporation.
Analysis of business level strategies for General Motors Corporation
General Motors Company is one of the leading companies in manufacturing, assembling, and distribution of automobiles as well as their parts (General Motors, n.d). The company is headquartered in Michigan, but it mainly focuses on supplying the international market with its motor products and services (General Motors, n.d). However, other corporations from different countries have the same objectives as the General Motors. As such, the company adopts various at business and corporate levels to improve its competitive capacity and market share. Some of the business-level strategies that General Motor uses are analyzed below.
The cost of manufacturing or assembling determines the price at which the products and services are sold. Companies in competitive markets tend to set competitive prices that can place them in better competitive positions relative to their competitors (Gallagher, 2008). The General Motors put persistent efforts to achieve best its cost leadership goal by conducting internal analysis to collect relevant information pertaining to costs, as well as reducing all unnecessary costs such as legacy cost (General Motors, n.d). Besides, the company strives to minimize operational expenses by reducing the cost of labor through the use modern technology. As a result, the overall manufacturing cost reduces, enabling the company to offer motor products at affordable prices.
Operational efficiency is another approach the General Motors use to achieve cost leadership. The company has continuously adjusted its manufacturing systems to improve operational efficiency. Additionally, the company aims at reducing brands that involve high manufacturing costs and are less profitable, which help in reducing operational costs and improving the efficiency of producing the remaining brands (General Motors, n.d).
Product differentiation
Differentiation entails the modification of products’ features to make them more appealing to as many customers as possible. General Motors Corporation has continuously differentiated its products through innovation and brand development to improve customer satisfaction and competitive advantage (General Motors, n.d). Product differentiation helps the company to add value to the products resulting in a wider market. The market for General Motors’ automotive has extended in many countries like China and India due to improved quality and high level of customer satisfaction (General Motors, n.d).
Integrated differentiation
The use of integrated differentiation approaches which involve the combination of cost and product differentiation enables the company to gain global popularity (Gallagher, 2008). The company seeks to achieve low manufacturing costs and a significant global market share through the use of these strategies. A combination of low cost and product differentiation promotes customers loyalty to General Motors’ products (General Motors, n.d).
Differentiation seems to be more significant for the success of the company. Long-term success depends on the growth of customers’ confidence in the firm’s products. Differentiation enhances the competitive position of companies by instilling the perception of products uniqueness among customers. As a result, the customer loyalty to the product improves, leading to a relatively stable market. Cost leadership has many challenges that limit its effectiveness in promoting the long-term success of business organizations. Some of the challenges facing cost leadership include but not limited to loss of significance due to changes in technology, cost imitation, and loss of customers’ focus. For example, Ford was overtaken by General Motors due to use of cost leadership strategy (General Motors, n.d). Thus, differentiation stands out to be more effective in triggering long-term business success than other business-level approaches.
Corporate level strategies for General Motor Corporation
The central vision of the General Motors is to manufacture brands that meet the market demand in terms of quality, efficiency, and customer satisfaction, through innovative research and design (Norton, n.d). Besides, the company focuses on long-term growth through increased sales and market expansion (Norton, n.d). Therefore, it adopts various strategies that incorporate business-level strategies to enhance its capacity to realize its long-term goals. Some of the corporate –level strategies of General Motors are analyzed below
Growth
Most business organizations aim at achieving the highest possible level of growth. Growth strategies entail the actions and activities that business organizations undertake to achieve expansion of both operations and market (Gallagher, 2008). The realization of business growth occurs through expansion of the current business or development of new business in the same production line. Growth strategies enable the company to increase its total revenue through increased sales. Additionally, growth strategies enhance the market share of an organization both in the domestic and global market.
General Motors aims at expanding its business not only in America but also multi-nationally (Norton, n.d). As such, it undertakes various plans to facilitate the realization of this growth. Product diversification is one of the strategies that the company uses. Also, the company seeks to achieve growth through increased production. For the last 100 years, General Motors has supplied about 450 million automobiles to the global market (Norton, n.d). However, the company aims to increase this number, a move that requires strategic approaches. Product diversification through the development of new brands is one of the strategies that have successfully contributed to the growth of the General Motors (General Motors, n.d). Additionally, the production of fuel-efficient and environmentally friendly automobiles has led to the expansion of the company through increased demand. Manufacturing of Flex-Fuel vehicles increased the sale volume by 11% between 2004 and 2008 (Norton, n.d).
Stability
Stability strategies facilitate the realization of the vision of an organization in various ways. Companies attain stability both at operational and market levels by concentrating in a particular line of production which improves their capacity to exploit their competencies (Gallagher, 2008). As a result, business organizations are able to meet market requirements fully through quality products and affordable prices. The General Motors achieves market stability by concentrating on the manufacturing of various brands of automotives. Also, the company has many years of experience in customer service, which enables it to determine succinctly the market needs (Norton, n.d). Thus, it has been able to sustain its business operations despite stiff market competitions.
General Motors has a flexible organizational structure that enables it to adjust consistently to market changes (General Motors, n.d). It undertakes various restructuring as well as streamlining plans to enhance its adaptability to changes in the global market (General Motors, n.d). This promotes its market stability and enables it to achieve sustained growth. Additionally, the company integrates the idea of product design in its operations through research and development, resulting in the development of new models to meet the varying needs of various generations (General Motors, n.d).
Renewal
Renewal strategies entail the activities and decisions that business organizations take to manage changes that affect their performance (Gallagher, 2008). Essentially, restoration strategies constitute of management activities that restore the normal business performance after a period of a depressed market (Gallagher, 2008). General Motors use various methods to maintain its status and restore performance. The company eliminates unprofitable brands from the markets and replaces them with best-selling brands to ensure the restoration of profitability. Additionally, General Motors boosts its market performance during low market activity through various turn-around strategies which promote the marketing of its products (Rosevear, 2015).
The stability of business organizations seems to be the best corporate-level strategy for the long-term success of the organizations. Operational and market stability of an organization promote the survival of business in competitive markets. Market stability promotes the continuity of business and guarantees a stable source of raw materials for manufacturing activities. Besides, stability promotes growth through continued manufacturing activities.
Analysis of competitive environment
General Motors Corporation does not operate as a monopoly in the motor industry. As such, it faces competition from various rival manufacturers which produce similar products and services. The Toyota Company poses stiff competition to General Motors through imitation of strategies that General Motors adopts (Rosevear, 2015). According to Hill, Schilling, & Jones (2016), both Toyota and General Motors perform best in their home countries, but Toyota performs better in the global market. The main reason for Toyota’s top position is the fact that it was not severely affected by the global financial and economic crisis that affected most of the American companies (Hill, Schilling, & Jones, 2016). Toyota reduces operational costs mainly through collaboration with its suppliers of components. Both companies adopt cost reduction strategies such as the elimination of unprofitable brands from the market innovation. However, Toyota uses more efficient production systems which result in a relatively low price of its products (Hill, Schilling, & Jones, 2016). Both companies adopt product differentiation strategies, but Toyota is more efficient in differentiation than General Motors since it uses annual market surveys to determine brand requirements of its customers (Vinik, 2014). Thus, Toyota is most likely to be successful in future.
Comparison of General Motors and Toyota in slow-cycle and fast- cycle markets
In both slow-cycle and fast-cycle markets, Toyota will lead General Motors in performance. The strategies that Toyota uses have popularized its brands and created high customer loyalty all over the world (Vinik, 2014). Thus, the market share of Toyota’s products in the international market remains high. Therefore, its market position will still be high even if the market is low. The productivity and quality of Toyota’s products is a guarantee of its success in future. The General Motors used to be ahead of Toyota, but in 2008, Toyota surpassed it. In 2010, Toyota had managed to capture about 15% of the international automobile market (Hill, Schilling, & Jones, 2016). Therefore, Toyota has greater prospects of controlling the largest global market share irrespective of the market performance.
Conclusion
Strategic approaches to a business operation are fundamental to business performance which determines the future success of the business. Business-level strategies enable business organizations to improve their competitive positions by creating a higher customer value. Corporate-level strategies incorporate business-level strategies to facilitate the realization of wider visions of business organizations. The strategies used by General Motors and Toyota to compete in the market are essential for evaluating the effectiveness as well as the comparison of strategies at both business and corporate levels. Due to efficiency and strategic approaches to business operations, Toyota is likely to be more successful in future than General Motors.
References
Gallagher, S. (2008). Business level strategies why does firm performance differ? Business level strategies. Retrieved from http://educ.jmu.edu/~gallagsr/WDFPD-Business.pdf
General Motors | Investors - Corporate Strategy | GM.com. General Motors | Investors - Corporate Strategy | GM.com. Retrieved from http://www.gm.com/company/investors/corporate-strategy.html
Hill, C. W. L., Jones, G. R., & Schilling, M. A. (2016). Strategic management: Theory & cases: An integrated approach. United States: CENGAGE Learning Custom Publishing
Norton, M. General motors business strategy. Retrieved from http://myweb.wit.edu/nortonm/coursework/GM_Business_Plan.pdf
Rosevear, J. (2015). Why can’t general motors earn profits like Toyota’s? -- the motley fool. Retrieved from http://www.fool.com/investing/general/2015/05/09/why-cant-general-motors-earn-profits-like-toyotas.aspx
Vinik, D. (2014). Toyota just recalled as many cars as there are in Belgium. Retrieved from https://newrepublic.com/article/117321/comparing-general-motors-and-toyota-recall
