International Market Entry Plan
Company/Product Overview. General Motors are a multinational corporation whose mother country is America. The General Motors’ business is in the automotive industry with its headquarters in Detroit, Michigan. The company’s main activities are the designing, building and selling of cars and trucks. It owns eighteen brands including Chevrolet, Cadillac, Opel, and GMC among others as illustrated by Harrison et al (17). There is no particular mission for the company, but on their website, they exist for this, “Making the best vehicles in the world needs world’s greatest employees. We take great pride on duty and care to deliver exceptional cars and customer loyalty all over the world” (www.gm.com para 1). The business of General Motors is guided by five principles that include safety and quality as the priority, creating lifelong customers, embracing innovation, delivery of long-term investment value to the stakeholders and ever committed to making a positive difference in the automotive industry (Pound 1). Considering the structure of the mission of General Motors, it is evident that the mission does not address all the stakeholders adequately. It is customer oriented, and all that is conspicuous is the future of the company, but it does not consider the products fully in the mission statement thus there is a need to develop a strong mission for the enterprise. Our mission at the General Motors is to be the industry leader in this era of transformative change, which is not well structured.
The culture of General Motors is innovative in all directions. The energy of the company is infectious, and the drive of the company is the constant passion for seeking out challenges and identifying and exploit new opportunities (www.gm.com para 5). All stakeholders of the business feel valued and have the chance to grow, learn and become professional in an environment of freedom. Therefore, the culture of the company is creating a long-term customer loyalty. The strategic business plan that the firm is working to achieve includes several initiatives like being a leader in products and technology utilization (Pound 3). In 2015, GM global sales volume rises to 27% and this expected to increase to 38% in 2016/2017 financial year (www.gm.com para. 7). The other core strategy is the achievement of operational efficiency. General Motors has a great history and heritage, which has a vital role in the global automobile industry for more than a century. The innovation is one of the company’s proud cultures, from the first horseless carriages to modern marvels like the Chevrolet Volt (Harrison et al. 13). Currently through innovations, they are producing Cadillac, which is the first choice for many presidents.
Www.gm.com (para 8) illustrates the key people at General Motors include the founder William C. Durant, who started the company on September 16, 1908, as a holding company. All the stakeholders from management led by CEO Mary T. Barra, all directors and employees are significant people because it is through their unified effort that they make the company stand out as an exception in the automobile industry. The primary objective for the General Motors existence as per the current CEO Mary Barra is to become the most valued company in the automotive industry. The collaborators of General Motors include the suppliers and partners. The most recognized supplies are five who have shown innovation that meets customer satisfaction. Autonomy as supplier brought to GM new lightweight acoustic material that helps reduce mass by 20% simultaneously offering an improved acoustic performance in 2016 GMC Acadia. Delphi supplier brought the innovation of vehicle-to-vehicle wireless communication technology (Richards 29). The partners who work together with General Motors are the finance institutions like the IMM Bank, where the company owns 20% of the total stock of the bank (Parker 4). The outlets for their products at different levels are also key to the General Motors enterprise.
Sustainable Competitive Advantage. A competitive advantage gives a company a lead over rivals in the market. General Motors uses resources to gain a competitive edge in the automotive industry. The first step is resources classification regarding strengths and weaknesses. The strengths of the company are combined to outdo those of the competitors. Recording of the potential profits that the company intends to achieve is the next course of action (Whalen 1-2). The strategy that is used to exploit the business's capabilities about the external opportunities is the next step to have an outstanding competitive advantage (Wheelen and Hunger, 84). Some of the key benefits that make General Motors to gain a competitive edge is its location. The stable presence of General Motor in America and China is indeed an opportunity to be a leader in the industry. The top three manufacturers in the automotive sector belong to General Motors. The low cost of production makes the company gain a little price differentiation which a competitive advantage (Pound 2). Additionally, Dure (41) states that his existence of outlets in most countries in the world gives General Motors an added benefit over the other car and truck manufacturers It has created a niche advantage for general motors where the customers in each country have a say on how they want their cars built and designed.
Marketing Strategies. The strategic company growth is based on the parade of new models, which are innovatively designed. The 2016 strategy that the enterprise CEO Barra has replaced all the global product lines to gain a profit rise to 39% (www.gm.com para 7). The sales that the company projects is expected to come from the new models through utilization of technology (Dure 43). The first release is Super Cruise option that allows hands free drive on the highway, and it has performed best so far in profit generation. The marketing strategy that general motors intend to use is designing new models that customers currently prefer and expanding markets as the case in China. China is in the eyes of general motors as innovative, and new models are preferred there making the company achieve its objective of profit growth of up to 39% this year. The product line of GM, which includes cars and trucks and their spare parts, attracts a good marketing strategy where the company CEO intends to change the product line to improve sales (Dure 44).
International Involvement. General Motors has a global market for its products. With thirty country outlets, the company has covered a vast region. Most countries without the General Motors outlets have their products too through importation. Dure (47) highlights that most sales for GM come from the U.S. market and China.
Performance Metrics. Since 2013, stock prices for GM has slightly differed based on the innovation, designs the company is offering. The company intends to stagnate the price and even lower it with innovations like that of reducing material use during the manufacturing process. The company expects to make increased profits and reach the target of 2016 projected to be 38% and up to 47% by 2019 (Peter 3).
Global Industry Analysis
Industry Overview. The automotive industry is an array of companies and organizations that participate in the business of crafting, manufacturing, marketing and selling of motor vehicles like cars, trucks, motorbikes. It is faring very well in the world regarding revenue. Peter (4) notes that the industry has attracted many competitors (e.g. General Motors, Ford from the US, Toyota, Honda from Japan, Benz and Volkswagen from Germany, Tata from India among others). The top three manufacturers in the automobile industry are Toyota, General Motors, and Ford. In America, there is a significant competition between GM, Chrysler and Ford (Peter 4), considering the revenues that the three companies generated in the year 2014. Toyota dominates the automobile industry, which makes the most sales each year because of the cheaper Automotives that they are offering. In developing countries, Toyota has completely taken full control by providing all types of the locomotives that meet the economic and social needs of the customers.
Industry Performance. The industry is global as a revolution in the transport sector has reached all nations and the products of this industry has turned out to be of great need. When forecasting future markets, the previous year’s performance is very critical as they give a direction that the company needs to take to reach a set target. The comparison of return makes the industry measure its performance. The automotive sector had a revenue of $9 trillion (2015), which is a growth of 2.5% for the last five years (Peter 5).
Competitive Forces. This segment deals with the analysis of Porter's five forces of the industry. Porter's five forces include competitive rivalry, threat of new entry, supplier’s power, buyer’s power, and availability of alternatives.
Competitive Rivalry. The industry is being faced with stiff competition, thus; generally, low returns are expected in the short-term since the cost of competition is high. The automotive industry is an oligopoly when given a market structure (El Halabi, and Matthew 354). This has helped the industry to minimize the effects that arise because of price-based competition.
The threat of new entrants: - An average individual cannot come along and start manufacturing automobiles. The history has it right. First, the American automotive industries and the other big motor industries from Japan were safe. The opening of Japanese-based Honda plant in Ohio brought competition into the territory occupied by the American-based industries (El Halabi, and Matthew 356). The emergence of foreign competitors needs innovation and best marketing shares to maintain a company’s market share.
Availability of substitutes: - Since there exist many brands, one can buy any brand he or she wants. The force also considers the effect of one taking a bus, a train, aircraft and any other form of transport to take them to their destination. The higher costs involved in operating a vehicle may make the person get attracted to seek an alternative (Jurgen, and Jeffrey 118).
The power of buyers: - Historically the dealers of automobiles never gave customers room for bargaining. The various products offered in the industry today have given room to bargain. Customers are price-sensitive to the vast knowledge of the industry, but have less power since they buy a single product.
The Power of Suppliers: - The business of supplying automobiles is fragmented, that is, it has many firms involved. They sell products from different manufacturers depending on their location and the customer tastes and preferences they deal with.
Industry Trends. It involves the PEST analysis of the automobile industry. The motor industry has gained attraction in the recent years. The owner of a vehicle has become a lifestyle and thus many people all over the world are competing in terms of who owns the latest model car.
Political factors affecting the automotive industry include the legislation, where the emphasis is put on the environment, competition and company cars. The government through the transport sector has put in place some laws that govern the industry. Public vehicles need to be painted in a particular manner, and meet certain standards. The manufacturers need to obey these laws for their survival in the market. The industry contributes a significant revenue to the government through taxes. The economic factors affecting the sector include diversification, economies of scale, mergers and strategic alliance. The different players need to work with each other to make the industry improve performance. The social factors include environment, culture, tastes, and preferences. The industry is customer oriented, thus the cars need to meet customer needs, tastes and preferences. The technological factors affecting the industry e-commerce, plant efficiency and safety. The vehicles need to utilize technology to ensure all these factors are met.
Competitor Analysis. The main competitors are Toyota from Japan and Ford from America. There are many substitutes in the automotive industry this competition is very stiff (Lau, 33). The customers are very selective in the industry. The Toyota Company is very innovative in that they are designing new models that meet customers' tastes and preference. This has earned them a competitive advantage and a wider market share. Toyota is manufacturing cars that are gender sensitive, income considerate and a class of its customers. Some models like “vits” are seen to accommodate the low-income earners and women in some countries like the African women (Lau, 35). The model is fuel friendly. Hence, the least consumption attracts many buyers so that they can save on fuel consumption. Ford company and General Motor, on the other hand, are working on quality whereby they are offering expensive, high-quality cars in the upper class. The developed countries consume most of these cars making the company remain competitive in the market.
SWOT Assessment and Recommendations
Strengths. For quite a long period, US. Companies had dominated the automobile industry until 2008 when the trend changed, and Toyota took over. General Motors have a global presence as a strength, until 2007, General Motors was the leading company in the automotive industry regarding sales. The new vision and operation strategy after 2008 bailout has placed General Motors into a better place again. Change of management was a good strategy that seems to take the company back to its position. The strong brand portfolio is paramount in the competitive market (Lau, 36). The eighteen brands General Motors selling in over one hundred and fifty-seven countries are a strength for the company. China is experiencing developments, and the strong presence of General Motors in this economy is an advantage to the enterprise. Home advantage is a strength to General Motors. In America, the company is fully accepted and thus it has ever been a leader in the home market.
Weaknesses. The bureaucratic culture has been a big weakness of this company. The trends led to the loss of market share until 2008 when the system changed and thus we have an improvement in performance. Brand dilution is a weakness of General Motors. The eighteen brands of General Motors sell in different markets, not any place this has led to less awareness (Parker 1). They need to offer brands in all markets so that everyone gets to know about their products. The high-cost structure is also a weakness of General Motors. The high cost of the structure resulting from generosity to its employees is making the company incur excess costs. The company needs re-evaluate the employees’ incentives to make it cost competitive.
Opportunities. The current market is aware of pollution through the greenhouse gasses released to the environment by the automobiles.General Motors has a positive attitude towards the production of environmentally friendly vehicles. Thus, the manufacturing of hybrid cars by GM is an opportunity to gain more market share. The hybrid cars save the costs of fuel. This attracts customers to hybrid vehicles that consume less fuel to cover longer distances. Change in consumer needs and preferences. The introduction of many new models of General Motors meets the customer needs. For example, manufacturing of new fuel-efficient cars has attracted many customers to shift to their models as highlighted by Parker (2). Additionally, the General Motor’s acquisition strategy is an opportunity as it increases its asset base. The personnel from the acquired companies improve performance by giving the strengths of the other companies to the General Motors.
Threats. The energy industry has experienced fluctuations due to many social and economic changes in the world; most notably the fluctuating fuel prices. The increase in the quantity of Shale gas production offers a possibility of a drop in fuel price. The reduced cost of fuel poses a significant threat to the hybrid and electric cars, which the General Motors has ventured into. The new emission standards may cost General Motors massive amounts of money to comply with when these new standards are imposed. This threatens the company, as it is will increase the expenditure yet any business operates to increase profits through cost minimization strategies (Parker 3). Intense competition in the industry due to the innovations and utilization of modern technology is a threat to all companies in the automotive industry, General Motors not an exception. Exchange rates are becoming a threat to General Motors. The second largest market for General Motors automobiles is China. The exchange rate fluctuation is a threat to General Motors since the dollar is depreciating against the Chinese Yuan Renminbi.
Recommendations. General Motors have been the leader in the manufacturing of automobiles for quite an extended period. Through innovations and diversification in product development, General Motors have attracted many customers, and there are very many potential customers ready to purchase their products. Every year, the company is trying to make a new model something that the clients appreciate. The move by current CEO to make models that a fuel friendly regarding consumption is quite a good move as it shows how the company has used technology to make better cars.
The analysis that I have provided with the aid of the available information about the company and industry, I recommend that General Motors needs to have a strategy that would widen its market so that it reaches the target profit increase. There is potential to perform in the industry that requires extra effort regarding innovation to dominate the market once again. The company needs to come up with a unique model that combines several innovations to improve the position regarding sales in the industry. Like the Chevrolet brand that sold best upon release, they need to introduce all their brands in all countries so that customers would see the innovations they have and purchase their products.
References
Dure, Beau. Long-Range Goals: The Success Story of General Motors. Chicago Tribune, Inc., 2010.
El Halabi, Ezzat, and Matthew Doolan. "Operational Challenges in the Automotive Recycling Business: A System Dynamics Perspective." Re-engineering Manufacturing for Sustainability. Springer Singapore, 2013. 353-357. Available at: http://link.springer.com/chapter/10.1007%2F978-981-4451-48-2_58
Harrison, Jeffrey S., et al. "General Motors Company: Restructured to Rediscover American Innovation." 2012: 11-25. Available at: http://scholarship.richmond.edu/cgi/viewcontent.cgi?article=1005&context=robins-case-network
Jurgen, Ronald K., and Jeffrey N. Denenberg. "Automotive Electronics Handbook, 2nd Edition" (1999): 114-127.Available at: http://works.bepress.com/jeffrey_denenberg/11/
Lau, Ronald S.M. "Strategic Flexibility: A New Reality for World-Class Manufacturing." SAM Advanced Management Journal 61.2 1996: 31-37. Available at: http://www.freepatentsonline.com/article/SAM-Advanced-Management-Journal/18660777.html
Parker J. What Analysts Are Saying about General Motors: 4Q15 and Beyond - Market Realist. Marketrealist.com. 2016. Available at: http://marketrealist.com/2016/01/analysts-saying-general-motors-4q15-beyond/. Accessed May 8, 2016.
Richards, Assunta. "Electric vehicles in Sweden." 2015: 27-33
Pound, Arthur. The Turning Wheel-The Story of General Motors through Twenty-Five Years 1908-1933. Edizioni Savine, 2013. 1-5.
Whalen C. Competitive Advantages and Strategies of General Motors. 2014. Available at: https://prezi.com/oxxktbewmafm/competitive-advantages-and-strategies-of-general-motors/. Accessed May 8, 2016.
Wheelen, L., and J. David Hunger. Concepts in Strategic Management and Business Policy. Pearson Education India, 2011.
www.gm.com. General Motors. Investors: Corporate Strategy. 2013. Available at: http:// /company/investors/corporate-strategy.html
Peter E. Carlson. Auto Industry Trends. (December 2006). Available at: http://www.jff.org/sites/default/files/publications/Auto-IndustryTrends.pdf
