Potential Country Markets
The process of identifying the high potential countries where General Motor products can be marketed used a broad examination of several factors. The factors considered included country rating, business climate rating, 2015 forecasted market size, and the overall market potential evaluation index. The 2015 forecasted market size would help me select the nations that are importing GM products for further in-depth analysis in this paper. With the current reports, India would not be a safe country to target for GM products. The country is experiencing around medium, and the volatility in its economy would make slight changes that are not favorable for business. India has an inflation rate of 4.83 According to April statistics (Bennett 17). Russia is also another nation that is favoring the automobile business as it has a country rating of B and the business climate is not that good as the rating is a C. The disagreement between the US government and the Russian government may not allow more GM business in this nation.
When it comes to Turkey, North Korea, and France, they do not qualify for marketing our GM products. The market in North Korea for GM products especially the Chevrolet model are indeed doing good, but there are many counterfeit productions in this country. This has led to continued poor performance, and thus, it is eliminated from the list of consideration. Despite these countries promising high returns, I considered them not fit to market our products. There are trade sanctions against North Korea due to the Counterfeit goods sold there and customers in this nation tend to buy products produced locally rather than the quality original products (Feenstra 35). France is centrally located in Eurozone and due to the stiff competition from Toyota Motors it is eliminated from the list.
With the above eliminations, the countries left for consideration include the North America and China where there is the biggest market share, and the returns are indeed good. The rapid growth and development of the Chinese economy promise a continued ready market for our products. There is a potential market in China because it ranks number two (Bennett 21). The increased incomes favor lavish living and thus buying a car to Chinese is currently viewed as a necessity to them. North America, on the other hand, is the home country of our company, it is offering most returns every year, and improvements are expected from the region.
Source: Michigan State University (2016 April 16) and Data monitor (2015, November)
China: Country and Market Analysis
The factors that would be considered to analyze the Chinese market for General Motor Automotive include political-legal, economic, social, and technological environments. The total market potential in both countries will be considered then have a competitor analysis to determine the competitive strategy to undertake.
Political, regulatory and legal environment. China, commonly known as the People’s Republic of China with an autonomous government under one party system. There are 23 provinces, five autonomous provinces, and four municipalities, which are administered from Hong Kong and Macau. The laws of this nation are based on civil laws derived from continental civil code and the Soviet legal principles (Peng, Chao, and Miguel 425). There exist a supreme people’s court is a branch that each judicial branch is composed of. The political structure consists of the executive branches comprised of the president, vice-president, state councils, and premier. The main political party the Chinese Communist party that regulates eight other small parties that operate under it. There is continued political unrest in China because the citizens are not in a position to change the government through the voting process.
The political risks involved in the Chinese political and legal environment are insignificant to affect business operations in their territory. The challenges that can be considered as big in China is that of corruption, but the government is currently fighting to see those corrupt face law. This would provide a conducive environment to do business in China. The issues related to land are some of the political unrest in the entire Chinese nation (Business Monitor International, 2011). Taking global trends into consideration, increased the cost of wages and salaries to employees in China may lead to increased prices because the households have enough incomes to spend. The government of China is adequately prepared to work and supports property rights thus General Motor Company would be favored to have protection from the government. This shows that China is indeed the right place to invest more in the automotive industry.
The economic environment. China can be classified as middle-income economy but with the modern technology and collaboration with other governments, it is experiencing increased growth rate that has led to it being referred to as the larger economy that is growing very fast. Since the 1970's, China has undergone many changes and with the aid of interest groups like the USA, it is becoming a super power soon. The automobile industry has the largest part share in China due to the increased income of households and the development projects the nation is currently undergoing. Since 1978, the economy of China is experiencing an active growth which is measured by the GDP.
In 2010, regarding the purchasing power, China ranked as the largest economy that had that ability in a continuous manner. According to the U.S. Department of State (para. 4) the statistics indicated that the main exports taken to China that yielded a total of $9.5 billion. The Chinese economy imported $1.307 trillion of which 7.66 came the U.S economy. The GDP of China was estimated to be $9.872 trillion which is estimated to be 10.3 percent growth rate as compared to 2009. In the 2010 GDP, agriculture accounted for 9.6 percent; services had 43.6 percent, and the highest percentage came from industry with a percentage of 46.8 (Peng, Chao, and Miguel 425)
The industry in China recorded the biggest percentage of the 2010 GDP. The automotive industry is among the sectors that performed well since from 2008; the Chinese are consuming cars and passenger cars at a very high rate. About 70 percent of the China output come from the private sector banks being in the forefront (Keegan and Green 33). The currency of the China that is Yuan Renminbi appreciates against the US dollar; thus, the government intends to strengthen the currency by investing more in development projects and establishing many entirely foreign companies in the economy (XE, 33). The government through such projects would have created an enabling environment for businesses like GM.
Social and cultural environment. China is situated in the Eastern part of Asia continent. The population is about 1.3 billion people with a current growth rate of 0.49 percent. The urban population almost account for about half of the whole population with 48% staying in towns. The majority of the population has the age of more than 30 which is a mature age that can embrace development as at this age most people are investing for the future from their current income. The society of Chinese has two segments that are the ganbu and the peasants. The ganbu are the political leaders while the peasants are the regular citizens. 91.5 percent of the Chinese population is the Han Chinese, who are identified with this ethnic group (U.S. Department of State para. 7). The family is very small regarding the social structure, but it is that basic unit of the society. The Chinese are very harmonious people thus impressing one with your product is like influencing the whole community.
Technology. Through research and development, China is very vast technologically. The government is ready and working very hard to transform China through technology. The cities in China, in particular, Hong Kong has undergone so many transformations. The development agenda of the nation is to change from made in China and become designed in China. The government is supporting innovations and establishment of new firms either from other countries and local investors.
Competitors analysis. The automotive industry in China is facing stiff competition, especially from foreign companies. Volkswagen has been there for quite a long time but with GM, Ford, Toyota, and Honda, the market is diverse, and every company is seeking to satisfy the consumers. The main competitors are Toyota from Japan and Ford from America. There are many substitutes in the automotive industry thus 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 customer tastes and preference. This has earned them a competitive advantage and a wider market share. Toyota has manufactures cars that are gender sensitive, income considerate and class of its customers.
North America: Country and Market Analysis
The factors that would be considered to analyze the U.S market for General Motor Automotive include political-legal, economic, social, and technological environments. The total market potential in both countries will be considered then have a competitor analysis to determine the competitive strategy to undertake.
Political, regulatory and legal environment. The American economy is very stable and since the financial crisis that faced the whole world, its economy has been stable for an extended period leading the nation to be termed as a superpower. The stability of this economy has allowed businesses to thrive well increasing the GDP every year. The United States is ruled under a multiparty system where two rival main parties continue to rule the states (Liebhold, Joel, and Gregory, 515). The opposition is always on toes to ensure those in power do not fail the economy, a trend that has strengthened the economy to be a bit stable over many other nations. Since the mother country of General Motors is America, the environment is very friendly, and the many states value products manufactured by their local companies. This has made the company to make big profits over the last two decades than any other company. The legal framework in America is guided by the constitution that governs all their activities.
Technology. America supports the development, and it is always ready to offer support for research and technology. The vast technology has labeled America as a superpower and thus in industries and every business; innovation is the key. The infrastructure of America is well developed. Thus, they need quality which GM is offering to the market. Liebhold, Joel, and Gregory (517) notes that the Chevrolet model made significant profits in America than any other model in 2008.
Social and cultural environment. America is bordered to the north by the Pacific Ocean, and there are many people. The 2014 census records that the population is about 318.9 million inhabitants. There are several classes in America. The upper classes are the rich and the wealthy people; the middle class is the workers and laborers who are seeking daily bread through hard labor. The lower class are the poor who are working from hand to mouth and earn very little that cannot allow them to save. The diversity of the American people is ideal for GM to manufacture models that meet all market segments based on classes.
Economic environment. America is classified as a high-income nation that gets its income from industries. It owns the big manufacturing companies all over the world. For instance, the Microsoft, which a worldwide company together with Coca-Cola, Walmart, GM, Ford among many others. These many companies are generating a lot of revenue to the government for continued development. The GDP of America according to 2015 is $19.268 trillion, which is a growth of 3.23 percent (Fogel, Randall, and Bernard 89).
Competitor analysis. The main competitors in US automotive industry are the GM and the Ford Company, which dominate the whole economy of automobility. Through innovations, these companies are making use of technology to come up with many new models that show significant innovations. The innovation of electric cars and the high tech in premium models has gained a competitive advantage to GM.
Market Entry Recommendation
Based on the analysis of the two potential countries for GM, I recommend China be the country of focus. This is because of the large economy and ever increasing incomes. They favor the GM innovations; hence, the potential market is China is greater than that of American since America is already developed. The Chinese government is embracing foreign companies to enter its economy and help them achieve strategic development goals.
Works Cited
Bennett, James, Ed. The optimum shape: automated structural design. Springer Science & Business Media, 2012.
Datamonitor Automobile industry profiles: US, China, India, Indonesia, and France. (2010, July).
Feenstra, Robert C. Advanced International Trade: Theory and Evidence. Princeton University Press, 2015.
Fogel, Kathy, Randall, Morck, and Bernard Yeung. "Big Business Stability and Economic Growth: Is what's good for General Motors good for America?" Journal of Financial Economics 89.1 (2008): 83-108.
Keegan, W.J., & Green, M.C. (2011). Global Marketing. New Jersey: Pearson Education.
Lau, Ronald SM. "Strategic flexibility: A New Reality for World-Class Manufacturing." SAM Advanced Management Journal 61.2 (1996): 31-37.
Liebhold, Andrew M., Joel A. Halverson, and Gregory A. Elmes. "Gypsy moth invasion in North America: a quantitative analysis." Journal of Biogeography (1992): 513-520.
Michigan State University. (2011, February 14). Market Potential Index for Emerging Markets-
National Bureau of Statistics of China. (2011, February 28). Statistical communiqué of the People.
Peng, Guo, Chao, Alex, and Miguel Baptista Nunes. "Using PEST Analysis as a Tool for Refining and Focusing Contexts for Information Systems Research." Sixth European Conference on Research Methodology for Business and Management Studies, Lisbon, Portugal. 2007.
U.S. Department of State. Background Note: China. (2010, August 5). Retrieved from http://www.state.gov/r/pa/ei/bgn/18902.htm
XE. Currency Converter. (2011, May 21). Retrieved from http://www.xe.com/ucc/convert/
