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General Motors: A Model Manufacturing Company

Introduction

The dynamic nature of the business environment requires that companies and firms work towards enhancing their competitive advantage in order to not only thrive but to also survive. Unlike in the past when the market environment was not competitive, current trends indicate that the scenario has changed dramatically and more than ever, companies are working relentlessly to attain the highest degree of stability and sustainability. In particular, they are concentrating on effective mobilization and use of resources in a way that enables them to attain distinctive abilities that set them apart from their equally aggressive competitors.

Since its establishment in 1908, General Motors Company has maintained an elevated status in the automobile industry. The company has struggled to address the complex challenges and competitive threats that stem from industry dynamics as well as local and foreign manufactures. Generally, the company has been exceptionally aggressive, an attribute that has given them an advantage against its competitors. It is against this background that this paper provides an in depth analysis of how the company has managed to survive the challenges through time. In detail, it reviews the strategic approaches that the company has assumed in an attempt to maintain this desirable status.

General Motors is a US based international automobile manufacturing company that was founded in 1908. Currently, it assumes second top position in the market as the largest car manufacturing company in the United States. In addition, it has establishments in thirty five countries across the globe in which it manufactures and sells cars and trucks. Furthermore, it as a large employee base of close to 266,000. Since its establishment, the company has undergone different changes with respect to management, growth and development. The sustainable policies and strategies that it employs have further enabled it to face the challenges and maintain a high profile for an entire century. Certainly, very few manufacturing companies in American history have enjoyed the long term success like General Motors.

In its review, the Global Market Direct ascertains that for a significant period of time, General motors has maintained low cost production, very powerful and strong economies of scale an a market share of up to 60% (Global Market Direct 7). Despite having these capacities, the company has not been immune to market based challenges. Since historical times, it has battled with threatening financial challenges that stem from poor management and policy implementation. Regardless of this, it has managed to maintain a leading position in the market in the past. This can be attributed to its strategic positioning in the market. This has given it a competitive advantage and empowered it to stay ahead of its competitors.

The Root of Success

The establishment of GM Company dates back to 1903 when Olds Company merged with Durant’s Buick Motor. Historical evidence shows that by 1930, General Motors was a giant company that constituted an amalgamation of a significant thirty different companies. At this time, the major competitor of the company was Ford that had assumed market dominance. The Sloan’s strategy steered the relative initiatives through its emphasis on price and quality. In addition, the recognition that the automobile industry is highly dynamic triggered the company to assume the planned obsolescence theory that stipulated a frequent review of the product models.

Of great importance at this point in time was the introduction of the reorganization philosophy that culminated in the assumption of a new system that was based on decentralization of responsibilities and operations and coordinated controls. In this regard, Pelfrey cites that each division was allowed to retain autonomy although they were expected to operate under a set of uniform guidelines and policies that were developed by the board (Pelfrey 57). These developments steered the company to prosperity and enabled it to overtake Ford and assume market leadership since the 1940s.

Strategic Analysis

As indicated earlier, the company explored it strategic positioning in the market and capitalized on the intrinsic niches in a bit to enhance its performance. The company’s mission and vision have played an integral role in guiding its respective operations. The goals and objectives stated herein have enabled it to remain on track and to assume approaches that are directional. The vision of the company stipulates that it seeks to be a world leader with respect to transportation products as well as related services. In addition, the GM looks forward to winning the enthusiasm of its clients through consistent improvement that is guided by teamwork, integrity and innovation (Barabba 36). The company did not only work towards attaining this status but it has also maintained it through time.

This can be exemplified through client loyalty that it enjoys on a wide scale. In the recent past, the company has expanded its vision to incorporate the need to pursue green production. This is in a bit to enhance sustainability by ensuring that production processes do not impact negatively to the environment. Seemingly, this is approach is aligned to the hanging attitudes of the consumers with regards to environmental protection and management. Sopariwala cites that the mission statement of the company pertains to driving the improvements in revenue, market share, brands, cost effectiveness, people, responsiveness through the assumption as well as implementation of practice sharing and global common metrics (Sporiwala 72).

At this point, Coulter ascertains that quality production is requisite to improved performance by any given company. Put differently, the ability of a company to maintain quality performance enables it to win the trust of the customer and enjoy the relative benefits (Coulter 55). This is particularly important for companies that specialize in durable goods such as automobiles. This has been instrumental in mainstreaming standardized production and sustainability in GM’s production. This has been very useful because the company operates on a global scale. Standardization of its operations has been instrumental in enhancing a positive response from the consumer base.

Core Competencies

Coulter suggests that a company that seeks to improve its competitive advantage needs to explore its innovation and creativity (Coulter 45). This constitutes an ability to not only survey the complex dynamics of the market environment but to also tailor the respective products to be reflective of the changes in the environment. Companies that frequently innovate, develop and test their new products in the environment are more likely to outperform their competitors. Usually, competitors tend to dwell on understanding the current status of the ideal company but lack useful insights in to the future strategic decisions that the company seeks to attain. As a result, the competitors tend to imitate or ape the dominating company, rather that seek to understand its future strategies. Thus in the long run, innovation helps a company to maintain a lead in a certain niche and be able to reap optimally from the ensuing profits. Furthermore, innovation triggers dynamism and flexibility that are fundamental for a company to anticipate and adjust to future change accordingly. Seemingly, General Motors seems to have mastered the art of innovation and creativity.

In his review, Greimel indicates that innovation and creativity have enabled the company to increase its turnover through time (Griemel 296). Emergent studies ascertain that since its inception, the company has remained innovative up to date. In this regard, historical evidence indicates that GM engineered and commercialized the renowned self-starter engine in 1911. In 1926, the Cadillac product pioneered and influenced its devising of a national service strategy. In 1996, the company can be complemented for introducing OnStar satellite technology.

This allows the equipped vehicles to be recovered effectively in incidences of theft. In addition, it allows the occupants or passengers in the respective vehicles to communicate clearly with the ONStar personell. Other important developments that had a direct positive impact on the sales of the vehicles pertain to Chevy Aveo as well as hybrid vehicles. In particular, The Global Market Direct reports that the company could not effectively address the consumer demand for hybrid vehicles. The inherent developments can be attributed to the market researches that indicated that consumer preferences in this industry are very dynamic and tend to change every after four year. At this point, it can not be disputed that the innovations have played a significant role in placing the company on the top of the market chart.

Emergent research indicates that technological advances that constitute the company environment can have diverse impacts on the functioning of the respective company. The ability of General Motors to respond swiftly to technology by integrating relative developments in its business has also enabled it to stay ahead of its competitors. In his review, Grossman cites that the company has successfully standardized its computer and engineering systems as well as created important on line web portals like GM Supply Power and GM BuyPower. These developments have eased communications with consumers who are able to view the models of the company on line.

Through these avenues, consumers are also able to bargain on line as well as request for financial aid whenever they want to make purchase. The company on the other hand has utilized this to create personalized profiles that ensure that all consumer needs are addressed accordingly. The inherent ease in communication has been imperative for enabling the company to further its innovation strategy. In this regard, consumers are allowed to place their preferences that are then integrated in future models. The characteristic customization is sustainable and as been instrumental for strengthening consumer loyalty. The fact that their specific needs are integrated in production enhances a sense of ownership and encourages repeat purchasing.

The digital approach has also enabled the company to pursue green manufacturing. In this regard, it should be appreciated that global warming is an emergent issue that has had massive implications on consumer behavior and attitudes. Inherent trends show that consumer preferences have shifted significantly towards the need for green products. Through technology, GM has been able to capture consumer views with respect to their production expectations. Basing on the consumer pressure to the company with regards to incorporating green initiatives in its production, Global markets Direct cites that GM is set to invest a significant $890 million in upgrading North American Plants to enable them produce next-generation V8 engines that are environmentally friendly. These would be used in manufacturing full-sized pick up trucks. The environmental consciousness has contributed positively to the reputation of the company. In particular, Barabba cites that this enabled the company to win the prestigious Business Ethics Annual Award in 1996 (Barabba 68). In this respect, the company was honored for being environmentally sensitive in its production process.

General Motors ability to offer large scale operations has also been a sustainable strategy that has enabled it to assume and maintain market dominance. Currently, it is estimated that the company sells its products in close to two hundred countries across the globe. In their research, Robbins and Coulter indicate that widespread operations cushion the company against the market shocks and challenges that can affect a certain region. In this respect, the company can be able o maintain operations in other regions and reduce the likelihood of collapse. More over, global operations have enabled General Motors to diversify its operations. This is due to the fact that consumer preferences differ across regions. Thus the North American client needs differ considerably from those in China. Generally, the company has been compelled to incorporate diverse consumer preferences in its operations in a bit to maintain its competitiveness. This flexibility can be attributed to the inherent financial stability that the company has enjoyed through time. Notably, this has also been instrumental in steering innovation and creativity. Barabba indicates that the company has continued to produce new models over time (Barabba 88). This has been essential for it to maintain competitiveness in diverse environments.

Global operations have also played an integral role in enhancing the popularity of the company. Compared to smaller companies, the products of this company are known on a global scale and their quality is appreciated on a similar scope too. Indirectly, this is a viable marketing strategy that makes company operations known across the globe. Arguably, his has also enabled the company to maintain lean production. Widespread operations have also enabled General Motors to initiate and maintain viable relationships with the governments in different regions. Besides, this has given it an upper hand with respect to understanding the global trends in the industry. Through its use of technology and open communication systems, it discerns future trends and is able to predict global preferences before its competitors. Thus it is able to take timely measure to exploit the market or cushion itself against negative implications accordingly.

Company Pitfalls

Regardless of the successes that the company enjoyed since its inception, it has suffered various shortcomings in the recent past. This has culminated in its being overtaken by the Toyota Company with respect to performance in the auto market. The downsizing of the company can be attributed to various factors. To begin with, Greimel appreciates that the innovation trap contributed to the failure of General Motors to maintain its steady growth (Greimel 297). Since historical times, the company has successfully invented various technologies that have contributed significantly to its prosperity. However, recent technological developments such as the electrical car program have not been successful. This had far reaching implications on the holistic wellbeing of the company as it has invested heavily in the production process. In this regard, the company needed to have evaluated the viability of such innovations before making efforts to pursue them.

Another shortcoming that has impacted negatively on the ability of the company to maintain optimal performance pertains to its inability to let go of its brand superiority. In this regard, Pelfrey posits that the ability of the company to finance its “different cars for different buyers” ideology that was adopted during its infancy became immense (Pelfrey 66). Regardless of this realization, the company found it difficult to give up this historic value because of the far reaching impacts that this was likely to have on its reputations. This culminated in a great financial burden as intrinsic operations were costly.

Finally, the company’s decline can be partly attributed to the legacy cost trap and specifically its large-scale operations. In this respect, Coulter indicates that although big companies have the capacity to leverage scale, lower the costs related to purchasing goods and be able to recover the investment costs because of the sell of their large unit numbers, the relative costs such as health care, worker salaries, administrative costs, pension of retirees and other benefits can upset company operations (Coulter 78). Furthermore, the inflexible labor contracts also undermine the ability of big companies to embrace flexibility. The interplay of these factors made it difficult for the company to maintain an upward trend with regards to growth and development.

Conclusion

From the preceding analysis, it is certain that General Motors Company has undergone various developments since its inception in 1908.The mission and vision of the company has provided the needed guidance and direction for the company. Besides steering innovation, the company mission has been imperative in encouraging quality performance. Of great importance has been the embracement of technology in enhancing communication with consumers. Through the internet, General Motors has been able to initiate and maintain viable relationships with the consumers. As it has come out from the study, use of the internet has enabled the company to customize its production by incorporating consumer preferences in production.

Finally, global operations have been imperative in enhancing the competitiveness of General Motors. Besides being able to expand its client base, it has influenced diversity with regards to production. Moreover, it has enhanced company popularity and enabled it to predict global trends and make timely interventions accordingly. This has been fundamental for building company capacities and cushioning it against the negative implications that stem from market uncertainty. Regardless of these developments, the company has suffered significant shortcomings that have undermined its performance in the recent past. Nonetheless, current strategies indicate that it still has the capacity to attain the topmost position in the automobile industry. Compared to its counterparts, General Motors Company can be considered a model automobile firm whose performance has indeed been exemplary.

Work Cited

Barabba, Vincent. Surviving Transformation: Lessons form GM’s Surprising Turnaround. New York: Oxford University Press, 2004.

Coulter, Mary. Strategic Management in Action. USA: Prentice Hall, 2009.

Global Markets Direct. General Motors Corporation: Financial and Strategic Analysis Review. USA: Marketresearch.com, 2009.

Greimel, Hans. GM vs. Toyota: Who will Rule the Next Century. Automotive News, 83 (2008): 296-97

Grossman, Andrew. GM Factory a Model of Sustainable Manufacturing. Automotive News, 82 (2008): 16

Pelfrey, William. Billy, Alfred and General Motors: The Story of Two Unique Men, A Legendary Company and a Remarkable Time in American History. New York: AMACOM, 2006.

Robbins, Stephen & Coulter, Mary. Management 8th Edition. USA: Prentice Hall, 2004.

Sopariwala Parvez. Using Strategic Analysis to determine why GM-North America’s Earnings Dropped. Journal of Corporate Accounting and Finance, 18 (2007): 71-79.