Influence on the General Motors Corporation Essay

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Influence on the General Motors Corporation

This report analyzes the primary internal and external influence on the General Motors Corporation and the influence of changing political environment on policy making and response of the corporation. Then the report discusses the changing political environment in and its influence. The influences of political environment on policies and decision making to the corporation are analyzed. The corporation response to the political environment changing is critically evaluated. At last, some improvement suggestion for the corporation in the response of the changing political environment is demonstrated.

IntroductionGeneral Motors Corporation is the largest automobile manufactures in the world. The corporation, which is located in Detroit, employs more than 260 millions people and sells cars and trucks in about 35 countries. The corporation has a dominant influence in automobile market in the United States and other developed market such as the United Kingdom, Canada and so on. The corporation also enjoys a large market share in the rapid growing market of developing countries such as China and Brazil. However, the corporation is in face of changing internal and external environment.

Discussion and AnalysisIn the first part of the report, the primary internal and external influence is analyzed following the SWOT Matrix, which is a modern tool for analysis of internal and external environment. In the SWOT Matrix, the S stands for strengths, W for weaknesses, O for opportunities, and T for threats. The strengths and weaknesses are the analysis of internal influence while the opportunities and threats stand for the influence of external environments. In the following part of the report, the strengths, weakness, opportunities and threats that have influence of the organization is discussed one by one.

Internal influence: Strengths

This section analyzes the internal strengths of the corporation. The General Motors are rich in brands and product lines. The General Motors Corporation acquired and mergers many brands and auto companies in the early stage of its history. The General Motors Corporation acquired Buick and Oldsmobile after it is founded. Then it brought Cadillac, Elmore and Oakland and so on. As a result, the corporation owns many brands which are fit for different segmented markets.

Comparing to Ford’s only providing black Model T cars in the early years the General Motors Corporation provides various models, colors and brands for different markets. For example, the practical and economical Chevrolet are designed for entry level consumers, the Buick are make for middle class buyer and luxury Cadillac for high end consumers. (Warell, 2008) The advantage of multi brands strategy is to satisfy the needs and wants of different group of consumers to enter more segmented markets. The multi brands make GM a giant automaker and enjoys large market share.

The General Motors Corporation has the strength that it governs the advance technology and has an influencing power in the distribution channel. The General Motors Corporation has developed for a century since it is founded in 1908. During the time, the technology and channel influence is accumulating and increasing. The technology is of great importance in the motor industry, but the technology accumulating needs a long period. The General Motors Corporation now governs the advanced technology that it can make more sophisticated automobiles which are more durable, more safety, and have a rapider speed. On the other hand, the General Motors Corporation has a dominant power in the distribution channel. The General Motors Corporation has been the top automobile manufacturer for a long time accordingly it has a strong bargaining power in the distribution channel. The corporation can distribute it product in the United States and all around the world. The technology and distribution channel can be a great assistant in the further development of the organization.

Internal influence: Weaknesses

This section analyzes the internal weaknesses of the corporation. One of the most significant weaknesses is that the cost of production is too high. The Japanese automakers such as Toyota are dangerous competitors for the General Motors Corporation and the have scrambled for quite a large part of market shares if the GM in America and the global markets. The Japanese competitors cut down the cost tremendously by lean production. However, the production cost is still high in the General Motors Corporation. And the inefficiency of production cause the high price of its automobiles and the market share shrinks accordingly. (Coffey, 2005) Especially in face of the financial crisis, the General Motors Corporation has much to learn form lean production to cut down its production prices.

The bureaucratic culture is another weakness in the corporation. The General Motors Corporation employs more than 260 millions staff, which composes a huge and complex organization. The General Motors Corporation had taken the lead in organization. For example, the corporation had injected into matrix organization that combined the functional and project patterns of department in the same corporation in early years. The General Motors Corporation also organized with strategic business unit that classified products and product lines in the same independent business department in ahead of other corporations. The decentralization makes each department a profit centre. However, after ages of development the departments and business units concerns more on their own benefits and become bureaucratic. The well defined division of departments and united became deficiency and resistance to change. Formal and informal networks formed in the corporation. The bureaucratic culture is accumulating and hander the further development of the corporation.

External influence: Opportunities

This section analyzes the external opportunities of the corporation. The emerging markets of developing countries provide a great opportunity for the General Motors Corporation. The market of developed countries is fully covered and closed to saturation in the modern days. For example, in the United States there are two cars in a family in average so the market can not keep a rapid growing rate. On the country, market in developing countries shows their potential. The sales volume in China and Brazil is second only to the market of the United States. Many international automaker groups are scrambling for these markets. The large and potential markets of developing countries will provide opportunities for the corporation.

The achievement in technology is a great opportunities for the General Motors Corporation. The technology makes breakthrough achievement in fields of information, manufacturing, fuel and so on. The advance of information technology and implementation of management information system make it possible to collect and analysis accurate data and information all around the huge organization. The computers and instant communication tool help the corporation to organize and manage the supply chain. The new methods in manufacturing, such as lean production, can increase the efficiency of production while cutting down the cost. The leading edge achievement on fuel and new energy engine can promote the upgrade of automobiles. The General Motors Corporation is huge enough to afford the cost of R&D center and the implement of new technology, which in turn can raise the competency of the corporation. (Sengi et al, 2004)

External influence: Threats

This section analyzes the external threats of the corporation. The increasingly growing price of petroleum is a threat to the General Motors Corporation. On the one hand, consumers turn to other transport tools when they can not afford the high petro price. On the other hand, they want to purchase energy saving automobiles. Many products of the General Motors Corporation are large in size and heavy in weight and they are high fuel consumption motors. The fluctuation of oil price has a negative effect on the sales volume of the automobile of the General Motors Corporation. Some political affaires such as wars and conflictions in the Middle East, the “oil shock” caused by OPEC with economic and political purpose, the environment protection organizations anti-automobile movement and so on, enhance the threats of oil price turbulence.

The competition, both in the United States and the global market, is a vital threat to the General Motors Corporation. There are three automaker giants in the United States. They are the General Motors, Ford, and Daimler Chrysler. They compete fierce in the United States and in global market. In the Europe, there are strong competitors such as BMW, Mercedes-Benz, and Peugeot etc. In the 1970s, with the raising of oil price, some Japanese automakers gradually seized the automobile market shares. The low cost and energy saving cars, such as Toyota, Honda and so on became world famous brands. More and more automobile brands enter into the United States and they also scramble the global automobile market. (Loomis, 2006) They compete and try to meet consumers’ different needs and wants with lower production cost. The competition in and abroad America is fierce and threats the survival of the General Motors Corporation.

The following is the second part of the report. This section of the report discusses the changing environment in and aboard the United States. First, the influences of political environment on policies and decision making to the General Motors Corporation will be analyzed. Second, the corporation response to the political environment changing will be critically evaluated. At last, some improvement suggestion for the corporation in the response of the changing political environment will be demonstrated.

Influence on policies and decision makingThis section analyzes the influence of political environment change on the policies and decision making of the corporation. The political environment has great influence on the operation of the General Motors Corporation. One of the key political influences of the General Motors Corporation and automobile industry is the increased protectionism for fear of the decline of employment in the industry. The major automakers employ so many employees that the decline of automobile sales volume will cause the significant increase of unemployment in a country. As a result, many governments tend to support the automobile industry, no matter in the form of fund assistant, protective tariff or quota. The government of the United States has a tradition of protecting its automobile industry.

For example, the America government used high protective tariff to protect the automakers from the competitors from Europe and Japan in the last century. The government also gave financial assistant to the automaker that is at the verge of bankruptcy such as Chrysler. In the modern time, the automakers fall into trap again and the financial crisis enhance the tendency. The America government aims to give a large quantity of money to the automakers and use other protection methods to protect the automobile industry. It can be seem that the changing of political environment has significant influence on the policy and decision making of the General Motors Corporation. (Bowler et al, 1996) However, different presents and its government in the United States may have different attitudes on the protectionism of the Automobile industry. The General Motors Corporation should take serious consideration on the change of political environment and make full use of it.

The Country Alliances and Economic Blocs and other regional cooperation organizations are another main tendency of the political environment. The competition extends form national to blocs, even global. (Cho, 1998) The North American Free Trade Agreement, which including the United States, Canada, and Mexico, formed in 1994 with the purpose of freeing the trade, eliminating tax barriers and promoting fair trade in the North America. The NAFTA also extended to Free Trade Area of the Americas, which including country in the North America, Latin America and Caribbean countries. Many European countries ally with each other to form the European Union. After years of development, the union own 27 membership countries and creates a common economic area, in which people move and trade freely. There are many other Country Alliances and Economic Blocs such as Association of Southeast Asian and so on.

The political tendency of regional cooperation requires the top managers of the General Motors Corporation to consider and resolve the benefit conflicts between one power countries blogs and another when making decisions and policies. The Country Alliances and Economic Blocs and other regional cooperation organizations provide opportunities for the automobile manufacturers but the organizations in other area also became threat to the United States. The decisions and policies makers of the General Motors Corporation have to make strategy to cope with the tariff and nontariff barriers within and between the Country Alliances and Economic Blocs. The corporation should rethink its strategy. (Tay, 2007) The structure of the corporation according to different regional cooperation organizations should be considered when making decisions and policies. (Sastry, 1997) The new staffing and leading methods to deal with culture diversity also influence the policy and decision making of the General Motors Corporation.

The labor union, environmental organization and other political groups are gaining more and more power. The United Auto Workers is a key labor union in the automobile manufacturing industry. The union fights for the benefits of workers such as less working hours, more salaries, health insurance and pensions and so on. The labor union cause the high cost of the General Motors Corporation. The total expense on employees is almost twice as much as the workers in other industry in the United States, and much more than the employees in competitors’ factories, such as Honda and Toyota. (Benders and Morita, 2004) The union is blamed as the reason of the uncompetitive of the General Motors Corporation and the crisis of the automobile industry. However, the methods to deal with the strong political power are the problem to the policies and decisions makers of the General Motors Corporation.

In 2007, the United Auto Workers went on a strike against the General Motors Corporation, which causes tremendously negative effects on the General Motors Corporation. So the policies and decisions of the corporation should balance the interest of the employees. The environmental organizations are gaining more and more power. With the increasingly dangerous environment problems, many green groups, which become independent and influencing political power, claim for the protection of the earth. Motor vehicle exhaust is considered as the main effects of the greenhouse effect. Some green groups are against the using of automobiles, which cause the decline of the automobile sales volume. As the increasing of environment protection power and the widely acceptance of the green opinion, the managers should make new policies and decisions such as designing alternative fuels vehicles.

Evaluation of GM’s responseThis section critically evaluates the corporation’s response to the changing political environment. In face of the dynamic changing political environment, the General Motors Corporation makes some responses accordingly. The General Motors Corporation makes full use of the protectionism policies and financial assistance of the government to maximize its benefits. In order to be more influence in political, the General Motors Corporation spends a lot of money on political contributions. Statistics shows that the General Motors Corporation spent quite a lot of money as the political contribution for both the Democrats and the Republicans. The spending on lobbying the members of parliament is also quite large. Besides the political contributions, the General Motors Corporation also spends plenty of money on charities. For example, the General Motors Corporation is the exclusive financial source of “Safe Kids Buckle Up” program, which protect the children through education and inspection.

The political and charitable contributions are positive and active response to the changing political environment. On the one hand, the General Motors Corporation strengthens its influence and enhances the connection with the government. On the other hand, the corporation undertaken its social responsibility, which wins the corporation positive reputation so the General Motors Corporation can easily get the support when in crisis and consumers tend to purchase automobiles of the corporation. In the behavior of giving political and charitable contribution, the General Motors Corporation well response to the political change and gain more political influence, which helps the corporation get protection from the government.

The Country Alliances and Economic Blocs and other regional cooperation organizations are a main political change these decades. In order to minimize the hindrance and the conflict between different Economic Blocs, the General Motors Corporation makes trade strategy, ally with other automaker group, and establish joint venture in some countries. For example, the United States and China have different ideologies and economic situations and they belong to different Country Alliances and Economic Blocs. The Chinese government forbids the wholly foreign owned subsidiary in the automobile industry. The China customs also charge tariff on the automobiles.

In order to enter the market of other Country Alliances and Economic Blocs, the General Motors Corporation establishes joint venture with Chinese company. The Shanghai GM joint venture is created by the General Motors Corporation and a Chinese company, in which the automobiles of China’s market were manufactured. The General Motors Corporation brings advance technology, operation experience to the venture. The joint venture employs local workers whose salaries are quite low comparing with the workers of the United Auto Union. The joint venture brings profits for both sides and the General Motors Corporation avoids the high tariff and nontariff protection between different countries and different Economic Blocs. The General Motors Corporation makes an effective response to cover the gap between the Country Alliances and Economic Blocs.

The labor union and environmental organization become increasingly influencing political powers. The General Motors Corporation tries hard to response properly to the increasingly strong power of the labor union. The United Auto Union is blame as the cause of uncompetitive of the General
Motors Corporation for the members’ salaries in the union are much higher than its foreign competitors. The General Motors Corporation tries to cut down costs of the workforces in face of the financial crisis and problem of the automobile industry. The General Motors Corporation makes a policy of eliminating the lifetime health benefits of the white collar retirees. It is a hard decision after negotiation to response the political environment change and the automobile industry crisis. The General Motors Corporation has a long way to go, but it has taken a constructive step to response to the changing of political environment.

In response to the political force of green groups, the General Motors Corporation designs energy saving vehicles which implement alternative fuels and electric. The corporation researches and designs some alternative technology vehicles and some flex fuel burning vehicles. The General Motors Corporation also builds an automotive battery laboratory to research on battery for the electric vehicles. The hybrid electric vehicles are a more practicable automobile in the future. The General Motors Corporation introduced the hybrid concept vehicle in 2005. Up to now, the corporation owes several hybrid electric automobile models and even all electric vehicles. The General Motors Corporation does a good job in developing alternative fuels and electric vehicles in response to the environment protection political power.

Areas for improvementThis section demonstrates some areas for improvement of the corporation. The General Motors Corporation does well in response to the challenge of changing political environment. However, there are still some areas for improvement for the corporation. The most important improvement area is to raise the manufacturing efficiency. The average cost of manufacturing in the General Motors Corporation is high comparing with its main competitors such as Toyota. The Toyota is scrambling the market share of the GM little by little in the United States and all around the world. The competitiveness of Toyota come form the low cost caused from lean production. The core spirit of lean product is more value with less work. The purpose of production is to provide value to the final consumers. The expense for other goals is considered as a waste, by which the waste of resource is eliminated and the manufacturing efficiency promoted. It can introduce advance assembly line and reorganize the logistic department, through which the supply chain is organized. (Kochan, 2003)

The lean production and be combined with six sigma quality and total quality management to maximize the efficiency and cut down the cost. (Dahlgaard and Dahlgaard-Park, 2006)The General Motors Corporation can make a reform on culture. It can build a harmonious culture as in Japanese automobile manufacturing factories to coordinate the relationship and benefits between managers and workers. On the one hand, the harm of the Union Auto Workers can be minimized and the cost of manufacture can be cut down. On the other hand, the harmonious culture can promote the efficiency of manufacturing. The General Motors Corporation also needs to fight against the bureaucratic culture. The organization structure can be reformed and reconstructed break out the barriers between different departments and stimulate the cooperation of different profit centers. Different methods can also be implemented to motivate confidence, communicate and collaborate between staff in different level.

ConclusionThis report analyzes the internal and external environment of the General Motors Corporation in the first paragraph and then discusses the changing political environment of the corporation. In analysis, the strengths of branding strategy and advantage in technology and channel, the weaknesses of high production cost and bureaucratic culture, the opportunities of emerging markets and achievement of technology, and the threats of petroleum price fluctuation and strong competitors are analyzed with the SWOT model.

In the second part of the report, the influence of political environment change is discussed in three perspectives. They are the protectionism from government, the tendency of Country Alliances and Economic Blocs, and the growing in strength of labor union, green groups and other political groups. Their influence on policies and decision making and the response of the corporation are analyzed and critically evaluated. Then some suggestions are given on several areas for improvement of the corporation.

Recommendations

As is analyzed in above, the General Motors Corporation can improve in two ways. First, the corporation can introduce new manufacturing methods, such as the lean production, the six sigma quality and total quality management and so on. By implementing advanced manufacture methods, the corporation can promote its efficiency in manufacturing while reducing the cost. Second, the corporation can build a harmonious culture and fight against the bureaucratic culture, through which the barriers between different departments are broken while the staff in the corporation is motivated.

Reference:

Benders, J. and Morita, M. (2004), ‘Changes in Toyota Motors’ operations management’, International Journal of Production Research, 42(3), pp: 433-45.

Bowler, S. et al. (1996), ‘The growth of the political marketing industry and the California initiative proces’ European Journal of Marketing, 30(10/11), pp: 166-78.

Cho, D.S. (1998), ‘From national competitiveness to bloc and global competitiveness’ Competitiveness Review, 8(1), pp: 11-23.

Coffey, D. (2005), ‘Delineating comparative flexibility in car assembly: the problem of wide selection’ International Journal of Automotive Technology and Management, 5(1), pp: 18-31.

Dahlgaard, J.J. and Dahlgaard-Park, S.M. (2006), ‘Lean production, six sigma quality, TQM and company culture’ The TQM Magazine, 18(3), pp: 263-81.

Kochan, A. (2003), ‘GM creates flexible assembly line at its Ellesmere Port plant in the UK’ Assembly Automation, 23(1), pp: 32-5.

Loomis, C.J. (2006), ‘The tragedy of General Motors’, Fortune, 153 (3), pp: 31-45.

Sastry, M.A. (1997), ‘Problems and paradoxes in a model of punctuated organizational change’, Administrative Science Quarterly, 42(2), pp: 237-75.

Sengir, G.H. et al (2004), ‘Modeling relationship dynamics in GM’s
research-institution partnerships’, Journal of Manufacturing Technology Management, 15(7), pp: 541-59.

Tay, H.K. (2007), ‘Rethinking competition in the world auto market: cultural determinants, strategic’ Strategy & Leadership, 35(4), pp: 31-7.

Warell, A. (2008), ‘Multi-modal visual experience of brand-specific automobile design’ The TQM Journal, 20(4), pp: 356-71.

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