General Motors Company Overview
When conducting a SWOT analysis for General Motors, it is important to understand the company’s background.
Per se, General Motors is a multinational corporation that deals with the designing, manufacturing, marketing, and distribution of vehicles and vehicle parts as well as sale of financial services.
Some of the General Motors facts are as illustrated below.
|Company name||General Motors Company|
|Year founded||September 16, 1908|
|Founder||William C. Durant|
|Industries||Automotive and Finance|
|Headquarters||Detroit, Michigan, US.|
As reflected in the above General Motors facts, the company was founded in 1908. Since then, it undertook numerous acquisitions to become General Motors Company.
The company encompasses a multinational corporation that sells the different General Motors brands across the globe.
Common General Motors’ cars include GMC, Chevrolet, Cadillac, Buick, Vauxhall, Opel, Holden, Wuling, Baojun, and Jiefang.
SWOT Analysis for General Motors
A SWOT analysis would be an important tool in assessing General Motor’s strategic position.
General Motors SWOT Analysis Matrix
General Motors SWOT Analysis
1. Dominance of the U.S. automotive industry
2. Economies of scale
3. Strong brand name
4. Profitable joint ventures
5. Strong distribution network
6. Reliance on technology
7. Reliable suppliers
8. Product success
1. Overdependence on the U.S. market
2. Low diversification in vehicle types
3. Bureaucratic structures
4. Poor employee relationships
1. Declining fuel prices
2. Emergence of autonomous vehicles
3. Markets in developing countries
4. Adoption of technology
2. Increasing regulations
3. Emerging technologies
4. Exchange rates fluctuation
5. The COVID-19 pandemic
1. Dominance of the U.S. Automotive Industry
General Motors brands are quite dominant in the U.S. automotive market. The company is among the “big three” car manufacturers in the country.
Note that the US is the second largest vehicle market globally, where dominating it gives GM’s a huge advantage over rivals.
GM’s U.S vehicle market share in comparison with other major players is as illustrated below.
|Ford Motor Company||14.1%|
|Toyota Motor Corporation||14%|
|Honda Motor Company||9.5%|
2. Economies of Scale
Due to the company’s size, GM is positioned to enjoy economies of scale. It can leverage on its high purchasing power and capacity to cut down on production costs.
Accordingly, this purchasing power can enable it to effectively bargain for raw materials prices, discounts, as well as optimize on labor.
Its capacity also facilitates high production capacity and extensive market reach.
3. Strong Brand Name
General Motors by itself is an established market brand that enjoys high confidence levels among its customers. The company has managed to build a reputation for good vehicles.
Further, General Motors brands, including Chevrolet, GMC, Opel, and Cadillac are quite strong and well known in the U.S. and across the globe.
The huge brand portfolio positions the company favorably in relation to the satisfaction of diverse customer needs.
4. Profitable Joint Ventures
General Motors enjoy good joint ventures that have worked to augment its market share and profitability.
This is particularly the case with China (the largest automotive market globally), where GM has continued to increase its sales and market share.
Note that the company has forged about 11 joint ventures with Chinese companies, including SAIC General Motors Corporation that controls the Chinese automobile market.
5. Strong Distribution Network
GM has a strong distribution network that it can leverage on to reach markets where it has established its operations.
Accordingly, General Motors cars are distributed through strong supply chains built on robust, transparent, and reliable partnerships.
This is evident in the fact that the company has about 95 warehouses for parts distribution within 21 countries.
6. Reliance on Technology
The General Motors cars manufacturing process is defined by robust reliance on technology in quality enhancement.
For instance, the extensive automation of the production line at the company’s factories enhances product quality assurance and consistency in production.
As well, the company has over the years managed to rely on technology to come up with innovative and competitive products, including eco-friendly vehicles.
Through technological innovation, General Motors cars have been able to retain the reputation for high safety standards as well as sustainability, with Chevrolet Volt emerging as one of the most “green” cars.
7. Reliable Suppliers
General Motors has managed to establish a strong and reliable base of suppliers that ensures that the company does not encounter bottlenecks related to the supply of raw materials.
The company purchases raw materials worth about $97 billion for about 133 manufacturing plants in 16 countries.
This scale of raw materials supply has been made possible by reliable suppliers that make it possible for the company to keep up with General Motors competitors.
8. Product Success
GM enjoys a very high level of product success that is credited to complex processes entailed in the manufacturing process.
Compared to General Motors competitors, the company boosts enviable rate of vehicle recalls. The few car recalls save on costs and works to build customer confidence.
This has worked to enhance customer satisfaction rates for GM.
1. Overdependence on the U.S. Market
GM has primarily focused on the U.S. market. In this, the company has sought expansion strategies prioritizing growth mainly in its domestic market.
Compared to General Motors competitors like Toyota and Ford, the company has failed to make itself felt in the global markets.
Particularly, GM has not made adequate efforts to venture into developing countries and emerging markets.
This evident where in some markets it has introduced limited cars, like India where Chevrolet is the only the brand being sold.
2. Low Diversification in Vehicle Types
General Motors has also failed to successfully diversify its business. It majors in two industries only, the automotive business and the financial services sector.
Further, the company over relies on a few car types, pickups and SUVs in building its car brand diversification strategy.
It has shied away from venturing into small vehicles or medium to large sized trucks.
3. Bureaucratic Structures
General Motors Company is known for bureaucratic structures in its administration that usually pose a major challenge to its growth and expansion in different sectors.
The company’s organizational culture is rigid and conservative. This limits flexibility and ability to effectively respond to issues emanating from the external environment.
The poor culture and structure could give General Motors competitors undue competitive advantage.
4. Poor Employee Relationships
General Motors Company suffers from poor relationships with its employees particularly due to their approaches towards employee benefits.
Notably, the company’s costs structure that is based on employee benefits, together with poor communication has always made relationships between management and employees sour.
This relationship is reflected in the company’s underfunded pension program.
1. Declining Fuel Prices
The declining oil prices presents GM with an opportunity for growth. Fuel had seen a major drop in prices for a decade even before the COVID-19 pandemic that made them decline further.
Such a drop had increased the demand for large pickup tracks and SUVs, which are the best-selling types of General Motors cars.
2. Emergence of Autonomous Vehicles
The autonomous vehicle is being taunted as the next big thing in the automotive industry. It is expected to revolutionize the way people travel and move around.
Numerous companies, including General Motors competitors like Tesla are investing in this technology.
Although still at its novel stages, the autonomous vehicle industry is projected to be very huge.
3. Markets in Developing Countries
General Motors Company could also opt to expand its market to developing countries as a growth strategy. This is in noting that the company’s primarily focuses on the U.S. market.
Accordingly, GM could decide to focus on markets such as India and South America, where it would introduce some of its products not sold in these markets yet.
4. Adoption of Technology
GM can also leverage on technology to make their products more competitive in the global market. This entails investing effectively in R&D.
The automotive industry is characterized by stiff neck competition. General Motors competitors such as Toyota, Ford, and Daimler AG are keen to expand into GM’s market.
Traditional rivals and emerging competitors are venturing into markets dominated by GM and in the process threatening the company’s market share.
2. Increasing Regulations
Governments across the globe have continuously tightened regulations on the automotive industry. Particularly, restrictions on greenhouse gas emissions are a serious concern for GM.
Note that these restrictions have resulted into numerous car recalls in different countries.
Per se, regulations on emissions are likely to force the company to restructure their manufacturing approaches, which would be expensive.
3. Emerging Technologies
The disruptive potential of emerging technologies in the automotive industry is likely to pose threats to General Motors business operations and profitability.
In the recent past, companies such as Google, Apple, and Tesla have been involved in research that seeks to completely change the automobile industry.
These changes could completely threaten GM’s business.
4. Exchange Rates Fluctuation
International markets account for a significant share of General Motors profits. To repatriate these profits, the company needs to convert them into USDs.
With the volatile exchange rates, the company is exposed to fluctuating profits.
5. COVID-19 Pandemic
The COVID-19 pandemic is likely to significantly affect the automotive industry. The pandemic has caused a global economic crisis that is likely to negatively affect individual and household incomes.
The pandemic is more severe in the U.S. with local and global recovery from its effects likely to take some time.