General Motors’ strategic business model

General Motors’ strategic business model

General Motors’ strategic business model has made the company a dominant automotive company in the American and Chinese markets. However, the company has had some turbulent times in recent years. GM has experienced a decline in its global market share over the past 10-15 years (Doiron and Higgins 2). The company’s declining market share is attributed to the increasing competition from small and mid-sized car companies around the world. The challenges faced by GM have prompted the company to restructure its business model to conform to the new market trends. In this regard, GM’s CEO, Mary Barra, announced that GM was committed to pursuing its new objective of an “all-electric future” (Doiron and Higgins 6). The move signals the company’s new strategy of leveraging on the electric car revolution to regain its leading position in the global automobile industry.

However, the realization of GMs new strategic business model is not an entirely smooth ride. The financial problems plaguing the car manufacturer hinder the company from achieving its goals and objectives. The height of GM’s financial troubles came in June 2009 when the company filed for chapter 11 in the US Federal Bankruptcy Court in Manhattan (Doiron and Higgins 2). financial woes. General Motors’ financial problems are a fundamental strategic challenge in its effort to restructure its business model for future profitability and sustainability. A SWOT analysis of the company provides significant insight into the internal and external factors affecting its new strategy.

SWOT Analysis

General motors’ strengths include economies of scale, brand supremacy, technological capabilities, and market share. GM’s economies of scale largely contribute to the effective implementation of its new growth strategies (Young). Secondly, General Motors’ reputable brand makes it easy for the company to market its new electric cars. In terms of technological capability, the company has a proven track record of quality products and considerable investments in R&D (Bhasin). General Motors also enjoys a significant market share, especially in the US and Chinese markets. These internal factors leverage the company in implementing its new strategic business model.

Some of General Motor’s weaknesses include bureaucracy, lack of diversity, product recalls, and underfunded pension obligations. Foremost, bureaucracy makes the company is slow to respond to issues in the external environment (Young). Secondly, the company’s reliance on sport utility vehicles and pickup trucks shows that it lacks diversity in the products offered to the market. Thirdly, GM recalled 5000 pickups in 2016 and 588000 cars with faulty ignition systems in 2014 (Bhasin). The recalls dealt a massive blow to the companies brand image and sales. Finally, GM’s pension obligations to retired employees also threaten the financial position of the company (Doiron and Higgins 4). These weaknesses show that internal shortcomings hinder the potential global growth of GM.

The opportunities available for GM include new markets in developing countries and the growing demand for hybrid and electric vehicles. GM has the opportunity to grow its market share by introducing its new electric products into the developing markets in Asia and Europe (Young). The growing demand for electric vehicles provides GM with the opportunity to grow its global sales by creating new high-performance electric vehicles to fill this niche.

The main threat to GM is the intense competition posed by new car manufacturers. The growth of the automotive industry has led to the emergence of new players in the market (Bhasin). Emerging companies such as Tesla have intensified competition in the electric car market.

Action plan

The SWOT analysis illustrates that General Motors faces an uphill task in the quest to regain its position in the automobile industry. Thus, an effective action plan is required for the company to realize its new strategic business model. In this endeavor, general motors should first focus its investment on new technology to achieve its objective of producing high-performance electric vehicles. In turn, the company will be able to offer quality new electric cars that will be able to compete with models from their leading competitors such as Toyota and Tesla (Young). Secondly, General motors should restructure its pricing model to ensure the new products are offered to the market at affordable and competitive prices. Finally, as the company already has a significant market share in the US and China, it should focus its marketing resources on establishing new markets in developing markets. The implementation of these three action points will enable general motors to exploit its opportunities and effectively realize the strategic objectives of its new business model.