General Motors Essay

1049 Words3 Pages

The General Motors Company is in the automotive industry, within the Consumer Discretionary Sector, according to the Global Industry Classification Standards (GICS). General Motors is in the business of designing, manufacturing and selling a variety of vehicles to consumers at a global scale. Its corporate strategy focuses on creating and sustaining loyal customers to the GM brands. General Motors states that this strategy is what motivates and drives innovations in technology and inspires unique consumer experiences with GM vehicles.

There is much controversy surrounding GM because of its bankruptcy experience in 2009. However, for the purposes of this analysis, GM will be observed at the present time- a post-bankruptcy GM. ***__Insert …show more content…

Throughout all of its distribution activity, General Motors must take into account the regional regulations that are imposed on its network. All working contracts that General Motors writes can be overruled by these regional regulations. This lack of uniformity makes it difficult for General Motors to have a truly uniform way to deal with the suppliers and retailers it distributes to. Moreover, it poses a threat in making it more difficult for the company to make changes and improvements to its existing operations. In dealing with retailers, General Motors works with the dealers individually to deliver a customized product mix to the end customer. In this, GM takes on individual contracts to meet the distribution needs inclusive of both the automotive product and the supporting products for servicing and accessorizing. Raw materials are delivered to manufacturers based on production needs for a given product line. With their current operating strategies in this area, General Motors is inheriting a lot of risk by (1) relying on only a few raw material suppliers to meet their production needs (2) not keeping substantial inventories of needed materials should the supplier fail and (3) relying on steady raw material pricing to maintain profit margins on their products (their margins are …show more content…

GM’s strategy currently is used to bolster short-term, quarterly, profits. Popular vehicles like GM’s trucks are being priced very high relative to competitors Ford and Ra. In doing so, GM is showing profits in the short-term. However, this strategy is also leading to disloyalty of GM truck owners and a loss in the market share for GM which can seriously hurt GM in the long-run. If costs are to remain constant and GM continues to utilize this pricing strategy, the company could run into some major issues. Because GM trucks account for a large portion of GM’s sales, continuing with this pricing strategy could potentially lead to bankruptcy for the company. GM should seriously consider either “mustering the storm” of operating at losses for a couple quarters to help long-term goals or work to improve the sales of non-truck GM

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