Organisations, Markets and Economy- General Motors

Organisations, Markets and Economy- General Motors

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General Motors Company (GM) is a multinational corporation, which is headquartered in Detroit, USA (Holstein 2010). The company involves itself in designing, manufacturing, marketing, and distributing vehicles as well as vehicle parts in many parts of the world. In addition, the company have diversified to offering various financial services. Currently, the company usually produces vehicles in 37 countries, in various parts of the world. It does so under its ten brands namely Buick, Chevrolet, Holden, Cadillac, Wuling, Opel, GMC, UzDaewoo, Baojun, and Jie Fang. Again, the company is divided into five main business segments. These are GM North America, GM South Korea, GM international Operations, Opel Group, and GG financial. The company has topped in global vehicle sales consecutively for 77 years, from 1931 to 2007. Taking this into consideration, the company is among the largest automakers in the world (Yang 2005). Outside the United States, the company operates through wholly owned subsidiaries in all countries except China, where it operates through 10 joint ventures.

Objectives and Purpose of the Company

Just like any other business organization, GM has its objectives as well as purpose. One of the primary objectives of the company is to increase the US market share to 33 percent. To achieve this, GM is spending a lot of money in advertising as well as incentives for the purpose of marketing its products (Holstein 2010).The other key objective of the company is to increase satisfaction of the consumers, taking into account points of market share. When it comes to the purpose of the company, GM focuses on producing products that meet the requirement of the customers.

The vision and mission of the company takes into consideration of the designing, manufacturing, and selling the best vehicles in the world. Taking this into consideration, this vision of the company usually unites all the stakeholders as team in order to realize this vision. In order to realize its vision, the company takes into account great pride in its work for the purpose of delivering exceptional vehicles (Holstein 2010).  In addition, the company usually makes a strong commitment to its customers, employees, as well as other stakeholders who are crucial to the company. With regard to this, the company has five core principles which guide its day to day activities. These principles are considering safety and quality first, creating lifelong customers, innovation, delivering long term investment value and making a positive difference.

Most Important PEST Factors

PEST analysis takes into consideration the description of a framework of external factors that affect the business (Miller, Frederic, Vandome, Agnes & Mcbrewster 2011). It entails analysis of political, economical, social as well as technological aspects. With regard to this, the main two important external factors that affect GM are economical and technological. When it comes to economical factors, it is true that the world was going through recession in 2008. Considering this, everybody including the customers and raw material suppliers was minimizing expenses, making the condition more devastating to the company. With regard to the automobile industry, GM is a major consumer of various raw materials including rubber, textile, plastic and computer chips (Davis 2009).  The consequence of the recession is that it becomes hard for consumers to keep up with their purchasing habits. This again implies that the customers have to turn away from the company to more affordable products. Again, inconsistency in exchange rates is also a challenge to the company as customers are force to look for alternatives. Economic factors are important to the company as they assist in making decisions in order to maintain its sales in case of economical crises (Davis 2009).

When it comes to technological factors, it is true that technology is crucial in the performance of any business organization. With regard to this, company should always focus on advancing in technology in order to meet the dynamic requirements of the customers. For GM, it has embraced new technology, which has seen the company move to significant heights (Davis 2009). On this, the company has employed technology of the internet in its systems. This implies that customers can now be able to place their orders online. In addition the company has used technology in reaching out to its customers through more effective and reliable distribution channels. Continuous embracement of technology will enable the company gets competitive advantage over other firms in the industry. This in turn will increase the sales as well as profitability of the company.

Impact of Porter Five Forces on the Automobile Sector

Porter five forces is a framework used in analyzing the level of competition, as well as business strategy within a given industry (Porter 2004). These forces include threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitutes, and rivalry among competing firms. These forces are demonstrated in the diagram below.

When it comes to threat of new entrants, the automobile industry usually has no space for new entrants. This is because it usually needs a lot of capital in order to venture into the industry. Therefore, threat of new entrants for GM is significantly low. However, even a small entry into the industry would have the effect on the company with regards to the market share.

The bargaining power of suppliers in the industry is moderate. Having the largest share in the US market, GM has a lot of power over the suppliers. However, the company has always looked at the supplier as equal. The suppliers usually sell raw materials to various car manufactures as most of them do not rely on a single automaker (Yang 2005). Taking this into account, the bargaining power of GM is usually not as low as many people tend to think because they have some significant degree of diversification.

The bargaining power of customers with regards to automobile industry is high (Yang 2005).  There are over twenty companies in the automobile industry. Therefore, dealers usually give high discounts to customers for the purpose of attracting them. This indicates that the bargaining power of customers is usually high. The buyers have many options and therefore they can move to other car manufacturers (Applegate & Johnsen 2007).

When it comes to threat of substitute products, it is true that it is significantly high in the automobile industry. Over the past two years, the market share of GM is dropping continually.  This is because other car manufactures are producing substitutes and selling them at cheaper prices. The impact of this on the automobile industry is production of cheaper yet high quality products due to increased competition (Yang 2005).

Lastly, when it comes to rivalry among competing firms in automobile industry, it is significantly high. With regard to GM, its main competitors include Toyota, Ford, Nissan, and Chrysler. These firms are eating up the market share at the expense of GM on global aspect.  The impact of this rivalry is that automobiles firms are focusing on producing better vehicles and selling them at cheaper prices.


In conclusion, it is true that GM is one of the largest automaker companies in the world. The company aims at producing the best vehicles in the world.  The most important PEST factors that affect the company are economical as well as technological factors. When it comes to porter five forces, it is a fact that they have significant impacts on the automobile industry, and specifically to GM.


.Applegate, E., & Johnsen, A. (2007). Cases in advertising and marketing management: real situations for tomorrow’s managers. Lanham, Rowman & Littlefield.

Davis, MW (2009). General Motors : a photographic history. Charleston, S.C., Arcadia Pub.

Holstein, WJ. (2010). Why GM matters inside the race to transform an American icon. New York, Walker.{F8151C6D-FF32-4EFE-A922-D14B85ACDCDF}&Format=410

Miller, Frederic P., Vandome, Agnes F., & Mcbrewster, John. (2011). Pest Analysis. Gardners Books.

Porter, ME. (2004). Competitive strategy: techniques for analyzing industries and competitors. New York, NY [u.a.], Free Press.

Yang, X. (2005). Globalization of the automobile industry: the United States, Japan, and the People’s Republic of China. Westport, Conn, Praeger.


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