General Motors (GM) is based in Detroit, Michigan and was ranked as the largest global manufacturer of trucks and cars back in 2002. At this time, the company employed approximately 355 000 employees and its vehicles were sold in about 200 countries. It was affiliated to 14 000 dealers with manufacturing operations in about 30 nations. In the previous year, the company had sold about 8.5 million trucks and cars globally and this accounted for 15.1% of the global vehicle market, as well as $ 177 billion worth of sales. GM also boasted of 70 final assembly plants alongside hundreds of facilities from where manufacturing of sub-assemblies takes place (General Motor 4).
GM’s Canadian and US competitors included DaimlerChrysler and Ford, whereas it was also sharing the global market with other major players from Western Europe and Asia. Targeting at increasing its global presence, the company adopted a growth strategy that involved acquiring Saab and also forming alliances with Isuzu, Fiat, Suzuki, and Subaru. It also collaborated, in terms of technology, with Honda and Toyota, as well as entered into vehicle ventures with Renault and Toyota (General Motor 4). At this point, it operated two segments, one involving the auto-related businesses namely designing, manufacturing, and marketing of automobiles, car financing, and in-vehicle services such as telematics. The other segment entailed non-auto-related businesses including financial services such as mortgages and insurance, and Hughes Electronics Corporation (General Motor 4).
Major Enterprise Architecture Issues
- Business Process, Policy & Procedure; these include customer process, precisely expand its focus from high-quality productions to preferences and tastes of the customers and to create a balance between the products and the customers that it served
- Data, Information & Knowledge; the major issue here is exceeding inventory, owing to long replenishment time, as well as the unpredictable production
- Information Technology; existing information system had become obsolete such that it could not support the effective integration of the flow of GM
Analysis of the Major Enterprise Architecture Issues
Since the 2000s, the increasing demand from customers, the global market, along with the uncertainty in the economic trends has created significant problems for the automobile manufacturers. Specifically, the manufacturers are faced with an imbalance between the demand and supply sides, which ultimately affects the satisfaction of the customers. Additionally, the emergence of the Asian automakers especially in Japan and South Korea has made the issue essentially complex (General Motor 8). GM has to face such problems by seeking to intensify its stake within the competition realm. The company entered the US market and was commendably successful. This can be confirmed by the high market share it commanded. The key reason for such success was the shift of the consumer preferences towards small automobiles, which were fitted with quality options. Such automobiles were non-existent in the US there before. GM recognized the need to set up an effective strategic relationship with different stakeholders including the suppliers, dealers, and the competitors. In doing this, the aim was to satisfy the expectations that the US customers had.
The company had achieved immense success by 2002, digitizing through the various parts of the entity including those related to the customer and the supply chain. The success was visible through a number of outcomes. Such included many returning customers and the supply chain registering reduced delivery lead time. The success was also witnessed given that there was increased reliability in the replacement process. While this was the case, GM was required to assess and arrive at a decision on the initiatives that it had to support to ensure that it was adopted by others in the industry as a benchmark (General Motor 11).
As a common trend in the industry, GM only laid its emphasis on raising the level of sales to ensure that the company’s capital intensive plant assets and unionized labor force were used to their ultimate capacity. In effect, the costs attributed to maintaining the dealers’ large inventories, which did not reflect the preferences of the consumers, increased drastically. Consequently, the company experienced lowering levels of profitability. Therefore, it sought to identify working solutions to the problem. The company evaluated and established its competencies through three core areas namely; the supply, customers, and the IT realms (Inkpen 25).
Business Process, Policy & Procedure
Regarding the customer process, GM identified that it needed to expand its focus from high-quality productions to preferences and tastes of the customers, as well. The company found out that it had to create a balance between the products and the customers that it served. In this regard, it was of central importance for it to do not only rapid, but also sensitive responsiveness to the market and thereby allow a greater satisfaction among the customers (Fogel, Randall and Yeung 87). It had to do this by enhancing its technologies and internal structure. The company had implemented a multi-divisional structure, which lacked effective integration between the GM’s segmented parts and the customers (General Motor 7). The cause was the tendency of the GM’s branches to seek and maintain their own customers rather than sharing them. This, as a result, ensured the establishment of a non-loyal customer base. In order to resolve the uncertainty in demand along with the unnecessarily long delivery time, the company maintained a huge level of inventory by letting the prospective customers feel, touch, and engages with GM’s production. While this was the case, unwanted costs arose (Inkpen 26). To alleviate these, the company identified the need for creating new sales and delivery channels through negotiating among dealership including supermarkets and internet dealers.
Data, Information & Knowledge
The second area was the supply side in which the key issue was also exceeding inventory. The long replenishment time, as well as the unpredictable production was the major causes of the inventory issues. The company had prioritized excess inventory as a form of buffer and at the same time, to secure against uncertainties. The company also used inefficient, manual models of communications including fax to the community with the supply chain partners. On top of this, the company’s inbound and outbound operations were essentially complex.
In the case of IT, GM identified that the existing information system had become obsolete. It had become very old such that it could not support the effective integration of the flow of GM (General Motor 9). To solve such an issue, the company opted for standardized computer systems to connect the segmented infrastructure (Inkpen 29). The company expected that the proposed system would improve efficiency and drive costs down. Further, the company would be the very first company to become a self-digitalized organization. Towards setting such a pace, the company saw it essential to integrate the customer and the supply chain systems. It also established a digital loyalty network, which was meant to drive new value through the new technology. Through the new technology, the company leveraged the customer data, differentiated the customer responses, harnessed the power of e-commerce through developing a web-based channel, and set up direct links to customers by installing telematics.
Analysis of the Current Status of the Organization
GM, in the recent years, has faced immense issues. The most critical has been those that have been surfaced by the global crisis. These tend to affect all the business processes, and these include the customer and supplier courses. The company has continued to lose customers and avails its products at a high price. Indeed, in the period between 2008 and 2009, the company was almost declared bankrupt. However, due to the role it played in the US economy, GM was rescued. Also, in 2007, the company experienced issues with the labor unions. This led to significant losses. A further issue that the company is currently facing is weak competitiveness. These issues mean that the company has to come up with new offers, as well as new agreements in order to prevent further problems with the workers and prevent adverse consequences owing to economic difficulties. This far, it has attempted to solve the issue by attempting to lower its expenses ((Fogel, Randall and Yeung 89).
From the above analysis, it is without a doubt that GM is facing critical times. If the issues that it is experiencing continue in the absence of any significant restorative measure or solution being implemented, it is likely that the company will go under. Even if it continues to survive, there is a high chance that it will not be competitive as it was before. The company’s production requires new technological competencies and products. In addition, the marketing support should be strong. The essence of this is to ensure that there is increased awareness about the brand. Moreover, it is often determined that the word of mouth is among the most essential and powerful marketing tools. If customers become dissatisfied, they might express their experiences with the company to others, including the prospective buyers. This is damaging as the customer base will be eroded, and thereby adversely affect the financials of the company. The risk of bankruptcy might even emerge again. General Motors has to look into the possibility of this issue. Also, if the company maintains a higher level of prices for its products, there is a risk of the raw materials becoming more expensive. This is detrimental as the profitability levels are lowered. It also lowers the potential to deliver sufficient production (Fogel, Randall, and Yeung 103). Any new technology would help in reducing the operation costs, something that would serve as a strong basis for reducing the prices. Lastly, into the future, the gasoline engines will be phased out in an attempt to fight global issues such as climate change. This might present yet another challenge to GM and its competitors.
- One way that the company should go so as to increase its competitiveness is through adopting a new marketing strategy, as well as approach to production.
- It is also recommended that the company improves its management of customer service (Inkpen 30).
- It is recommended that the company should make extensive efforts to make the green technology process a major one as the entity has done to the engine oil production.
Fogel, Kathy, Randall Morck, and Bernard Yeung. “Big business stability and economic growth: Is what’s good for General Motors good for America?.” Journal of Financial Economics 89.1 (2008): 83-108.
General Motor. Building a Digital Loyalty Network through Demand and Supply Chain Integration, Knight Way, Stanford, CA: Graduate School of Business, Stanford University.
Inkpen, Andrew C. “Learning through alliances: General Motors and NUMMI.” Strategic Direction 22.2 (2006), 25-29.