You are on page 1of 2

International Business Case Analysis On The Changing Strategy of General Motors

Submitted By Narendran C Roll No: 95 Section - B

The Changing Strategy of General Motors


Industry level Analysis: Automobile industry is characterized by: Oligopoly Market To achieve economies of scale only few players should be there in the market and there are only few major players when it comes to Automobile industry. Economies of Scale and Standardization In automobile industry, economies of scale can be achieved through standardization with minimal or no customization. Rise of competition from countries like Japan (Toyota, Honda) and Korea (Hyundai) has led to the need for strategic change which will reduce the cost and improve efficiency and profitability.

Firm level Analysis: SWOT analysis of GM: Strengths: Large Market Share Global Experience Variety of Brands and Brand Equity New technologies Weaknesses: Over dependence in US market. Lack of international strategic coherence. Treating potential markets as dumping grounds. Poor Organizational Structure

Opportunities: Threats: Continuing to expand globally. Rising fuel prices. Developing new vehicles that share a Rise of competitors from Japan and Korea. common platform. Rise in supply costs of steel. Sharing common parts between GM cars which will reduce their operational expenses. Change Drivers: At Industry level: The Automobile industry is becoming global and hence it is really important to achieve economies of scale. Standardization is very important to achieve economies of scale and also to remain competent in the global market. At Firm Level: Competition from other countries forced GM to change their strategy to transnational strategy. To enable the company to spread its costs of design over greater volumes and to achieve economies of scales and also to reduce the overall cost structure, this strategy is introduced.

Key Implementation Issues and Recommendations: Automobile sector has become global and competition from other players will be the key issue to change their strategy. Also, because of standardization GM wont be able to meet individual customer needs as it tries to reduce their cost through economies of scales. Also, rise in the cost of fuel, supply parts will be a thorn in their strategy to reduce cost. GM planned to tackle these issues through transnational strategy where it can do less customization based on the geographical location and more standardization and achieve economies of scale. Also, through common parts they are planning to reduce their spare parts expenses by 3.5% (almost by $3.5 billion).

You might also like