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How did General Motors regained its marketability through strategy? .

Advanced Strategy

Technical Report · August 2019

DOI: 10.13140/RG.2.2.34128.87049

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Online Assignment Submission
Student ID Number: 1735120

Programme of Study: Distance Learning MBA

Module: Advanced Strategy

Assignment Title: How did General Motors regained its marketability through strategy?

Date and Time of Submission: June 25, 2018 , 4.00 AM

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ID Number:1735120

Contents

Introduction ……………………………………………………………………………………… 2

Daniel Akerson Leadership from 2010 to 2014 …………………………………………………. 3

Cultural Web under Akerson’s leadership summary …………………………………………… 5

PESTLE analysis under Akerson ……………………………..………………………………… 6

Mary T. Barra Leadership from 2014 to Present ……………………………………………….. 6

Cultural Web under Barra’s leadership summary ………………………………………………. 8

PESTEL under Barra ……………………………………………………………………………. 9

Strategic Drift Analysis …………………………………………………………………………. 10

GM’s current competitiveness described via Porter 5 Competitive Forces’ perspective ……… 13
Conclusion. ………………………………………………………………………………………. 13

Reference ………………………………………………………………………………………… 14
Introduction:

General Motors (GM) is a 110 year old company established under the leadership of William C.
Durant. Founded in 1908, GM commercialized aside from introducing the electric self-starter
commercially in its 1912 Cadillac that made the “hand crank” invention outdated. (Encyclopedia
Britannica, 2018)

GM had survived various crisis, designed and redesigned automobiles proudly called by U.S. its own.
GM is one of the most innovative car companies in the present.

The significance of this assignment is to determine GM’s adoptability and changing strategies. What
made GM lost marketability and how did it come back on-track? are focuses that this assignment
will tackle.

By using Cultural Web (Johnson, 1992) determines the structure changes, leadership efficiency,
corporate value as well as crisis faced by Akerson and Barra.

Strategic Drift was prepared as well to further analyze the phases of changes and explained how these
significant changes formed the GM of today.

Pestle and Porter’s 5 forces were as well given-out to determine the macro and microenvironment
factors that influenced GM’s changes.

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Part I

Daniel Akerson Leadership from 2010 to 2014

Akerson with engineering degree and masters in economics was a former naval officer and former
CEO of three other companies, pushes the significant efforts of GM by shifting from regional vehicle
platforms to global platforms, resulting in lower development expenses, faster design period and
aptitude to sell vehicle worldwide for better leverage and to improve profitability (Simply Dividends,
2018). As GM’s new business model commenced focusing on dealers and customers and raising-up
reputation and marketability within sales and stock-based motivation. (Johnson; Corporate
Newsroom, 2011) A part of the new GM’s strategy reformation from 2009 bankruptcy that affected
public image, customer demand, and forthcoming achievements in jeopardy, (Maniam; Bexley;
McFarlane, 2010) The U.S. government’s $49.5 billion bailout for GM’s bankruptcy that was as well
affected by the financial crisis of 2008-09, which was granted a bridge loan from the U.S. Treasury
in the conditions that GM should continue fast-tracking a robust reformation of its U.S. operations.
(p. 5, Jennings, Trautman, 2010)

GM’s divisional operation in different chain of commands, different plants with diverse strategies
and decisions with 95 cars for product portfolio. (More, 2009). In 2010, 567,458 units were sold
for the “most stylish, fuel-efficient crossovers” in the U.S. market (GM corporate newsroom,
2011).

In 2010, traces of Cobalt Ignition Switch issue that was an inconsistency in 1999 as when keys were
jolted, the cars experienced shut down. (p. 9, Jennings, Trautman, 2010) became more noticeable yet
GM has not fully confirmed the discrepancy nor focused on any advance unit modernization such as
self-driving and media integration in cars that bestows as growing demand opportunities. (page 7,
McKinsey and Co. 2012) Therefore, resulting to market focus demands drift that GM could face for
the next 5 years, and was left behind by precise market-focused competitors such as Toyota and
Honda. (More, 2009) Yet innovation wise, GM’s fuel-efficient crossovers 32-mpg highway-rated
Chevrolet Equinox and GMC Terrain are top sellers due to “comfort, utility and quality.” (Johnson;
GM Corporate Newsroom, 2011) Akerson headed GM’s IT makeover in 2010 which was beneficial
as well to employee’s accurately report payroll and head count; and brownouts at assembly plants
third-party server error. (Wayland 2017)

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GM encourages workers who shows quality of work, problem-solvers, propensity for leadership,
team-player, relying shop-floor employees on their initiatives on product quality, and decision
making as well as on-spot performance. (Whybrew; Chappell, 2012) Most of the employees remained
in GM aside from some downsizing disposals due to bankruptcy, since of compensation and benefits.
Implementation of proper working uniforms as well as safety gears in manufacturing.

Cultural Web under Akerson’s leadership summary:

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PESTLE analysis under Akerson:

Mary T. Barra Leadership from 2014 to Present

Succeeding Akerson was Barra. 33 years in GM and auto-making service, is an engineer by training
with a good design standing and costs effectiveness as well as GM’s first female CEO. She trimmed
the focus to R&D and few numbers of manifestos in car production since of divisional policies and
knows that too many diversions will lose the focus on more important things. (Currie, 2013)

Facing the ignition switch that caused sudden decline and loss of the competitive edge at GM, the
issue of safety will most likely to haunt GM in the next 5 years during Barra’s period as well as media
car sharing’s privacy issues. GM withdrawn hundreds of thousands of Chevy Cobalt due to faulty
ignition switch that caused about 139 deaths, recalling around 2.6 million vehicles causing $1 billion
in settlement. (Fast Company, 2018) Yet despite of this issue, GM beats Tesla’s Model 3 with the
Chevrolet Bolt EV in 2016 with “a battery that can outlast Tesla’s” and became the top-selling pure
electric non-luxury car, consequently resulted for the stock to raise up to 25% revenue ticked up 9%

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in 2016, GM’s biggest sales growth, as well as setting its eyes on driverless car innovation, acquiring
self-driving tech startup cruise automation in 2015 (Shaouni, 2017)

Barra is known to have further changed the culture of GM, imposing values and purpose with moral
intellect (Klayman; Seetharaman 2014) and that leaders must be individuals of high moral character,
as well as people-oriented. (p. 168, Weber, 2009) Barra is strict about dedication to the job and
dressing appropriately at work (Feloni, 2015) and emphasizes that by creating a workplace of
“inclusion”, each individual is valued. (Barra; Stern 2017) Labor increased again yet the threat to
change in NAFTA under President Trump might impend the labor force. Barra explained that
communications between the administration should be established and to educate people that by
creating jobs, there is a room for modernization. (Barra; Stern 2017)

GM aims to deliver self-driving cars by 2019, therefore in 2017 GM commenced in manufacturing

“scalable electric autonomous Chevrolet Bolt”, teamworking with “Cruise Automation, a self-driving
car startup it acquired in 2016” as well as launched “Maven”, a car rental program similar to Über
which is currently available in Los Angeles, San Francisco, San Diego, Phoenix, Detroit, Baltimore,
Washington, D.C., and Boston (Fast Company, 2018) GM as well met with top technology
companies, including Oracle, Apple, Google, and Cisco for future collaborations (Fast Company,
2018) GM’s sustainability and environmental related strategy includes as well using less energy,
water, and carbon in manufacturing for renewable energy plants. (Barra; Stern 2017)

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Cultural Web under Barra’s leadership summary:

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PESTLE under Barra

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Part 2

Strategic Drift Analysis

Phase 1 Phase 2 Phase 3 Phase 4 Disruptive

Innovation

During Akerson’s period, GM was in delicate period. History of past discrepancies and economic
difficulties influenced as well by the 2008 crisis affected GM’s marketability. GM wanted to further
implement a shift in strategy during the series of undesirable forces thus employing Akerson in 2010.
In Phase 2, when Akerson was leading GM, the drift was not really due to “rapid change of the
environment” yet that “environment changes more rapidly” that it is not easy for Akerson to
implement changes and strategies. (Johnson, 2005)

Akerson’s approach was to retain GM’s survival through costs cutting, IT development as well as
relying on the employee’s creativity with expectation to find a pioneering idea within employee’s
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creativity that could make another innovation history. As Akerson encouraged employees and teams
to “develop creative ways to tackle everyday problems with the existing bureaucracy and processes”
(Boojihawon, 2018) The most obvious discrepancy then from Akerson’s leadership was the unable
to implement supplementary changes due to lack of authority and relying the daily on-spot operation’s
decision making to the employees as since GM’s organizational structure is diversional with
disseminated areas of expertise as well as the different plant locations. It is not easy to gather different
resolutions in such a large group. Yet, Akerson’s fixes such as: manufacturing of fuel efficient cars,
increasing sales through different marketing methods as well as cutting costs, had somehow brought
changes to GM, yet ignoring the commencing issue of the Cobalt Ignition Switch. Akerson had a
short-term as a CEO therefore it only allowed a rather small space for the change to be visible.

The US government’s bail-out during his administration had provided resources for GM to expand
its R&D aside from pulling GM out-of-the pit, showing as well that stakeholders still trusts GM’s
capacity.

During Barra’s period, the implementation of change became easier, see Flux pertaining to Phase 3,
as monetary resources was expanded as well as her years of GM’s operation familiarity, adoptable
attitude, aptitude for change while retaining values, created a new company culture due to the
transformation, all added to the efficient strategy implementation that is inclined with the market.
According to Johnson (2005), the efficiency of the company’s performance will determine whether
it will form a drop or a “major transformation”. (Johnson, 2005) Under Barra’s leadership, it was a
successful change.

Yet the sudden test-of-fire as pertaining to the ignition switch issue affected her resources as costs
of rectifications were immense. But her decision to retrieve cars and proper settlement showed what
kind of leader she is. Adhering to the theory of decision making as a source of the company’s success
through concentrating on “longer-range decisions” that establishes the firm’s direction and proper
approach in consenting issues. (Birmingham Canvas, 2018) Barra’s discrepancy would probably be
less attention to the outside the US manufacturing, although it is as well compensated with
establishing the main company first for the rest to follow to establish a sustaining innovation. Yet by
creating a compact environment for employees, it is therefore easier to control and manage and as
even though she encourages open innovation within the company, she plays a great role in the
decision making. Therefore, Barra will be reminisced in 5 years or more, as an imposing leader.

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Further supposition on the Strategic Drift Analysis above, GM survived through disruptive innovation
to create change and establish position. Which means that by GM in present time established a long-
term competitive innovation through courageous moves and decisions, which is an example of a
disruptive innovation. The strategy of GM as “do-or-be-swiped-way” is not metaphorically “doing
without thinking” yet by giving importance as well to the competitive forces that shape GM’s
strategy. (Porter, 2008)

GM’s current competitiveness described via Porter 5 Competitive Forces’ perspective:

Threat of Entry:
GM’s standing as a long-running industry, the threat for new entrants is not as high as of the present
since its history of producing dependable cars despite some lapses, encourages customer to purchase
at GM since that GM has met the demand of modern and autonomous cars and even out-do companies
that were formed 5 to 10 years ago. The bail-out as well as recovering large budget for GM’s
expansion imposes a threat to new comers to compete against GM’s product portfolio since the
resources as well as its product development capacity is high.

Bargaining power of supplies:

GM benefits as well as a supplier of labor and material, lowers the production costs of GM as well as
GM manufacturing plants in US and different countries.

Bargaining Power of Buyers:

It is the demand for autonomous media cars in the first place that GM pursued the innovational
manufacturing of new car units. Therefore, GM creates price range according to the demand and the
quality of the units. Therefore, buyers will not consider GM’s price as high.

Rivalry among competitors:

The level of competition and rivalry in US is not as highly threatening compare to GM’s competition
in some Asian countries. GM’s collaboration with giant computer companies, as well as other top
industries that can assist in out-doing current competitors creates a more stable status in the market.

Threat of substitute products or services:

GM’s current product and market positioning is within its area of expertise therefore, for GM to divert
into a different field is not a high probability as of this time.

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Recognizing the advantages of GM through Porter’s 5 forces will emphasize the competitive
advantages of GM and determines its inclination within its process and management innovation.

GM’s mental balancing act can be one of the toughest of all managerial challenges. Company like
GM is efficient in developing its current line yet might face risks when venturing an unknown territory
hence to explain that GM is an ambidextrous organisation (Bimingham Canvas, 2018)

Conclusion

Therefore, the importance of this case is how advance strategy is essential in implementing long-term
sustainability giving attention to macro and micro environmental influences and establishing a solid
implementation of strategy. To further elucidate, incremental change is not enough to produce a
sustainable long-term stability yet will only limit the approach when issue is addressed only as it arise
without advancing plans and approaches.

Through analyzing GM and GM’s leadership with the use of cultural web, PESTLE, strategic analysis
and Porter’s 5 forces, I was able to draw conclusions, describing GM’s case, as a company that did
not only became successful in consistent planning but by accurate implementations, attention to the
company’s ethos, establishing the team and its individual’s performances, handling internal and
external forces, adopting to changes and most importantly committed leadership, will drive a
company like GM, in achieving and regaining its marketability and competitiveness.

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Reference:

Ambidexterity as a Dynamic Capability, University of Birmingham Canvas, 2018 [Online]

Available at: https://canvas.bham.ac.uk/courses/30161/pages/6-dot-3-3-ambidexterity-as-a-
dynamic-capability?module_item_id=899552 (Accessed June 25, 2018)

All car brands, General Motors (GM) Logo, HD Png, Information, 26 April 2018 Article [Online]
Available at http://www.carlogos.org/Car-Logos/General-Motors-logo.html Accessed June 21, 2018

Barra, 2017, Green Money Jourrnal, 31 October 2017, Available at

https://3blmedia.com/News/GMs-Mary-Barra-Sustainable-Business-Moving-Humanity-Forward,
Accessed on June 22, 2018

Corporate Newsroom, 2011, General Motors 2010 Calendar Year Sales Up 21 Percent; December
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Currie, 2013, Good Governance at G.M. 10 December 2013 Article, [Online] Available at:
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Chappell 2012, General Motors Focuses on Team Thinking When Recruiting Workers, 6 August
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https://www.fastcompany.com/company/general-motors Accessed on June 22, 2018

Forbes 2018, Mary Barra Profile [Online] Available at https://www.forbes.com/profile/mary-barra/

Accessed June 22, 2018

Feloni 2015, GM CEO Mary Barra explains how shrinking the dress code to 2 words reflects her
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