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They designs, manufactures and markets car, truck and other automobile parts all over the world. However, sustained decline in light vehicle sales as a result of increasing durability of vehicles and weak economic conditions in the US would put additional pressure on the overall performance of the company. Strengths Strong branding. Worldwide presence. Large scale operations. GMAC customer financing program. Opportunities Increasing demand for hybrid electric vehicles. Opportunities in emerging markets. Low interest rates. Develop new vehicle styles and models. Strengths Strong branding. GM has a strong brand portfolio. They build Chevrolet, Buick, Pontiac and Cadillac which have become household names in the US. GM is well rooted not only in America but throughout the world, on par with well-known brands such as Honda, Nissan, Mercedes-Benz and Toyota. Worldwide presence. General Motors truly has an international presence with factories in Poland, Russia, South Africa Ecuador, Egypt, Germany, Argentina, Australia, Belgium, Brazil, China, Colombia, South Korea, Spain, Sweden, and Thailand. The Weaknesses Behind on alternative energy technology. Overly dependent on US market. Overly dependent on GMAC financing. Threats Rising fuel prices. Growth of competitors. Pension payouts. Increased health care costs. Rising supply costs.
company is even in Vietnam. These outlets include distributors. General Motors has large scale facilities for the manufacture. office and warehousing operations in other countries. Since its establishment. dealers and authorized sales. In order for any automotive company to be successful from this point forward they must be Hybrid friendly and fuel efficient. GM operated distribution outlets throughout the rest of the world for vehicles manufactured by GM and its affiliates. Weaknesses Behind on alternative energy technology. and parts outlets. assembly. Large scale manufacturing facilities and a wide distribution network allows the company to strengthen its market position all over the world. The competition is becoming too strong to focus on just one country Overly dependent on GMAC Financing. Additionally. distribution. In addition. . GMAC’s function as a financial services arm for GM has proven to be most reliable source of revenue. GM has become too dependent on the US market and must take advantage of the opportunity to expand globally. it also has assembly. General Motor Acceptance Corporation (GMAC) customer financing program. Overly dependent on US market. Large scale operations. service. The alternative energy/hybrid trend has begun to take place in the automotive industry and GM has been one step behind the competition in terms of alternative energy vehicles. and distribution operation of its products. manufacturing. This has led to many problems including loss of market share and a decrease in company profit. This is GM's biggest weakness.
Hybrid engines. are likely to gain acceptance in heavy vehicle applications such as sports utility vehicles and commercial vehicles. already popular in the passenger car segment. Low interest rates. Rising energy costs and increased emissions regulations are likely to increase demand for it. Opportunities Increasing demand for hybrid electric vehicles.GM has become too dependent on its financing program. This is an opportunity that will never be satisfied. Develop new vehicle styles and models. Threats . However hybrid technology is still very much new giving GM the opportunity to once again become the automotive industry's leader in innovation and technology. meaning that GM should always be attempting to develop the automotive world's most popular vehicles. the company is well positioned to tap the opportunities arising from these growing automotive markets. With greater presence. however they cannot rely solely on financing in order to turn profit. especially if they want to compete with Honda and Toyota. It is obvious that GM was behind its competition with regards to the research and development of hybrid vehicles. China and India are expected to drive the global demand for new cars. With the right marketing strategy the low interest rates have the potential to generate an immediate increase in sales. The company also took significant steps towards increasing its presence in the Asian markets. who are rapidly growing. Granted it is a great strength for GM. Hybrid engines are more fuel efficient and less polluting than conventional petrol and diesel engines. Opportunities in emerging markets.
As mentioned earlier. - Rising supply costs. GM no longer has the luxury of being the known leader in the automotive industry and faces the reality that they are in serious trouble. - Pension payouts. however they are now experiencing problems as more and more people begin to collect.- Rising fuel prices. without taking away from the quality of the product. .e. - Increased health care costs. sales have drastically decreased due to the lack of fuel efficiency. i. Japanese car maker took the first step in the direction of hybrid technology and has since drastically grown and become the questionable automotive front runner to start the 21st century. is experiencing a large financial hit that only gets worse as time continues. The rise in fuel prices has played a significant role in creating the opportunity for development of both hybrid and more fuel efficient vehicles. - Growth of competitors. Steel Once again this threat affects the entire automotive industry and forces each company to cut manufacturing and production costs as much as possible. like many large companies with quality employee health care benefits. GM. GM is responsible for providing generous pension benefits to its employees. With GM being a large producer in both trucks and SUV's. which at the time seemed like a great idea.
The findings for GM are as belows: THREAT OF NEW ENTRANTS. which cannot manufacture car THREAT OF SUBSTITUTE PRODUCTS. There are other options that consumers have other than cars made in US. these treat are real. HIGH With lack of credit. People use public transportation. bicycles. heightened environmental awareness and fears of increasing oil prices. Their switching cost are low BARGAINING POWER OF SUPPLIERS. But to GM’s existing position.PORTER’S FIVE FORCES ANALYSIS OF THE INDUSTRY Porter’s Five Forces analysis is a framework for industry analysis and business strategy development which design to evaluate the competitive forces in the industry the firm operates. there are huge barriers to entry and minimal capital available. LOW Industry wise. power of customers. New automakers entering the market and claim a large share of the market. India or South Korea BRGAINING POWER OF BUYERS. Cars are not selling yet people are still Using non-GM products getting around. MODERATE The suppliers sell to other car manufacturers as most are not reliant on . Low costs cars from China. There are relatively few car companies operating in the US and millions of customers. Sale of cars from dealers to public could be a candidate. even a small entrant could have an impact. motorcycle or others to travel. themselves. The suppliers and the manufacturers need each other. MODERATE Dealers are offering low prices and discounts suggesting high bargaining Customers push the price of new vehicles down.
automakers to sell to). (Steel. aluminum. competition to expand. .just one automaker. this provide opportunities for the How competitive is the industry. Their bargaining power is not as low as it may appear as they have some degree of diversification (other How reliant are the supplier. There is minimal growth in this industry and the players are almost stuck in it. oil etc) HIGH There are huge rivalry between the automakers and as GM is in defensive position (cutbacks. The analysis above indicates that the industry is moderately favorable to profitability. asking for financial help). Suppliers rely on the automakers and could not build vehicles themselves. Competitors taking offensive action in acquiring market share. This is a highly integrated industry. The raw materials are also mostly commoditized DEGREE OF RIVALRY AMONG COMPETITORS.