Strategies That Capitalize On An Organizations Strengths Marketing Essay

Strategies That Capitalize On An Organizations Strengths Marketing Essay A SWOT Analysis is used to develop strategies that capitalize on an organizations strengths, minimize the effects of any weaknesses, exploit available opportunities and defend against threats. Implementing these strategies leads to achieving the organizations objectives. SWOT analysis looks at your strengths and weaknesses, and the opportunities and threats your business faces. By focusing on the key factors affecting your business, now and in the future, a SWOT analysis provides a clear basis for examining your business performance and prospects. INTRODUCTION General Motors Corporation is the worlds largest automaker company founded in 1908 which Employs about 326, 999 people around the world with its headquarters in Detroit, Michigan, USA. Founded in Flint, Michigan as a holding company for Buick, then controlled by William C. Durant and acquired Oldsmobile later that year. The following year, Durant brought in Cadillac, Elmore and Oakland. In 1909, General Motors acquired the Rapid Motor Vehicle Company of Pontiac, Michigan, the predecessor of GMC Truck. A Rapid became the first truck to conquer Pikes Peak in 1909. Durant lost control of GM in 1910 to the companys bankers, because of the large amount of debt taken on in its acquisitions. GM holds the biggest share in GM Daewoo Auto Technology Co. of South Korea and has product, powertrain and purchasing collaborations with Suzuki Motor Corp. and Isuzu Motors Ltd. of Japan. The company also has advanced technology partnership with Toyota Motor Corporation of Japan, DaimlerChrysler AG and BMW AG of Germany, and vehicle manufacturing Ventures with several automakers around the world, including Toyota, Suzuki, Shanghai Automotive Industry Corporation of China, AVTOVAZ of Russia and Renault SA of France. GM along with its strategic partners manufactures trucks cars in 31 countries, and the vehicles through these well-known brands: Buick, Cadillac, Chevrolet, FAW, GMC, Daewoo, Holden, Jiefang, Opel, Vauxhall and Wuling. China is known to be the largest national market, followed by the U.S., Brazil, Germany, U.K., Canada, Italy. General Motors Company develops, produces, and markets cars, trucks, and parts worldwide. The company offers its products under the brand names of Buick, Cadillac, Chevrolet, GMC, Daewoo, Holden, Opel, Isuzu, Vauxhall, Jiefang, FAW, and Wuling. The companys cars, trucks, and parts are marketed through retail dealers in North America, and through distributors and dealers outside of North America. In addition to the products it sells to its dealers for consumer retail sales, the company also sells cars and trucks to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies, and governments. As of December 31, 2009, the company had 5,619 vehicle dealers in the U.S.; 568 in Canada; and 263 in Mexico. Additionally, there were a total of 14,317 distribution outlets throughout the rest of the world. Significant Events In February 2010, the company completed the sale of Saab Automobile AB to Spyker Cars NV. In September 2009, the company decided to wind-down the Saturn brand and dealership network. On August 18, 2010, General Motors Corporation is collaborating with SAIC Motor Corporation. The collaboration is targeted at developing 1.0 litre and 1.5 litre engines for small cars. On August 26, 2010, General Motors Company has collaborated with Bright Automotive, Inc. The collaboration is targeted at offering an electric commercial fleet vehicle. In October 2010, General Motors Company had set up a used car joint venture with Shanghai Automation Instrumentation Co., Ltd. to expand into an untapped segment of the worlds biggest auto market. Mission and vision GM is one of the respected auto companies in the world. It has a variety of products that ensure that the company is faring well in the market. The companys headquarters is located in New York, United States and looks forward to establishing an outlet in every country of the world. Product analyses The planning strategy is looking on how the GM products are faring in the world auto market. The existence of the company in the market is based on an extensive research that was carried out in the European market which shows that there is still large untapped market potential in the auto industry in Europe and other parts of the world. The GM Company specializes in Designing and making of automobiles, trucks, locomotives, and related parts such as chassis, interiors, drivetrains, and electronics (Brandi, 2007). The company employees more than 205,000 people in every major region of the world and does business in some 157 countries. GM and its strategic partners manufacture cars and trucks in 31 countries of the world. The SWOT analysis of General Motors is given below. Strengths 1. Large Market Share Although GMs market share in the US has dropped it is still very much competitive at 26 percent. They also have an increasing share in the Chinese market. With the right decisions there is no reason for GM to not become the automotive leader it once was. 2. Global Experience As explained above even with GMs recent decline they still have the market share and the experience to bounce back. They have been a worldwide company for nearly a century now and have established themselves as the global leader for most of them. If you recall I mentioned above that a current opportunity for GM is to expand globally and as we can see they already have the experience to do so. It is just a matter of the correct planning and proper implementation of those plans that will decided whether or not GMs goals are achieved. 3. Variety of Brand Names GM as I mentioned has been the automotive leader for the majority of the last century. A large reason for that is the wide variety of quality brand names that appeal to all target markets. The current GM brands include: Chevrolet, GMC, Cadillac, Buick, Pontiac, Saturn, Hummer, Saab, Daewoo, Opel, and Holden. 4. GMAC Customer Financing Program Since its establishment in 1919 it has proven to be GMs most reliable source of revenue. 5. OnStar Satellite Technology Developed in 1996 OnStar currently has over 3 million subscribers and is standard on all GM vehicles. This technology allows the vehicles to be tracked in the event of an emergency or theft. It also allows the driver and or passengers the ability to communicate with OnStar personnel at the click of a button. Weaknesses 1. Behind on Alternative Energy Movement This is GMs biggest weakness. 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. This has led to many problems including loss of market share and a decrease in company profit. In order for any automotive company to be successful from this point forward they must be Hybrid friendly and fuel efficient. 2. Poor Organizational Structure As we can see in exhibit 1 of the case GMs organizational structure seems to be too vertically integrated. This causes a lack of communication between employees from top to bottom and may have played a part in GM falling behind on the alternative energy movement. 3. Stagnant Profitability Looking at GMs profit we see that they are certainly struggling with respect to the size of their company. Their profit margin was about 1.5% and the ROE has dramatically decreased over the recent years dropping to 10% in 2004. This is a situation that shareholders will not be pleased with. 4. Overly Dependent on US market GM has become too dependent on the US market and must take advantage of the opportunity to expand globally. The competition is becoming too strong to focus on just one country. 5. Overly Dependent on General Motors Acceptance Corporation (GMAC) Financing GM has become too dependent on its financing program. Granted it is a great strength for GM, however they once again cannot rely solely on financing in order to turn profit, especially if they want to compete with Honda and Toyota who are rapidly growing. 6. Poor Credit Status GMs credit status has like everything else has been steadily declining. Their current ratio is just barely above 1 and their acid test is even lower. Although, I dont see them getting denied based on their credit at this point, the seriousness of the matter is certainly apparent. Opportunities Produce fuel-efficient, smaller, and higher-quality models that can attract the consumers. Chinese government condensed automotive taxes in order to encourage declining sales. In February 2009; citing declining manufacturing numbers, the State Bank of India decreased interest rates on automotive loans. Establish or Equip facilities to manufacture advanced technology vehicles that would meet up certain fuel economy and emissions standards. One of the big opportunities is to shift manufacturing to other amenities in order to produce in-demand vehicles. Manufacturing could be done in those countries where the labor as well as material cost is low. Diversification in other related and unrelated products or shifting to the hybrid electric engines. The purchasing power of consumers is increasing due to end of financial crisis 2007-10. à ¢Ã¢â€š ¬Ã‚ ¢ The firm can use the knowledge that it gained from Toyota Nummi joint venture and Saturn experience. à ¢Ã¢â€š ¬Ã‚ ¢ It should build its image and gain more share in the market with its newly build confidence regarding the customers. à ¢Ã¢â€š ¬Ã‚ ¢ New car models and designs should be introduced keeping in mind the customer preferences, because in the automobile industry, the needs of the customer are the valid puncture points that will provide profitability if concerned with delicately. à ¢Ã¢â€š ¬Ã‚ ¢ Expansion of their business processes, but also keeping in mind the preferential influence of the customers. à ¢Ã¢â€š ¬Ã‚ ¢ VEBA can help General Motors save up to $2.5 to $2.8 billion a year in cash if the process is implemented strictly. 8. Alternative Energy Movement It is obvious that GM was behind its competition with regards to the research and development of hybrid vehicles. However hybrid technology is still very much new giving GM the opportunity to once again become the automotive industrys leader in innovation and technology. 9. Continuing to Expand Globally. Recently GM saw an increase in the Chinese automotive market, which proves their needs to be more emphasis put on foreign markets. If GM can infiltrate these markets and successfully grow along with their continuing focus on the US market they will be headed in a positive direction. 10. Low Interest Rates With the right marketing strategy the low interest rates have the potential to generate an immediate increase in sales. 11. Develop New Vehicle Styles and Models This is an opportunity that will never be satisfied, meaning that GM should always be attempting to develop the automotive worlds most popular vehicles, and as we know, what is in today will be out tomorrow. Threats The automotive industry crisis of 2008-2010 was the big downturn. Now it is challenge for industry players to recover. The financial crisis of 2007-10 caused by a liquidity deficit in the U.S banking system resulted decrease in consumer wealth. The crisis mainly felt in the U.S and also affected Asian and European automobile manufacturers. Car companies from North America, Europe, and Asia have implemented innovative marketing strategies to attract disinclined consumers. Major producers, including the Toyota and Big Three offered significant discounts across their lineups. North American consumers shifted to more fuel-efficient and higher-quality product of European and Japanese automakers. Environmental politics and allied anxiety concerning carbon emissions have sharp sensitivity to environmental protection worldwide and gas mileage standards. U.S manufacturers are facing soaring gasoline prices, health care costs for an aging workforce, dependence on declining SUV and eroding market share. The company is facing very high labor and raw material cost as compared to Asian manufacturers. GM is also facing criticism on its culture and corporate practices. In 2007, its employees union went on the first countrywide strike due to which a transmission facility and two car assembly plants were closed down. à ¢Ã¢â€š ¬Ã‚ ¢ The industry although has matured considerably, but there is still room for more improvements, and due to which new entrants are entering the market even though the competition is already tough. (New entrants, not likely pose much of a threat, although Domestic and Foreign competition both act as active threats for the firm that has already gone through losing its market share.) à ¢Ã¢â€š ¬Ã‚ ¢ Regulations and legislative authorities engaging the industry more actively. à ¢Ã¢â€š ¬Ã‚ ¢ Consumer lawsuits are also present to be accounted for. à ¢Ã¢â€š ¬Ã‚ ¢ Japan being a high manufacturing ground for automobiles, is being affected by the decline in its currency Yen. à ¢Ã¢â€š ¬Ã‚ ¢ Current threat to the image of the GM is posed by the Senator Charles Grassley has accused GM for using bailout money to bailout of the loans it had taken from the U.S. and Canadian Govt. (The money used were paid, not through GMs profitability, but it was yet another loan acquired, so it is accused.) 11. Rising Fuel Prices With GM being a large producer in both trucks and SUVs, sales have drastically decreased due to the lack of fuel efficiency. The rise in fuel prices has played a significant role in creating the opportunity for development of both hybrid and more fuel efficient vehicles. As you will find with most threats, an equal opportunity will usually emerge as is the case here with GMs opportunity mentioned above. 12. Growth of Competitors 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. As I mentioned earlier Toyota took the first step in the direction of hybrid technology and has since drastically grown and become the questionable automotive frontrunner to start the 21st century. 13. Pension Payouts. Part of this threat is their own doing and the other is simply unavoidable. GM is responsible for providing generous pension benefits to its employees, which at the time seemed like a great idea, however they are now experiencing problems as more and more people begin to collect. 14. Increased Health Care Costs GM, like many large companies with quality employee health care benefits, is experiencing a large financial hit that only gets worse as time continues. 15. Rising Supply Costs, i.e. Steel Once again this threat affects the entire automotive industry and forces each company to cut manufacturing and production costs as much as possible, without taking away from the quality of the product. OVERALL POSITION The current global crisis has affected almost all aspects of the economy. It has resulted to borrowing of money by the companies from the government and General Motors (GM) and Chrysler are among these companies. GM has already borrowed 13 .4 billion from the Treasury Department but they announced that they need 30 billion in total to compensate for the declining auto market. Chrysler on the other hand needs 9 billion in total. Since the General Motors has issued to be resolved, then GM will have a hard time coping up with the crisis. Two of the major issues are (1 ) GM needs to drop their unsecured debt burden from 27 billion to 9 billion which still has to be negotiated with the bondholders and (2 ) the debt of GM to United Auto Workers (UAW ) which amounted to 20 billion . GM Chairman and Chief Executive Officer Richard Wagoners plan for the company is to pay its debt and reduce its long-term debts thus making the company economically viable. Wagoner claims that if their turnaroun d plan will work then GM will profit within 24 months. General Motors already presented their plan to the bondholders and it is up to them to scrutinize the plan and conform for a deal to be done. With the General Motor s new CEO , Mr . Frederick Fritz Henderson s determination to reorganize the company , and the US government s strong effort to support the ailing businesses , recovery would be possible for General Motors . General Motors Corporation gets into supervised bankruptcy as the new strategy upon the advise of Steven Rattner , President Obama s auto task force chief (Whoriskey . Bankruptcy is the term given once a company seeks for financial aide in form of loan from the government however , this agreement involves direct intervention and manipulation of the government in the overall operation of the company bankruptcy is another President Obama s strategy to help in the recovery of the economy of the United States . The initial impacts of this agreement between GM and US government are the firing of GM s former boss Rick Wagoner and the formulation of new business plan for submission within sixty days . The new business plan , which was submitted to the US governm ent in December last year constitutes new strategies and endeavor that will benefit in the recovery of General Motors Corporation . In the restructuring plan submitted to Senate Banking Committee and House of Representatives Financial Services Committee , new approaches are outlined with the hope to competitively dominate the market once again . CONCLUSION A SWOT analysis is a popular decision making tool in business which analyzes the strengths, weaknesses, opportunities and threats of the organization in relation to a specific objective. This decision making technique can also be used for making personal decisions and in a variety of different situations.