Genera General Motors Company
Choose any company listed on the NYSE or TSX and discuss whether you agree with the company’s strategies to deal with its three most significant risks. Compare the risks highlighted by the company you select with those listed by its three major competitors. Based on this comparison, you will decide whether your company has identified the correct major risks. Then, based on a comparison with the strategies highlighted by its competitors, you will determine whether your company is on the right strategic path to deal with the risks. If you decide that your company has not identified the most significant risks, then you will conclude that it is not on the right strategic path. The essay should be about 1,000 words in length. No need to list references. The essay will be due on October 21. Do not submit a hard copy. Send me your essay by email.
General Motors Company …show more content…
General Motors Company (GM) is the business representative of multi-brand development in the automotive industry.
In history, GM has had more than 10 brands throughout the world, include of Buick, Chevrolet, Cadillac, Opel, Pontiac, Saturn and so on. Today, GM still has 7 brands. For consumers in different regions, the company adopted the multi-brands strategy; it means consumers in different region markets like the different brands. For example: Chevrolet is one the most important popular brands in North America, on the other hand, Cadillac has a certain status in the luxury car market; but in China, Buick is the most important popular brands, Chevrolet becomes the representatives of middle or low level cars and Cadillac presence lags behind that of other luxury car brands; the other example is that GM’s Opel brand is very important in European
courtiers.
In the history of GM, the multi-brands strategy helped the company to be the No.1 in automobile industry in the world. Unfortunately, for many years later, GM was neither the largest auto company nor the fastest growth company in the industry. It even restricted for its bad situation in 2008. Nowadays, with the strategy of multi-brand, there are a lot of risks appear, including:
Firstly, the number of brands is too many and the regional markets have their own characteristic. In the face of so much smaller shock in different regional markets, the headquarters’ response has fallen short.
Secondly, the operations of different brands in different regional markets are independence. Costs, expenses and budgeting are all different, which make it difficult to control company’s overall costs effectively.
Thirdly, there is big difference between all kinds of brand images, which means it is difficult to form a strong unified GM-brand effect.
The three big competitors of GM are Ford, Toyota and Volkswagen around the world. These three competitors have their own features in brand management.
For Ford, it implements the "One Ford" brand strategy in recent years, focuses on developing “Ford” brand and improving efficiency of capital investment to achieve economies of scale in car type development and brand marketing.
For Toyota, it has only two key brands: Toyota and Lexus. The company doesn’t have specific regional brand, so it has strong unified brand effect. For this reason, it is easier to achieve synergy of its marketing promotion in the entire world.
For Volkswagen, although it also has many brands, its “platform” strategy could help the company escape from the adverse effects of multi-brand. The company implements the "platform" strategy in products development, production procedures and parts purchasing. Different brands share limited number platforms, which is a good method to control the cost and expenses of the whole company.
Under the double blow of which continuous extrusion from competitors and the failure internal strategy of multi-brand development, both the sales of GM and the profit are surpassed by its competitors. Although the whole sales of GM are no. two in 2012, only after Toyota, its profitability is far behind. The net income of GM was only 4.9 billion dollars. Toyota's latest fiscal year (From April 2012 to Mar 2013) displayed that its net income is 9.7 billion dollars, the figure of Volkswagen and Ford were 15.5 billion dollars and 5.7 billion dollars respectively.
Maybe GM has realized the probability of its persistent decline by comparing with its major competitors. GM seemed correctly identified its main strategy risks.
In order to eliminate the risks caused by the multi-brand strategy, we can see GM has taken these different strategies as below:
1) Decrease brand numbers – close end or sell out unprofitable regional brands,
2) Increase the localization of production proportion in key markets.
We agree with these actions in changing strategy. First, fewer brands would enable the company to concentrate the limited resources which includes capital resources and human resources on researching new car-models, brand marketing and also to be more flexible to react to the market changes actively and timely in different markets. Selling out unprofitable brands is good for cash flow and eases the company’s burden. For instance, I think Opel should be sold so that GM could reallocate more resources on Chevrolet and Buick and reinforce the construction of these stronger brands in European market.
Secondly, Increase the localization of production proportion especially in its key markets could be a super useful way to reduce cost in key markets especially emerging markets. For example, in recent years, China becomes the second important market and the most important profit-driver of GM globally; GM believe that the purchase of parts should be more locally than ever before. Compare with developed market, China has lower wages rate in human resource and lower construction costs, compare with other developing countries, China has a huge scale market, more intelligent engineers and more skilled workers. The profit in China is crucial to GM, the successful experiences told us, the higher portion of localization manufacture and parts purchase, the higher profitability.
However, multi-brand management is adopted through the whole history of GM and there are still several brands in different regions around the world, so it is hard to say GM would change its essential culture gene in a short period. As mentioned above, though we stronger recommend selling bands which was improbabilities, it is unlikely for GM to adopt the recommendation to sell Opel in European market. The contradiction is: in history, GM is the representative of multi-brand company. In people’s mind, GM is the multi-brand, multi-brand is GM. But now, GM has to reduce the brands to save its life.
To conclude, GM has to made slow congress, keeping the cash cow market would be the guaranty to support the GM’s reform. I am convinced that there is little chance for the company to modify its multi-brand management strategy in the short time unless it is faced up to another turn of big loss of revenue or market share. Also it is hard to forecast what would be happened in 10 years later. Maybe in 10 years later, we could see the number of brands reduced from 7 to 3 in GM.
General Motors Company …show more content…
General Motors Company (GM) is the business representative of multi-brand development in the automotive industry.
In history, GM has had more than 10 brands throughout the world, include of Buick, Chevrolet, Cadillac, Opel, Pontiac, Saturn and so on. Today, GM still has 7 brands. For consumers in different regions, the company adopted the multi-brands strategy; it means consumers in different region markets like the different brands. For example: Chevrolet is one the most important popular brands in North America, on the other hand, Cadillac has a certain status in the luxury car market; but in China, Buick is the most important popular brands, Chevrolet becomes the representatives of middle or low level cars and Cadillac presence lags behind that of other luxury car brands; the other example is that GM’s Opel brand is very important in European
courtiers.
In the history of GM, the multi-brands strategy helped the company to be the No.1 in automobile industry in the world. Unfortunately, for many years later, GM was neither the largest auto company nor the fastest growth company in the industry. It even restricted for its bad situation in 2008. Nowadays, with the strategy of multi-brand, there are a lot of risks appear, including:
Firstly, the number of brands is too many and the regional markets have their own characteristic. In the face of so much smaller shock in different regional markets, the headquarters’ response has fallen short.
Secondly, the operations of different brands in different regional markets are independence. Costs, expenses and budgeting are all different, which make it difficult to control company’s overall costs effectively.
Thirdly, there is big difference between all kinds of brand images, which means it is difficult to form a strong unified GM-brand effect.
The three big competitors of GM are Ford, Toyota and Volkswagen around the world. These three competitors have their own features in brand management.
For Ford, it implements the "One Ford" brand strategy in recent years, focuses on developing “Ford” brand and improving efficiency of capital investment to achieve economies of scale in car type development and brand marketing.
For Toyota, it has only two key brands: Toyota and Lexus. The company doesn’t have specific regional brand, so it has strong unified brand effect. For this reason, it is easier to achieve synergy of its marketing promotion in the entire world.
For Volkswagen, although it also has many brands, its “platform” strategy could help the company escape from the adverse effects of multi-brand. The company implements the "platform" strategy in products development, production procedures and parts purchasing. Different brands share limited number platforms, which is a good method to control the cost and expenses of the whole company.
Under the double blow of which continuous extrusion from competitors and the failure internal strategy of multi-brand development, both the sales of GM and the profit are surpassed by its competitors. Although the whole sales of GM are no. two in 2012, only after Toyota, its profitability is far behind. The net income of GM was only 4.9 billion dollars. Toyota's latest fiscal year (From April 2012 to Mar 2013) displayed that its net income is 9.7 billion dollars, the figure of Volkswagen and Ford were 15.5 billion dollars and 5.7 billion dollars respectively.
Maybe GM has realized the probability of its persistent decline by comparing with its major competitors. GM seemed correctly identified its main strategy risks.
In order to eliminate the risks caused by the multi-brand strategy, we can see GM has taken these different strategies as below:
1) Decrease brand numbers – close end or sell out unprofitable regional brands,
2) Increase the localization of production proportion in key markets.
We agree with these actions in changing strategy. First, fewer brands would enable the company to concentrate the limited resources which includes capital resources and human resources on researching new car-models, brand marketing and also to be more flexible to react to the market changes actively and timely in different markets. Selling out unprofitable brands is good for cash flow and eases the company’s burden. For instance, I think Opel should be sold so that GM could reallocate more resources on Chevrolet and Buick and reinforce the construction of these stronger brands in European market.
Secondly, Increase the localization of production proportion especially in its key markets could be a super useful way to reduce cost in key markets especially emerging markets. For example, in recent years, China becomes the second important market and the most important profit-driver of GM globally; GM believe that the purchase of parts should be more locally than ever before. Compare with developed market, China has lower wages rate in human resource and lower construction costs, compare with other developing countries, China has a huge scale market, more intelligent engineers and more skilled workers. The profit in China is crucial to GM, the successful experiences told us, the higher portion of localization manufacture and parts purchase, the higher profitability.
However, multi-brand management is adopted through the whole history of GM and there are still several brands in different regions around the world, so it is hard to say GM would change its essential culture gene in a short period. As mentioned above, though we stronger recommend selling bands which was improbabilities, it is unlikely for GM to adopt the recommendation to sell Opel in European market. The contradiction is: in history, GM is the representative of multi-brand company. In people’s mind, GM is the multi-brand, multi-brand is GM. But now, GM has to reduce the brands to save its life.
To conclude, GM has to made slow congress, keeping the cash cow market would be the guaranty to support the GM’s reform. I am convinced that there is little chance for the company to modify its multi-brand management strategy in the short time unless it is faced up to another turn of big loss of revenue or market share. Also it is hard to forecast what would be happened in 10 years later. Maybe in 10 years later, we could see the number of brands reduced from 7 to 3 in GM.