Global Strategy at General Motors Essay Example for Free

Global Strategy at command Motors EssayCompany, one of the humannesss largest automakers, traces its roots back to 1908 and its annual revenue in 2000 of $185 billion. The lodge distributes 8 million vehicles per years, 3. 2 million of which atomic number 18 puddled and marketplace outside of its North America. GM caught 27 percent sh be of the North America and 9 percent destiny of the market in the abide of the world as well as GM captured 12 percent share in the western atomic number 63 in 2000 which is second only to that of ford.With its world(prenominal) headquarters in Detroit, GM employs 235,000 people in e precise major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through the fol execrableing brands Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall and Wuling. GMs largest national market is the United States, fol meeke d by China, Brazil, the United Kingdom, Canada, Russia and Germany. GMs OnStar subsidiary is the industry draw in vehicle safety, security and information services.General Motors Company acquired operations from General Motors Corporation on July 10, 2009, and references to prior periods in this and other press materials refer operations of the old General Motors Corporation. Though GM had a long presence in growing countries, until recently sales there accounted for only a little fraction of the companys total international business. Traditionally GM used the develop countries as a dumping prime for the obsolete technology and outdated models and earned huge currency from this aging coronation.This strategy has seen as lack of commitment from top carry awayment and GM offered very low quality, made of old product. All decision, plan and trade decision were centralized by Detroit headquarter and they acted as a market mise en scene. GM kept in its mind about the poverty, crime, geographical situation and politics and socialism in the developing countries. On the other hand, GM Detroit headquarters kept away GM European operation from other part of the world. And because of this arms-length-basis, company had failure to share all the valuable technology, adroitness and practice among the subsidiaries.But it had appeal market, and high profit opportunities in the Europe. So, GM did tailor the specific market take because it had worried about blowing off from market if it didnt tailor the specific market. So, while the GM tight controlled over its operation in the developing country but in the some beat GM was too lax in Europe and felt lack of overall strategic coherence. Since 1997, GM has been trying to switch a philosophy that centre of excellence may reside any where in the global operation. An embodiment of this is to set up new quartette plants in the developing countries with investing $2. billion. And the four plants are identical and they can able to imitate Toyota. At the Eisenach plant, GM leant lean production from Toyota and apply this. So the plant which productivity rate is at least twice that of most North American assembly operations is most businesslike in Europe operation and the best in GM. Although they dig the more scale economics, more efficiency, more synergy, and ability to match local preference, but this strategy are not working because GM still suffers from high costs, low perceive quality.Finally, GM thinks that the push toward global cars is misconceived. At the Opels Russelsheim design facility, the German based design has uttered concerns that distinctively European engineering features may be left by the wayside in the drive to devise what they see as blander global cars. Question-1 How would you characterize the strategy pursued by GM in the (a) developing world and (b) Europe before 1997? Answer The question asked to characterize the strategy pursued by GM in the developing world and i n Europe before 1997.So, first of all it is very important to notice that in this question we have two important information for discussion First information there are two main market areas for GMs international operations Europe and the developing world which is made up of Latin America, Asia and eastern Europe and the strategy pursued in these two markets are totally different. Second information is that theres a key date in GMs history which is 1997. This date is an important turnaround for GM. Strategy in developing countries before 1997The position Outdated low cost products were selected for developing countries. All the strategic decision, marketing and manufacturing plans were centralized by Detroit headquarter kickoff commitment policy was there since GM select developing countries as a dumping ground for obsolete technology and outdated models The context The main context in the developing countries is the political and efficient instability. Low expanse capability of t he developing countries as they are poor. Low growth perspectives. The strategy determination to produce and sell low cost models that were considered outdated developed world. Added benefit of extending the return on investment of previous decades investments. This allowed generating a continuous cash flow to be invested in more appealing markets like Europe. Probably willingness is not to share valuable technologies and skills in countries with low patent protection. The consequent market share less than 8. 9% The strategy pursued in the developing markets before 1997 was a very low commitment from the top management towards the developing markets.This means that the product offer was very low quality, made of old products that would have not been sellable in a competitive, developed market like the US or western Europe. From the case we also noticed that all the strategic, planning and marketing decisions were centralized in the Detroit headquarter. So, this means that the top management didnt consider important to have a direct contact with those markets and didnt want trust local subsidiaries to manage on their own. They thought they could manage the developing market from their desks in Detroit.Lack of initiative or just plain Yankee trust werent the main reasons. We think the GM management acted accordingly to the market context. In fact to extrapolate their strategy, we must keep in mind that the geopolitical situation before the nineties in southwestern America had instability both in politics and economy, poverty, crime and sometimes civil wars. In east Europe and Asia communism was also known as not favorable to American capitalists. The choice of a low profile strategy was the only chance at these conditions and there were low risk, low investment, low commitment but also low return.The market share of GMs vehicles in these markets was very little but, considering the amount of resources invested, its not bad at all. After all, this low-cost strategy allowed GM to extend the life of obsolete products without risking to loose valuable resources in risky subjects. And most important, generating some cash to be invested in more appealing markets like Europe. Strategy in Europe before 1997 The context Strong local competitors Strong cultural identity Differences in preferences compared to US Tight urban steadThe pursued strategy Need to totally design, produce and sell different models( compared to US) Huge investment. Allowed to produce state of the art vehicles featuring the ultimate technology and design tailored to the local customers. Loose control by Detroit headquarter and blanket(a) freedom to regional and national subsidiaries( strategy planning, designing of cars and facilities were managed on their own) The Result 11. 3% market share second only to Ford Lack of an overall strategic coherence. Inability to leverage synergiesAnd here we go with the second part of the question strategy in Europe before 1997. Here everything is different. We have an appealing market, high profit opportunities, demanding customers and strong competitors. In Europe you cant even imagine to sell the same cars you sell in America. First of all because theres not enough post streets are smaller, plain and simple. Second, because people have very different preferences compared to US and third because if you dont tailor the cars to the specific market needs, local competitors will blow you off in a minute.And youll be out of the game. So heres how GM managed the European operations They gave local subsidiaries freedom to design, produce and sell new models. Impact of pre 1997 strategy In developing countries Inability to respond to market needs Mediocre from a competitive bakshish of view but decent from a financial point of view In Europe comfortably response to market needs High costs Good from a competitive point of view but very expensive and not much efficient To summarize Pressure for cost reduction was hi gh in developing countries not because of competitors but principally because of poverty.In Europe, compared to developing countries, customers have a high expenditure capability so if a nip for cost reduction exists, its due to competition but still its not same to that in the developing world. Thats why weve put it in the lower end of the axis. Question-3 How would you characterize the strategy that GM has been pursuing since 1997? How should this strategy affect GMs ability to create value in the global automobile market?