E-Commerce in General Motors
Introduction
General Motors is a US-based manufacturing company with over a hundred years of operation. On the general scale, the company has produced over 450 million vehicles universally. The company operates internationally and therefore has covered a wider global market in terms automobiles. Although the company has had a remarkable improvement in its market scale globally, the United States of America remains the largest market for this corporation. The company’s strategic power lies in the fact that it supports a large community of the US in terms of employment (Kang, N., et al. 2001, p. 69). The company is the backbone of the US economy through employment of 1 out of 10 people employed in the country as well as being the chief purchaser of the country’s steel, aluminium, iron, copper, and plastic among other materials used in the manufacture of automobiles.
Despite the fact that the corporation has gained reputation over a number of years, it is not an exception when it comes to struggle resulting from increased universal competition. This competition emanates from foreign manufacturers in the sector of lower wages, healthcare and compensation costs. These costs have cost the company over 100 billion dollars over the past 15 years. As a result, the costs have constrained investment in more complex manufacturing and vehicle technology (Hill, C. & Jones, G., 2009, p. 112).
However, the current annual report indicates that the company has made remarkable progress in reducing the gap with competitors in form of automobile quality, productivity and fuel efficiency. For the purpose of long-term investment, the company has put in place plans to go international in countries like China, Latin America, and Russia. On the general scale, this company has never failed in meeting a congressional mandate in significant sections of fuel effectiveness and vehicle emission. This has set the company into the green manufacturing industry based on its environmentally friendly operations and social responsibility.
Internal and External Environment
In any business undertaking, it is imperative to take the environmental analysis of a company for purposes of profitability. This helps in the establishment of the corporation in terms of the current position and the company’s sustainability through strategic management. This may involve the establishment of competition from other key players in the business. This analysis will consider industry analysis, economic analysis, competitive analysis and social analysis of General Motors
Industry Analysis
Threat of new entrants: considering the level of maturity for general Motors, it is clear that the company has little vulnerability of threat from new entrants. In most cases, incidences of threats because of new entrants emanate from start-up capital, strain in accessing dissemination channels, unavailability of good leadership styles, and extensive research and development costs necessary for product innovation (Kang, N., et al. 2001, p. 69).
Power of suppliers: The entire automobile industry has a lower level of the bargaining power of suppliers because of the saturated market. It is clear for the General Motors Corporation that there are other automotive part suppliers for vehicle manufacturers. This causes manufacturers a chance to change suppliers if needed.
Power of Buyers: General Motors Company has a significantly high bargaining power of buyers since particular clients buy the bulk of the industry’s output, which forms the largest source of income. As a result, the company should consider client satisfaction as a priority. This will increase the purchasing power of returning customer and increase the company’s sales.
Availability of substitutes: according to the previous reports of the company, availability of substitutes is relatively low. However, this does not entirely rule out the fact that there are more substitutes like walking, bikes, or public transport. This however depends on the geographical location of consumers.
Competitive Rivalry: even though there is a rise in other companies dealing in automobiles, General Motors Corporation has a high competition. This requires that the company seek for other means to sustain its competitive power in the market. This may include rebranding as well as cutting down on the costs. The company should also study client preferences so that it concentrates on increasing sales.
Economic Analysis
The attack on the US in September 2001 resulted into the country experiencing economic recession. The government put in place strategies to get the country back on its feet and this was through automobile companies like General Motors. Ever since, the income for each person in the US has risen by 9.8% resulting into a general growth trend of up to 2.9%. In addition, productivity for companies like General Motors has risen by 3%, which explains why employment rate has gone up annually (Cervone, T., 2006, p. 17). On the other hand, this has led to the decline in gas prices by 80 cents for the last quarter. This implies that the profit margin so far experienced is due to the economic boom of the entire company.
Social Analysis
For many years, the baby boomer generation has been the primary target market for automobile manufacturers. However, as this generation nears retirement, and is spending less money, automakers are shifting their focus to younger generations. This generation is reaching a point of greater financial stability; thus, contributing greatly to the amount of consumer spending on luxury products such as automobiles (Cervone, 2006, p. 81). Consumer trends are also shifting from oversized passenger vehicles, such as trucks and SUV’s, to smaller more economic, fuel-efficient automobiles. Therefore, marketing efforts must shift to meet changing consumer demands. This is why the management of the company has to incorporate e-commerce within the operations of the company. Such marketing efforts, however, depend heavily on geographic location of the consumer. For example, marketing a convertible in a cold climate is not as economical as marketing it in a warmer climate; therefore, the company’s marketing mix must be adjusted accordingly to geographic conditions.
Strategy to go International
For the next couple of years, General Motors intends to make its business operations global (Baki, Matt, 2004, p. 103). However, because of increased competition on the international automobile market, it is imperative that the company makes a number of changes to enable it effectively fit in the wider market. The first move that the corporation has focused upon is restructuring of its brands as it concentrates on core businesses. As a way of moving international, the company has decided to maintain Chevrolet, Cadillac and Buick as the main brands to compete in the universal automobile market. Such a decision is according to the statistics in the sales made for the past five years.
On the other hand, fuel efficiency is the key focus for GM to go international successfully. This follows research done on the effects of global warming and green technology. This forces the company to be more sustainable as well as environmentally friendly. Most industries across the world are required to focus on fuel efficiency to reduce chances of harmful gas emission and ultimately reduce on global warming (Hill, C.W., 2005, p. 86). The company has carried out a widespread research on consumer preferences so that it reduces the gap between clientele perception and satisfaction. Customers opt for effective automobiles in terms of fuel.
To cut on the increased competition realized in the automobile industry, GM has considered cutting down of its prices. The company therefore prefers to manufacture brands that are more affordable to all types of clients to increase sales. In addition, its marketing strategies should change in which case; the company should value e-commerce. This is vital when ensuring that product promotions reach a wide range of clientele.
The Impact of E-Commerce on the Company
Improved information and communication technology coupled with novel networking abilities enable all firms to communicate, carry out business transactions and associate smoothly. This is because activities accomplishment is at a lower cost and with elevated ease and suppleness than ever before. This move stimulates transformations in the schemes of organizational characteristics and causes establishment of cyber-traders as well as implicit enterprises. Increased transformations in organizations are paramount in adopting and adapting new technologies to facilitate efficient business transactions (Baki, 2004, pg. 67).
E-commerce is changing the marketplace through transformation of most companies’ business models. An important effect of the e-commerce in the current business activities is that it changes relations among major firms in the market as well as through contributing to changes in the overall market structure. Based on the dynamic inclination of these activities and their companies, it is not easy to outline the effect of e-commerce. However, it is probable to identify some emerging trends and a number of conclusions come out of commerce case studies. To establish the impact of e-commerce on firms, it is imperative to look at three main areas: transformation in company’s business models, change in the structure of markets, and chances for economic growth resulting from organizational change.
In the case of a large organization like General Motors, e-commerce creates the probability of novel models for organizing manufacturing and carrying out transactions in the business enterprise. This occurs through provision of intermodality and complementarity within the business model (Baki, 2004, pg. 79). The workforce of the company becomes flexible and adaptable to facilitate a smooth flow of operations in the company. In any organization, e-commerce that majorly involves the internet opens up particular proprietary links, improve the links between sectors, and enable accessibility of products to a wider market. This enables the company to address international markets. In addition, e-commerce changes the corporation’s strategies and competitive advantage both in local and universal markets. This implies that work within the company can be accomplished through from a wide range of locations. Similarly, General Motors will be exposed to global competition.
Research indicates that e-commerce has many key factors that add to the level of integrity on the electronic market. There will be emergence of web-based competition in the company. For most firms, e-commerce facilitates entry of new entrants to compete in setting standards and offer the interface, and alliances based on the web. These play a strategic function in shaping emerging standards. Due to e-commerce, any firm is able to compete and capture clientele information. In this move, the virtual communities are imperative in striking equilibrium of market power between consumers of the products and the supplier. On the other hand, there would be first-mover merits, linked to the existence of constructive association externalities. Since e-commerce is a form of innovation, it propels growth within firms.
Global Impact of E-Commerce on Society
To focus on the impact of e-commerce on society, it would be imprudent to assume the effect of electronic commerce on universal marketing. Based on increased development in technology, it is clear that many business activities are becoming more profitable. This implies that e-commerce favors global marketing largely. Electronic commerce, by use of distribution channels such as eBay, offers marketers a faster, cheaper and an easier way of focusing on market segments (Cervone, 2006, p. 31). Marketers experience a smooth time since intermediaries are fewer when it comes to involvement in e-commerce distribution channels. This is advantageous because fewer intermediaries involved mean decreased cases of intermediaries involved. The move allows connections between manufacturers and clients to be smooth.
In the case of General Motors, for instance, the company and buyers of automobiles on eBay transact with one another directly. There are no intermediaries involved, which makes the supply chain direct and smooth by allowing the buyer and seller to interact. Any moment a client has an interest in the company’s product placed on the eBay, the client has two options to acquire the product. In the first place, the customer may perform an online auction before the company makes arrangements for delivery of the product later. On the other hand, the customer may buy the product directly at a fixed price. This form of business transaction is beneficial to the marketer since in addition to allowing direct contact, anyone can also be a marketer. The e-commerce field is wide since the marketer is not just the marketing department of eBay, but also anyone selling a product on eBay.
Another advantage of e-commerce for global communities is that it causes seller specialization easier. The activity allows for high level of specialization uneconomically feasible in the world of reality. For example, in the event General Motors sells an automobile that is only attractive to a niche market can function in a cyberspace. However, in real essence, the company would lack enough clientele. This applies more effectively for those firms whose products are not locally available. Another importance of e-commerce to the global society is the use of standardized marketing techniques that make the marketing process easier. Clients that rely on the internet for the purchases have common characteristics. In the first place, this society of customers is computer literate. It is therefore important that a marketer equip himself with such basic skills to attend to the needs of such clients. As a result, taking advantage of standardization accompanying e-commerce and the respective channels of distributions, marketers easily target particular markets (Cervone, 2006, p. 17).
In addition, e-commerce is advantageous to the universal society through making marketing cheap. For instance, through the eBay, sellers can communicate to particular market segments since they generally use one medium, which is the internet. This does not imply that other conventional means of promotion are useless. However, the cost of operation for such media like television, print and the radio is much higher than that of the internet.
On the contrary, e-commerce has its negative effects to the society and the universal marketing process at large (Baki, 2004, pg. 112). E-commerce has two major obstacles seen in the distribution channels of eBay. In the first place, when a company incorporates e-commerce as a strategy for marketing its products, it is hard to sustain an efficient level of security. Just like the physical distribution channels, those on the internet are not safe. The speed at which transactions take place and susceptibility of the websites facilitate unrestricted access by other parties. This may result into interception of products during shipment as well as information that is sensitive. This however does not imply that everything crumbles down when it comes to e-commerce. Such loopholes face stiff scrutiny from internet security technology.
Another problem faced by e-commerce is the presence of numerous cultural barriers. This means that marketers have difficulty in reaching new markets, and widening existing ones. Not all cultures have access to the internet, which makes it hard to rely on electronic distribution channels for promotion of products. Expansive cultural differences make it hard for companies like General Motors to market its products equally across the market scale. This makes it tedious for marketers to reach people without establishing standardized feature within each community. This is the only way to meet the criteria for communication. As a result, a corporation should take into consideration the language of each community to facilitate easy decoding and encoding of messages through the internet. This may require that companies translate their web pages to local languages, which proves costly (Cervone, 2006, p. 17).
Self Evaluation
Looking at this paper, it is evident that a number of factors were paramount. I divided this paper into two main parts that had their respective subsections. In the first part, I handled every part of the instructions effectively. This included looking at the general Motors Company in general. According to the paper instructions, I had to look at the company’s core business functions. I covered this by looking at when the company was founded. It followed that I looked at the business environment analysis in terms of the internal and external environment. The next stage included carrying out an analysis of the company’s core competencies according to Porter’s five forces of competitive analysis.
The next level included analyzing the level of market structure and competition through promotional strategies such as e-commerce. I covered this particularly well when it came to exposing the company to a wider universal market hence, increased profitability. However, I acknowledge the fact that this was not sufficiently covered owing to the fact that General Motors is still at the level of introducing e-commerce within its distribution channels for automobile. It proved hard to acquire enough material on the company’s database that could cover the subject effectively. The last stage of the paper in the second section involved an analysis of the impact of e-commerce to the global society. I am confident that I covered and mastered the content of this section well. This particularly attributes to the fact that there is a wide range of literature on the incorporation of eBay as an online marketing strategy for most firms. Even though there were a wide range of positive impacts associated with e-commerce, two major loopholes were inevitable. One that can out profoundly during my analysis was insecurity of crucial data to unauthorized parties.
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