Project 2: Tool Analysis

Project 2: Tool Analysis

Since the 20th and 21st century, General Motors Company has been one of the leading motor vehicle manufacturers in the United States along with many other countries. With its main products that include trucks, automobiles, auto components, engines, and financial services, the company has gained its pedestal from years of strong reputation. Although the company has been trumping for years, General Motors Company currently has potential competitors that are powerful as well. The purpose of this report is to go through an give an analysis of the company in order to identify its strengths and weakness versus the competitors in the motor vehicle company industry. The outcome of this report is to create a business plan that will ensure a steady position for General Motors Company today and the future of the industry. This report will go into an industry analysis with the support of Porter’s Five Forces as a tool to analyze the intensity of the potential competitors.

Industry Analysis

To conduct an Industry Analysis for General Motors Company, Porter’s Five Forces will be used as a tool to analyze the competition within the automobile production industry. Porter’s Five Forces explains that competitiveness within an industry will be determined by five factors: the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, and the threat of substitute products (Porter’s five forces explained with examples: B2U 2020). Conducting an industry analysis helps give a general overview of the industry, look at current industry news and innovation, views consumer market data, analyze competitors, economic conditions, and government regulations.

Threat of New Entrants

           The threat of new entrants is an important consideration because it brings a new want to gain a share of the market. If there are high barriers to enter for newer members to enter into the industry, the less of a threat it is to current competitors. Barriers can include factors such as: customer loyalty towards current competitors, the need for cumulative experience, access to distribution channels, and switching of costs (Porter’s five forces explained with examples: B2U 2020). This is basically explains how difficult it is for a new company to enter into the industry.

           One thing to consider when it comes to the current competitors of General Motors Co. is that the current competitors are already companies of scale. General Motors Co’s main competitors include: Ford Motor Co, Tesla Inc, Shyft Group Inc. and ZAP. The companies listed, including General Motors Co, are largely-scaled companies with higher pricing advantages.

As far as product differentiation, General Motors has a plethora of automobile brands to choose from for different customer tastes. Some of the brands that General Motors Company carry includes: Chevrolet, GMC, Cadillac, Hummer and Buick. Although General Motors Company is competing against companies like Tesla which the innovation of electric cars, being hard to recreate, General Motors is still at a high competitive advantage due to the variety of vehicles that they have to offer and their customers with brand loyalty. Overall, the walls are high for new entrants to come into competition and the threat is low.

Bargaining Power of Suppliers

Bargaining Power is important for businesses because the less power that a supplier has over the business, the better it will be for the business itself. General Motors Company has over 70 suppliers from around the world. Some of the companies include SL Corp, Lakeside Plastics, Compuware, and Van-Rob Corp (Maverick, 2021). This means that the company is not tied to only 2-3 suppliers which means that they have more control of the business. Having limited suppliers can also result in raise in prices and run into an issue where the company has to pay more when the supplier has a manufacturing issue. General Motors Co. has a plethora of suppliers which results on a low risk for the bargaining power of suppliers.

Bargaining Power of Buyers

General Motor’s current competitive strategy is their cost leadership This means that their appeal is that they are known for their low cost automobiles and products compared to luxury brands like Mercedes Benz and BMW. This correlates to the fact that General Motors Co. has no specific type of customer but only focusing on attracting people for their low price. This results in lower negotiating power for the buyers. This is a low threat for outside competitors to enter into especially with the low price.

Threat of Substitutes

Threat of substitutes is the idea of what the customers can purchase instead of the product that the company provides. The automobile industry is generally created in order for people to be able to transport themselves from one place to another. General Motors Company is known for regular, gas-powered vehicles. Companies like Tesla and Green Automotive Co. provides electric vehicles which can an alternative choice for the masses. People can also use other forms of transportation such as buses, trains, bicycles, etc. This will all vary from location, demographics, and preferences. The Threat of Substitutes for the automotive industry is moderate due to the other transportation alternatives. For General Motors Co. itself, there is also a moderate threat due to the different types of automobiles that the competitors has to offer.

Competitive Analysis

General Motors Company has three main competitors in the automotive industry: Ford Motor Company, Tesla Incorporated, and Shyft Group Inc. Each company specializes in assembling commercial vehicles and recreational vehicles. The three companies listed, include General Motors Co, also provides commercial parts and accessories.

The Competitive Profile Matrix (CPM) is a tool that is used to compare and contrast the strengths and weaknesses of a company along with it’s competitors. This tool helps better understand the external environment of a company’s industry in order to better understand the factors needed in order for the company to be successful (Jurevicius, 2021). The CPM will be able to identify what the company needs to sustain and improve while comparing the competition.

CPM Table
		General Motors Co.	Ford Co.	Tesla Inc.	Shyft Group Inc.
Critical Success Factor	Weight	Rating	Score	Rating	Score	Rating	Score	Rating	Score
Model/Styles	0.14	4	0.56	3	0.42	2	0.28	2	0.28
Global Expansion	0.1	4	0.4	3	0.3	3	0.3	2	0.2
Advertising	0.09	4	0.36	3	0.27	3	0.27	2	0.18
Price	0.16	4	0.64	4	0.64	3	0.48	3	0.48
Customer Loyalty	0.15	4	0.6	4	0.6	4	0.6	3	0.45
Hybrid/Fuel Efficcient Models	0.11	3	0.33	3	0.33	4	0.44	2	0.22
Management	0.11	3	0.33	3	0.33	3	0.33	3	0.33
Product Quality	0.14	3	0.42	3	0.42	4	0.56	3	0.42
Total	1		3.64		3.31		3.26		2.56

 Professor mentions that the answers to these questions will help support the paper

1.  What are the two dimensions critical to defining a company’s business-level strategy?

the source of competitive advantage (cost or uniqueness) and the scope of operations (broad or narrow).

0. What are the generic strategies? How does an organization achieve these strategies?

The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus.

0. What are the limitations of the generic strategies?

1. What is a best-cost strategy?

2. What does it mean to be ‘stuck in the middle’?

3. When does a best-cost strategy work best?

4. What is a major risk associated with the best-cost strategy?

5. Why do some companies concentrate on a single industry while others focus on multiple industries?

6. Describe vertical integration and explain why companies use this strategy.

7. What are two types of diversification and when should they be used?

8. Why and how would a company retrench or restructure?

9. What are three concentration strategies? 

10. What is horizontal integration and identify two reasons why horizontal integration fails?

11. What is backward vertical integration?  What are some examples?

12. What is forward vertical integration?  What are some examples?