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Strategic Alternatives and Recommended Strategy of GM

Strategic Alternatives and recommended strategy of GM using the TOWs Matrix. Can the current or revised objectives be met by the simple, more careful implanting of those strategies presently in use?
What are the major feasible alternative strategies available to this corporation?

What are the pros and cons of each. Can corporate scenarios be developed and agreed upon?

Cost leadership and differentiation must be considered as business strategies.

Consider stability, growth, and retrenchment as corporate strategies.
Consider any functional strategic alternatives that might be needed for reinforcement of an important corporate or business strategic alternative.

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Introduction

The economy is continuously changing which is seen through globalization and internationalization of business which have brought about various changes and advancements in the world economy and business market. There has been an increased amount of international business activities worldwide and it is expected to see continued growth in future years. (Gannon University, 1998) This has altered the view of the market from various industries to one of a single market with industries competing on a global basis.
Companies are realizing that to compete in this ever-changing market they must change the way they market their vast array of products by cutting costs, increasing product line and customer satisfaction (Gannon University, 1998; Harvey & Brown, 2001, p. 2). Total customer satisfaction and TQM are the ultimate goals of any progressive organization today. Thus, to prosper within the market and achieve the vision of being leader of industry one must increase their knowledge on the complexities of the market while focusing on increased customer satisfaction, quality and innovation of products.
Today's presentation will encompass such complexities and information surrounding this organization in this tumultuous market. Discussion will include information on information obtained in a SWOT analysis performed on General Motors, assumptions made about the organization, problems faced, strategic alternatives, recommendations, how to implement the stated recommendation and evaluation and control during the implementation. As these are all essential aspects during a strategic analysis of an organization.
Company Background
General Motors Corporation is world's largest automaker and has been founded in 1908. It manufactures its cars and trucks in 35 different countries and sells them under the brands of Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn and Vauxhall. As of 2007, General Motors is the fifth largest company in the world. (Wikipedia) General Motors is the world's leader in manufacturing cars and is traded on the New York Stock Exchange under the ticker symbol GM and has a market capitalization of $13.63 billion. (Yahoo! Finance, 2008) This compares to the number two auto maker, Toyota, which has a market cap of $175.5 billion, 309,797 employees and a net income of $17.15 billion in 2007. (Yahoo! Finance, 2008) General Motors is concerned about the environment and has developed technologies such as alternative combustible fuels such as diesel and flex fuel vehicles that can run on a mixture of regular and ethanol. (General Motors, 2008)

External Factor Analysis Summary:
"The remote environment comprises factors that originate beyond, and usually irrespective of, any single firm's operating situation: (1) economic, (2) social, (3) political, (4) technological, and (5) ecological factors." (Pearce, 2004, p.79) Globalization presents a new series of challenges for organizations in that not only does the execution of core competencies become more challenging as well as amplified in importance, but also in that cross-cultural communication and the interaction of disparate values and beliefs further complicate organizational operations. Here we will analyze the affect of societal forces and to see what trends are like to affect the Sports bar in a brief manner:

Social factors
It is of very much importance to it as its products are consumed. The factors like lifestyle changes age distribution of population, life expectancies etc. There is a greater demand of biocars or ecofriendly vehicles.
Technological Environment
With the advancement of technologies one can examine its customer base more intimately. Based on new abilities to tailor offerings under Customer Relationship Management (CRM) theory, GM can start differentiating its customers and customizing its offerings to them. It must gather its information about its customers and then interact with them further to deliver an end product that provides the most value. The impact of the internet, portable information devices, electronic networking, smart mobile robots, and increase in the speed of microprocessors will have tremendous impact on business. Moreover there has been tremendous impact of e-business on the typical business. The information is exchanged much more quickly than any other medium which is helping organizations to make more quick and accurate decisions. E-business has removed geographical and time restrictions for the organizations. It also helps in the following: (Information Systems, 2007)
?Recording and analyzing strategic management records: processing these strategic management records into industry trends reports, market share reports, mission statements, and portfolio models. (Information Systems, 2007)
?Use of all the above to implement and control the businesses.

Thus they are more connected and knowledgeable in seeking to improve the processes, quality, technology and overall customer delight. Due to e-business there is much more agility to improve and also to respond to the needs of the customers, vendors, government and to society at large. It is also reducing the costs and making supply chain more efficient.

Economic Forces
General Motors operates globally and is impacted by the economic indicators around the world. Over 60% of General Motors' sales were outside the US. (General Motors, Q4 2007 Earnings Release, 2008) To focus on particular markets, General Motors must identify the markets with room for growth and the markets where General Motors is posting the biggest losses. General Motors is divided into General Motors Latin America, Africa & Middle East region (GM LAAM), General Motors Asia Pacific (GMAP), General Motors Europe (GME) and General Motors North America (GMNA). (General Motors, Regional Overview, 2008)

In North America, General Motors posted a loss of $3.3 billion for 2007, the biggest loss for any one of their global automotive divisions. (General Motors, Q4 2007 Earnings Release, 2008) This is ironic since the US is the home of General Motors. General Motors cites a soft US economy, unfavorable exchange rate (declining value of the US Dollar) and weaker sales to rental car companies as the primary reason for the loss. (General Motors, Q4 2007 Earnings Release, 2008) GME did much better with a reported loss of $524 million in 2007, with an overall increase in sales with the Opel and Cadillac brands. The positive factors for GM in Europe are their year over year growth and the continued expansion of the EU. In GM LAAM, GM reported earnings of $1.3 billion. GMAP reported income of $681 in 2007. Both of these markets are doing well for GM and are profitable. In the end, the only market where General Motors sold less vehicles in 2007 compared to 2006 was North America.

Hence now one has monitor the economic trends like GDP trends, Interest rates, Money supply, Inflation rates, Unemployment levels, Disposable income. Currently in USA there is recession but in other parts of world there is growth especially in Asian countries. Individual economies becoming interconnected into a global economy. Thus it has to expand market share in other countries.
Exchange rate exposure may affect financing costs volatile cash flow. Transaction exposure reflects the exposure of Microsoft's future cash transactions to exchange rate movements. Economic exposure measures the direct and indirect risks to cash flows from exchange rate movements. Translation exposure focuses on consolidated financial statements. (Measuring Exposure to Exchange Rate Fluctuations, 2004)
Below is a list of the 2007 GDP in US Dollars. It will be interesting to see this list in 2009 if the US Dollar continues to fall against other major currencies since lists like these are typically done in US Dollars. All figures below were compiled from the CIA World Fact Book.

Economy 2007 GDP (nominal) 2007 GDP Growth
1 European Union 16.37 trillion 3.00%
2 United States 13.79 trillion 2.20%
3 Japan 4.346 trillion 1.90%
4 China 3.249 trillion 11.40%
5 Canada 1.406 trillion 2.70%
6 Russia 1.286 trillion 8.10%
7 Brazil 1.269 trillion 4.90%
8 India 1.09 trillion 9.60%
9 South Korea 981.9 billion 4.80%
10 Australia 889.7 billion 4.00%

The US Dollar
The falling US dollar has been a result of the slashing of interest rates by the US Federal Reserve Bank (Platt, 2007) This combined with back to back months of unexpected job losses in the US has many economists predicting that Q1 will result in negative GDP growth for the US. (Stoddard, 2008) Oil is traded in US Dollars and the price per barrel is rising as the US Dollar falls against other major currencies. (Healey, 2008) This, combined with surging demand for oil from India and China, has hurt General Motors in the US since many of their best selling products in the US are not fuel efficient vehicles. General Motors should look at ways to produce fuel efficient vehicles that will sell well in the US, even when the economy is at the bottom of the economic cycle.

Capitalizing on the EU's Economic Strength
Based on the strength of the EU economy and General Motors' success in Europe, General Motors should continue to focus on growth in Europe while it is focusing on restructuring in the US. Sales in Europe are up and even luxury cars like Cadillac are selling well. GM should look at exporting more cars to Europe so they can take advantage of a falling US Dollar against the Euro. For example, a top of the line Cadillac should have a price advantage over European cars if built in the US and sold in Europe. Countries with high economic growth like China and Russia may be the perfect market to focus sales of General Motors' popular trucks and SUVs since affluence is on the rise. (Kranz, 2008)

Car Culture
General Motors sells vehicles all around the world in a variety of cultures. Car culture also differs by generation, but certain demographics are bigger than others in some countries. For example, car culture in the US, Canada, New Zealand and Australia seem to have certain commonalities since the people seem to like large vehicles and they seem to have 1960's nostalgia. These countries all have a similar baby boomer demographic which may explain this phenomenon. (Macunovich, 2000) In contrast, more modern cars are popular in Europe, Asia and Africa where the population is much younger. These differences in car culture have created several culture groups within the automotive world. In Europe, excessively large and/or inefficient cars are frowned upon. A family in Europe is much more likely to own a station wagon rather than an SUV. In the US, low social status is associated with small and/or low horsepower fuel efficient cars among older and/or affluent buyers. These observations are just a fraction of what General Motors must deal with when importing and exporting their own cars between markets where they sell and manufacture cars. This can be seen by comparing a car company's UK web site and the same company's US web site. For example, Volkswagen only exports their larger vehicles with larger motors to the US. A quick comparison of the UK Volkswagen web site and the US Volkswagen web site makes this apparent. (Volkswagen, 2008) They understand that the culture in the US is not conducive to selling smaller, more fuel efficient cars. However, cultures change ...

Solution Summary

Word and Excel files attached give pros and cons of strategies feasible to a corporation.

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