Strategic Issues for General Motors

Solution Preview

Running Head: STRATEGIC ISSUES FACED BY GENERAL MOTORS
Strategic Issues Faced by General Motors

General Motors: An Introduction
General Motors Corp. is one of the largest manufacturers of automobiles in all over the world. It has been the leader in this segment for a number of decades (About GM, 2009). The company was established in 1908 by William C. Durant and currently provides employment to nearly 284,000 people all over the world (General Motors-Corporate Website, 2009). General Motors has its headquarters in Detroit and has manufacturing centers in 33 countries (Demos, 2007). Among the various brands owned by this company Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Opel, Pontiac, Saab, Saturn and Vauxhall are the most prominent ones (About GM, 2009).
Strategic Issues
In the automobile industry, a large number of strategic issues are faced by the companies on a regular basis. In addition to General Motors, these issues are faced by organizations such as DaimlerChrysler, Toyota, Ford, Honda etc. Some of the most prominent strategic issues for these organizations include:
Strong Competition: In this industry, the competition among the rivals is very strong. In fact, all the major players in this segment are well-balanced (The Automobile Industry Goes into Lower Gear, 2005). One of the major reasons for such a high degree of competition is attributed to a lack of differentiation opportunities. All the companies manufacture similar kind of vehicles (Popescu, 2008). At the same time, the aspects of price, quality, durability etc. also do not exhibit a high amount of variation. In addition, with the constant entry of new players, it is expected that competition will become more intense in the near future (The Automobile Industry Goes into Lower Gear, 2005).
Weak Global Economy & Stagnation in OECD (Organization for Economic Co-operation & Development) Markets: In recent years, the global economy has not performed as per the expectations of many market analysts. There are various factors which have weakened the global economy and led to stagnation in the OECD markets to a great extent (Lilliehöök, 2009). For illustration, the financial markets have reflected an uncertainty in the movement of equity prices as well as the cost of borrowing. At the same time, various emerging market economies have also been unsuccessful in putting up a good show (Rastello, 2009). Subsequently, the automobile industry is facing diverse challenges due to the weakening of global economy (The Automobile Industry Goes into Lower Gear, 2005).
Rising Fuel Prices: As a consequence of energy crisis and monopoly of certain nations in this sector, the fuel prices are hiked on a regular basis. This increase in fuel prices makes a direct impact on the sale of automobiles (Klein, 2008). Subsequently, the automobile manufacturers are compelled to increase the prices of their vehicles despite knowing the impact of such a hike on their sales and profitability (Klein, 2008).
Increased Political & Social Pressures: The industry has to deal with various types of social and political issues. One of the most important political issues is related with the growing ...