General Motors Case Study

2213 Words Apr 6th, 2012 9 Pages
Case 34

General Motors

What are key forces in the general and industry environments that affect the U.S. auto industry, and General Motors?

General Motors (GM) has suffered different threats and difficulties that have put in risk the continuity of its production. Before the year 2000, GM has been going through different production, financial, and development problems. Wagoner has tried in different ways to address each problem in order to make GM more successful. Unfortunately GM had high losses that have made it very difficult to solve those problems. All this is due to a very competitive environment in each there were different forces that affect the development of the firm. According to Porter’s Five-Forces Model of
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Cost disadvantages are other problems that are affecting GM. The firm has had some changes in the health and retirement benefits programs which has caused some disagreements with the workers. This brought some conflicts with the United Automobile Workers.

Second, the bargaining power of buyers is a threat that GM has been trying to deal with using product differentiation. The automobile market is very competitive and has a high demand. The internet along with the sheer number of vehicles available for sale in any given location combined with the declining economy has led to auto manufactures offering deals and incentives to dealerships and buyers in order to get the products onto the dealerships lots and then to entice the customers to buy.

The bargaining power of suppliers is a huge concern for GM. For the auto industry this refers to all the suppliers of parts, tires, components, electronics, and the assembly line workers, which in turn means the auto unions. In the US the auto unions are tremendously powerful, as demonstrated in the case study as GM continuously has to make concessions to the union in order to meet the union’s demands. This has burdened the company with a high cost structure and a huge fixed-cost base.

The threat of substitutes is a valid possibility that GM must address. The company’s decision to have as many as 8 brands and carry over 60 different models of cars and trucks makes it
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