Introduction:
General Motors is the world’s most prominent automobile manufacturer like Buick, Cadillac and Chevrolet. GM is a multinational company with its headquarter residing in Detroit, Michigan. Currently, it is working in 37 countries, and it also possesses a wide range of joint ventures in famous cities like Shanghai-GM and SAIC-GM Wuling in China and Ghandhara Industries in Pakistan. GM has also faced complex situations regarding its financial stability in the years 2008-2009. However, after that the company has regained its market share and profitability through its renewed operational strategies.
Problem statement:
As the industry structure is changing dynamically with the continuous bullish and bearish trend in the supply and demand of commercial vehicles, GM’s sales are affected greatly with these complexities. Currently, the company is facing difficulties regarding government regulations and brand protectionism issues. The Chinese government is facing urbanization and mass traffic problems due to which it has limited new vehicle registrations in China’s largest cities. China has eliminated subsidies and has increased taxes on new car purchase.
Despite all these issues fake branding and desecration of GM’s intellectual property rights. These issues include the trademark and designing the scheme of GM’s vehicles has made its effort more intensified to protect its position in the automobile industry.
Porter Analysis
It primarily provides the foundation of market research for a particular industry. Through Porter's Analysis, the user can be aware of its market position and the challenges they would have to bear in order to enter into that industry or to sustain their growth in the industry.
Threat of new entrants is low
The overall threat of new entrants is low in the Chinese automobile industry. The reason behind the low level of this threat is the mass capital investment which is required for entering into this industry. Due to which everyone cannot afford to be a part of this league easily because of the huge operational cost and high-quality standard set by market leaders and customer’s expectations.
The bargaining power of buyers is high
China is a strong economy in terms of financial stability that means that its citizens are also enjoying a moderate and even higher standards of living. This situation has led the buyer to select consumer goods on the basis of quality, brand equity and reliability instead of giving much attention to the products price scheme. Hence, undoubtedly the barging power of the buyer would be high in china.
The bargaining power of suppliers is medium
In Chinese automobile industry, the supplier possesses a wide variety of strategic alliances with the automobile makers, however, both the manufacturer and the supplier value long term relationship for their potential interest. The company needs to sustain this relation with great efforts so that their competitive advantage would continue to grow with the dynamic environment of the market. Acquiring quality raw material is the most important task for the management for which they value efficient supplier who meets their demands. However, due to the competitive industry the supplier knows their market demand due to which they work on their asked price.
Degree of competitive rivalry is high
The competitive rivalry in the automobile industry is high. The Chinese automobile market consists of large domestic competitors. These competitors compete head to head in the national, as well as international markets. The main competing aspects are price, variety and quality differentiation. In China, the cost of labor is low, and the government supports the automobile industry so, therefore, the competitive rivalry is high.
Threat of substitution is high
The threat of substitution is high in the Chinese automobile industry. People may consider traveling through the local trains and other passenger vehicles instead of cars and buses in order to save fuel and maintenance cost. The Chinese government has also invested on the efficient availability of the local transportation system for Chinese citizens.
Swot Analysis
Strengths
1. International brand
2. Strong brand equity in china
3. Large market share
4. Financial stability
Weaknesses
1. Low level of organizational configuration
2. Membership in WTO resulted in the weak trade strategy.
3. Obsolete technology
4. Expecting decrease in profit.
5. A huge reliance on US markets instead of Chinese market.
Opportunities
1. Increasing demand for electric/hybrid vehicles
2. Expending living standards.......................
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