SWOT Analysis of General Motors

General Motors is one of the oldest names in the automobile Industry. With its vision of manufacturing safe, eco-friendly and convenient cars, the company has been dominating the global market with a big chunk of market share. General Motors always thrives on putting its name on the top with its strong global presence and futuristic vision. Despite having some key strengths, the company still faces internal and external issues. The volatile automobile sector, extreme competition from the other players and dynamic consumer preference put the company into many issues. There are some opportunities too that can be the route to ultimate success for the company if it can resolve the issues with its strengths. Here, we will have some key aspects through a SWOT analysis of General Motors.

Strengths of General Motors

General Motors has created a dominance in the U.S. market as well as in the global arena. The company has built strong areas that enable it to defeat the big players in the market. There are internal factors like its robust production capability worldwide, use of advanced technology. These strengths help G.M. run towards its vision smoothly. Let’s have a look into its main strengths.

Robust Manufacturing Capability

General Motors has a robust capability of manufacturing automobiles. The company currently employs over 155,000 people, serving six continents and operating across 22 time zones. [1] this huge production capacity helps the company meet the rapidly changing demand for automobiles. At the same time, the company is capable of producing suitable products for different regions since the facilities are diversified into many geographical areas.

Advanced Platforms

General Motors is adroitly expanding its business operations into many other areas with its advanced technological platforms. They are going forward with platforms like Ultium and OnStar® while leveraging their existing businesses such as G.M. Financial and Defense. The company is also pioneering new markets in areas like Insurance. [2] These expansions and growth strategies are opening new avenues for G.M. to ascertain.

Strong Presence in the Domestic Market

Being a U.S. company, G.M. has been dominating the market with a big chunk of market share. The company earns a significant amount of its revenue from the U.S. market, which is one of the most lucrative car markets in the world. In 2020, General Motors held 17.3 percent of the U.S. market. [3]

Safety Quality of Cars

General Motors has been popular for the safety quality of its cars. Even the company’s vision is to make zero crashes in the future. A huge segment of automobile consumers tends to prefer safety over all other features of a car. This gives a competitive advantage to the company.

Weaknesses of General Motors

General Motors has failed to make the best out of its vast resources and strategic position worldwide in the everchanging automobile sector. Both in the global and domestic arena, the company has lost a significant amount of its market share to the competitors due to some limitations it has and some issues it could not resolve easily. Some of those weaknesses are below.

Late to the E.V. Market

The competitors moved so fast towards the E.V. sector, and G.M. could not go with the flow easily. They are stuck with the traditional automobiles while the competitors are booming with their E.V.s. Although G.M. has been currently focusing fully on its E.V. segment, they’re still late to the market compared to other global giants. 

Over-Dependence on the Domestic Market

G.M.’s key success point was its dominance in the U.S. market. But with the flow of time, many other global companies have been established, and they’ve created a strong position in the U.S. market. G.M. has lost a big portion of its market share in the U.S., which was 28 percent 19 years ago. [3] If the company fails to overdependence on the domestic market, it will have to face harsh consequences in the future.

Comparatively Low Investment in R&D

General Motors’ Investment in R&D is lower than that of the industry’s strong competitors. In spite of spending more on research and development than the industry average, the company has been failed to differentiate itself in terms of innovation and advancement. This issue hinders the company from providing superior quality in its cars.

High Cost-Structure

When compared to all other automakers, G.M. has one of the most expensive cost structures. The cost of doing business at G.M. is driven by the company’s high employee compensation and pension programs. It needs to minimize the COGS to stay competitive in the market and acquire shares in the mass markets.

Opportunities for General Motors

There is a lot to improve for General Motors. The automobile sector is truly generous in terms of demand, scope to grow and expand. To reach the pinnacle, the company needs to utilize these scopes. The change in consumer preference and fierce competition have opened new scopes for G.M. These opportunities must be taken under consideration in order to sustain in the market. The key opportunities G.M. can grab now are as follows.

Integrating A.I.

G.M. can integrate artificial intelligence with its cars. This will enable the company to go one step ahead of the competitors in the automotive sector. The demand for self-driven cars has been booming, and this is the right time for the company tojump into this segment with complete focus.

Go Green Mission of Organizations and Individuals

Due to the concern about carbon emission and climate change, organizations and individuals are now switching to eco-friendly transportation solutions. So, it’s a great opportunity for G.M. to produce eco-friendly mass vehicles and private cars. Especially, public and mass vehicles have huge potentials for the company.

Expansion in its Other Functions

General Motors is already focusing on other sectors as its growth strategy. The company’s new business brand BrightDrop® is one among those. It’s renovating the logistics sector. If General Motors can expand into that sector properly, it will be able to leverage the growing need for modern logistical systems worldwide.

Create Dominance in the Developing Markets

The U.S. market demand is shrinking, and the competitors are dominating the European market with their robust capabilities. But the developing nations possess a massive potential for automobile manufacturers. So, creating dominance in the developing markets will allow the company to raise its market share and overall growth.

Threats for General Motors

There are some external risk factors that threaten the business of General Motors. The highly competitive automobile industry is dependent on some other relevant industries. The threats those relevant industries possess also have an impact on G.M. Let’s discuss how threats like global economic factors, change in consumer preferences, and strong competitors impact G.M.

The Dominance of the Global Players

Global companies already have a strong position in the industry. Their dominance threatens the long-sustainability of the company in the market. These companies are offering superior solutions at lower prices. For example, Tesla has created a vertical integration model for its business, which minimizes costs and finally cuts a greater profit margin. If G.M. fails to regain its dominance, the threats of these global giants question the company’s future existence.

Decrement in Demand for Traditional Cars

The demand growth of traditional transportations solutions is decreasing for various reasons while G.M. depends on the sales of such products. This issue will push the company to make huge investments in its R&D and innovate new consumer-centric products. Otherwise, it will fail to retain the existing position in the near future.

Regulations and High Tariffs

The high import tariffs in the emerging south Asian markets are a key barrier to entering and leveraging the market. Even if General Motors wants to start manufacturing, they’ll have to face strict regulations from the governments and huge financial requirements. For these reasons, entry to emerging markets would not be easy for the company.

The Effect of the Global Recession

The average income of people has decreased worldwide. The pandemic has caused people to lose their jobs, face different financial crises. The automotive industry has lost billions of dollars as a result of the economic downturn, and recovery is expected to take several years. This will impact the sales volume of G.M. for a long time along with other market players.

Recommendations for the Company

To tackle the fierce competition and other threats of the industry, General Motors needs to utilize its core strengths like its advanced platforms and robust production capability. As the market is being saturated, the company needs to focus on its advanced platforms for long-term growth. Investing more in R&D and introducing cars with innovative features will help Gm to eradicate one of its core weaknesses and be a strong competitor in the market. The company should also gear up for the E.V. sector and integrate the safety features of its previous models to push itself more for innovations.

References

• https://en.wikipedia.org/wiki/General_Motors
• https://www.bloomberg.com/news/articles/2016-05-13/vw-s-european-market-share-slumps-to-five-year-low-on-scandal
• https://www.bloomberg.com/news/articles/2016-10-14/vw-fails-to-end-europe-market-share-decline-a-year-after-crisis
• Financial Statements of General Motors
• Wikipedia
• GM official Site
• https://practicalmotoring.com.au/car-news/general-motors-and-honda-team-up-to-produce-hydrogen-fuel-cell-systems/