Xavier University-Ateneo de Cagayan

School of Business Management

Corrales Avenue, Cagayan de Oro City

A WRITTEN ANALYSIS OF CASES 18: GENERAL MOTORS

In Partial Fulfillment of the Requirements for Strategic Management; BA23

Submitted to:
Mrs. Lilibeth Celesios

Submitted by:

Porcadilla, Justine Kaye

Godoy, Maria Ellieza
Mansog, Nica Loi
Gonzales, Windel
Jamora, Shaneika
Lehito, Garry Jay

March 03, 2020

Problem
(Actual Situation) General Motors is an automotive company that provides wide ranging vehicle
lines designed for different customers around the world. Nevertheless, General Motor has encountered
unprofitable and devastating operations that lead the company to abandon Russia and other Asia
countries. General Motor experienced a disastrous ignition switch flaw causing hundreds of deaths,
billions of fines, lawsuit settlements and ranging costs. The company's model development was also
lagging behind its domestic and foreign rivals, losing distinctiveness and forced to give up car lines.
General Motor is facing operations and safety problems that come from deep underlying problems with
the company's culture. Thus, the company should ensure sustainable and responsible operations to
maintain integrity, accountability, and profitability.
(Desired Situation) General Motor desires to offer a quality experience in transportation through
providing wide ranging vehicle lines to a global customer base. The company's primary weapon to beat its
rivals is through offering a distinct and extensive brand line up. The company also attempts to roll out new
models faster by making changes to its decision making process. General Motor has a clear vision to
address all kinds of problems to a year-long transformational leadership and a culture based in integrity,
accountability and profitability.
Objective/s
This paper aims to create possible ways on how General Motor can improve its company culture
in order to resolve multiple operations and safety problems to maintain integrity, accountability, and
profitability. It also aims to make recommendations about a framework for performance management that
can be implemented to obtain a competitive advantage.
Areas of Consideration
It is necessary to take a look at the factors that might affect the strategic actions of General
Motors. These include the macro-environmental (external marketing environment) such as political,
economic, social, technological, environmental, and legal factors; and micro environment (internal
marketing environment) namely: inbound logistics, outbound logistics, technology used. Accordingly,
political factors have become highly important in the 21st century. Increased oversight and government
regulation has led to increased pressure on international businesses. GM operates in several nations and
therefore its business is directly affected by the changing political climate of these countries. Economic
factors have also grown highly important in the context of international business. GM itself was on the
verge of bankruptcy and needed being bailed out by government support. During recession or times of
low economic activity, the level employment falls leading to low income and lower expenditure by
customers. This in turn leads to lower sales and profits for international businesses like GM. When the
economic activity is high, the level of economic activity and employment grows leading to higher
disposable income and faster growth for brands. In this way, economic factors affect businesses including
GM directly. Social factors have also kept growing in importance in the context of international business.
People’s taste and preferences change with changing social trends leading to fluctuations in sales of
specific products. In most corners of the world, the demand for SUVs and luxury cars has increased.
Moreover sociocultural factors affect the marketing and sales strategist of brands too. Demographic
changes in the world population have also led to changing demand and sales patterns. Millennial
generation wants stylish and technological advanced vehicles that provide higher level of safety and
convenience. The technological factors are now more important than ever in the context of automotive
industry as well. GM also sounds a large amount on research and development. In 2016, its expense on
research and development was 8.1 Billion dollars and this expenditure has kept rising from year to year.
Automotive brands including GM are on race for superior technology since it attracts customers in larger
numbers. All around the world, governments have become more cautious about environmental impact of
the automotive businesses. This is why brands are focusing more on minimizing their carbon footprint.
GM is investing in multiple technologies offering increasing levels of vehicle electrification and is currently
offering six models in the U.S. featuring some form of electrification and continue to develop plug-in
hybrid electric vehicle technology and extended range electric vehicles. Legal compliance is now a bigger
burden for automotive brands like GM than ever. Compliance issues are driving costs manufacturing
costs upwards for the automotive brands.  From environmental laws to labor laws and quality related
laws, there are so many laws that vary across the various corners of the world. In addition, when it comes
to the internal environment of the company, one major aspect is the culture of the company and its
employees. In General Motors’ case, the corporate culture promotes agility in human resources. Such
agility is expected to support the company’s efforts to improve overall business performance, especially in
the face of internal problems and rising competition with firms like Toyota and Ford.

Alternative 1: General Motors should continue reforming the organizational culture to address the
issue regarding operations and safety issues.

General Motor should improve its corporate culture by establishing clear company values and
goals. A poor company culture can have many consequences, which include things like what General
Motors has faced--- negligence towards disastrous ignition switch that caused hundreds of deaths, billions
of fines, lawsuit settlements and ranging costs. To avoid this from happening again, the company should
focus more from deep underlying problems with its culture. Even though it is not an easy task since it
requires plenty of time and effort, the management can change a negative work environment to improve
performance and increase accomplishments, both individually and as a team. Creating a committee of
employees who can work together to make the work environment better is one option. Holding a meeting
with the entire team to discuss improving the culture and asking for suggestions and opinions is a good
way to include everyone in the transition. Also, dealership’s leaders should be able to realize when
something is wrong with the workplace culture and subsequently take steps to fix it. Clearly, GM’s safety
culture is, and has been for quite some time, badly broken. A strong safety culture stems
from psychological safety — the ability, at all levels, to speak up with any and all concerns, mistakes,
failures, and questions related to even the most tentative issues, thus, General Motors must
encourage employees, dealers and suppliers to tattle whenever they see a possible problem. In this way,
the company employees can enhance its communication and relationship among one another and
ultimately get rid of “don’t tell” culture. If it is done properly, future possible complaints from customers
regarding operations and safety issues can be avoided. Although it requires the company to invest plenty
amount of time, money, and effort, all of these will not put into waste since it would be beneficial for the
company in the long run.

Alternative 2: General Motors should do multiple strict pre-production testing with expert switch
engineers and technicians to assure conformance and detect any switch defects before product
launching.
The company must focus on recalls and vehicle safety before, during and after the car is
engineered, built and sold. There must be someone who will communicate with GM leadership regularly
to ensure that top brass, including the board of directors, will not be blindsided by a major defect again
and that they are accountable for vehicle quality. In this way, the company can create a safety field
investigation team and a new, more comprehensive support organization to process and identify safety
issues and fix them fast. All employees, dealers and suppliers must be encouraged to submit safety
concerns to the field investigation team. Adding a systems engineering organization to oversee how
each part impacts the whole vehicle and implementing new-employee orientation and annual training on
improving safety can also be considered. Although these alternative ways may incur additional expenses
for the company since its implementation is quite expensive and require more time and effort, all would be
worth it if done successfully. It will help General Motors minimize future possible complaints from
customers regarding operations and safety issues; eliminate lawsuits, and financial crisis. Product
performance can also be enhanced and customer trust can be gained back if multiple strict product
testing becomes successful and consistent from time to time.
Alternative 3: General Motors should increase its rate of innovation to improve competitiveness
and protect the business from potential disruption in the automotive
Despite massive investments of management time and money, innovation should remain a
pursuit in General Motors. The market is transitioning fast and GM must focus on innovation to keep up
with the fast changing trends and demand patterns. The company must invest in the latest technologies
like AI and autonomous driving especially that the demand for electrical vehicles has kept rising, so GM
must focus on bringing more electrical vehicles and hybrids so as to gain leadership position in this area.
In this way, the company can grow its market by improving the production capacity and or flexibility of the
business – to enable it to exploit economies of scale. Innovation can also enable General Motors to
reduce its carbon emissions, and comply with changing product legislation. It can also help establish a
unique selling proposition– something which the customer is prepared to pay more for and which helps a
business differentiate itself from competitors. With new advanced technologies and new better ways of
product testing prior to launching, operations and safety issues of vehicles can be minimized and
eliminated. However, much research is speculative and there is no guarantee of future revenues and
profits. The longer the development timescale the greater the risk that research is overtaken by
competitors too. And just like other business activities, R&D has to compete for scarce cash. Given the
risks involved, R&D demands a high required rate of return.
Alternative 4: Grow the dealership network to expand GM’s market presence in developing
countries
General Motors aims to be one of the top sellers globally. Thus, the company should grow their
dealership network to expand GM’s market presence in developing countries. Developing new car
functions and features that involves automotive technology can increase their product lines. The company
can also grow by investing to companies that can grant technological advancements like virtual digital and
emerging car efficient technologies. With this, General Motors can revamp its product lines in a regular
basis and crafting a vision of the future with an established market presence in other developing
countries. Growth and expansion will globally cater the needs and wants of their customers around the
world. Moreover, expanding in emerging or developing markets by offering more affordable units will give
General Motors the opportunity for first-mover advantages. If the company can set up shop in an
emerging economy and build early success, it can become the recognized brand in its industry. It can
also build local partnerships and has an advantage over competitors that come along later. Moreover, as
new economies emerge, untapped capital is up for grabs and building and maintaining a pipeline to those
funds will help the company to not only expand globally, but also bring in new resources for domestic
growth. However, a disadvantage of trying to do business in emerging economies is the challenge in
overcoming cultural risks. Cultural perspectives and product usage vary around the world and when new
economies emerge, they may have different expectations than ones in which a business is established.
Conclusion
In conclusion, General Motor has remained one of the largest automotive companies of today.
Although they have experienced financial difficulties due to operations and safety issues, they still need to
continuously compete in the industry by providing quality vehicles and standing on customer satisfaction.
They have to focus on one single global vision that is to design, build, and sell the world's best vehicle by
giving much more importance on reinvesting what drives continuous improvement in vehicle safety and
design, manufacturing discipline, brand strength, competitive pricing and margins. Overall, if General
Motors continues to use the method of providing quality vehicles and focusing on customer satisfaction,
the company will regain its excellent position in the industry.
Recommendation
In order for General Motors to continue on its path to growth and success, the company’s
marketing, strategic, and operation management must be on point. A vital component of its system should
include a comprehensive environmental scanning process, both internal and external. The company has
to make sure that operations and safety issues will not happen again in the future by reforming
organizational structure into better one, doing multiple strict pre-production testing with expert switch
engineers and technicians to assure conformance and detect any switch defects before product
launching, and increase its rate of innovation to improve competitiveness and protect the business from
potential disruption in the automotive. Moreover, growing the dealership network to expand its market
presence in developing countries must also be taken into consideration. The process should emphasize
market research that focuses on specific target markets with strategic identification and unique
approaches per market. There should be a parallel unique point of sale concept per targeted area that
takes into consideration not only competition and economics but a holistic review of the various factors
affecting market conditions. Relatedly, strategic expansion will require optimal strategies form increasing
sales. Realities of this shift in economic power, especially in emerging markets, should focus on
affordability and practicality with a balance of quality and optional luxuries.