General motors external environment analysis

Demographic Factors Demographics in the automobile industry are very essential in determining what cars to make and who to sell them to. Before a car is put onto the market there are many studies that are taken to see what market the car will sell to, whether it is based on income, age, ethnicity, or gender. All of the studies are very important in determining whether the car is worth making and putting onto the market. The buying power of a certain demographic may be a key factor in determining whether to pursue that part of the market or not Ezine Articles,

General motors external environment analysis

For example, the company must implement measures to maximize process efficiencies, which contribute to cost leadership and, thus, competitive advantage. Strategic decision makers must prioritize business issues and challenges according to the intensities of the external factors and forces shown in this Five Forces analysis of General Motors.

The company must ensure that solutions and strategies are suited to the forces and applicable to the corresponding external factors. General Motors experiences a high intensity of competition, especially because of the aggressiveness of firms in the automobile market.

For example, relevant external factors support a high level of competitive rivalry against GM. Competitive rivalry or competition strong force Bargaining power of buyers or customers moderate force Bargaining power of suppliers weak force Threat of substitutes or substitution moderate force Threat of new entrants or new entry moderate force Recommendations.

Strong competitive advantage can protect the automotive business from the negative effects of the high intensity of competition. Thus, GM can address the competitive condition of the automotive industry environment through value creation and technological innovation.

Competitive Rivalry or Competition with GM Strong Force The influence of firms on each other and on the automotive industry environment is evaluated in this aspect of the Five Forces analysis of General Motors Company.

Firms typically compete against each other.

General motors external environment analysis

In this case, General Motors faces the following external factors and their intensities that contribute to the strong force of competitive rivalry: High aggressiveness of firms strong force High exit barriers strong force Moderately high number of firms strong force The high aggressiveness of firms exerts a strong force on General Motors.

Such aggressiveness is exhibited through marketing campaigns, rate of innovation, and other endeavors. On the other hand, the force of competitive rivalry is strong, partly because of high exit barriers on companies like General Motors.

Economic Factors Important to GM

High exit barriers push firms to remain in the market and seek out more effective strategies against each other. This external factor imposes a strong force on General Motors and other automotive firms.

Moreover, even though there are only a small number of large automobile manufacturers in the global market, there are many small and medium regional and domestic players.

For example, General Motors must compete with global, regional and domestic automotive firms to succeed in growing the business. Thus, this aspect of the Five Forces analysis highlights the benefits of aggressiveness in General Motors marketing mix or 4Ps.

General Motors PESTEL/PESTLE Analysis & Recommendations - Panmore Institute

Customers determine the revenues and profits of companies. General Motors must address the following external factors and their corresponding intensities that lead to the moderate force of the bargaining power of customers or buyers: Moderate switching costs moderate force Moderate substitute availability moderate force Small size of individual buyers weak force Moderate switching costs are an external factor that creates a moderate force on General Motors Company.

For example, customers are moderately likely to shift from GM to other automobile manufacturers because of the price of each purchase.

These substitutes include bicycles and other transportation alternatives. However, the intensity of this power is weakened because of the small size of individual buyers that transact with General Motors.

For instance, a customer typically purchases only one automobile, which is small compared to the millions of automobiles that the company sells every year.

Political Factors Affecting General Motors Company

Suppliers control the availability of materials or inputs used in the production of automobiles and related products. Moderate population of suppliers moderate force High overall supply weak force Low forward integration weak force General Motors accesses a moderate population of suppliers, such as steel producers.

This external factor leads to a moderate force on the company. If there were fewer suppliers, each supplier would have a stronger bargaining power on firms like GM. Another consideration is the high overall supply available to General Motors. Such forward integration refers to the control that suppliers have on the distribution and sale of their products to companies in the automotive industry.

Substitutes can reduce the revenues of firms and limit the opportunities in the automotive industry environment.

General motors external environment analysis

In this case, General Motors must address the following external factors and their intensities that contribute to the moderate force of the threat of substitution: Moderate switching costs moderate force Moderate substitute availability moderate force Low variety of substitutes weak force Based on the external factor of moderate switching costs, substitutes exert a correspondingly moderate force on General Motors.

Also, the moderate availability of substitutes contributes a moderate force on the automotive industry environment. However, the intensity of the threat of substitution against GM is weakened because of the low variety of substitutes.General Motors’ Sierra in Montreal, Quebec, Canada.

A PESTEL/PESTLE Analysis of General Motors Company identifies significant opportunities for growth based on a variety of external factors in the remote or macro-environment of the automotive industry.

In the paper, analysis of the external environment of General Motors (GM) is done through the use of various analysis tools for the in-depth understanding of the external environment of GM and aid in the formation of perspective on the strategic issue.

This is a 6 page paper which discusses the current problems at General Motors and the affect of its external environment on the success or . The following analysis will discuss in detail the external environment of the auto industry and then transition to examining the internal environment of the U.

S. firm, General Motors. GM is a large and well known domestic auto manufacturer that was the leader in U.S. auto sales for many years and at one time possessed a 4% market share.

External environment of GM Motors as per Porter’s Five Forces Analysis is as follows. Threat of New Entry As per the economical slump, research and development cost, inflation with the respect to the automobile development structure, it is nearly impossible for the new entry to jump into business.

Environmental Analysis on General Motors Introduction Environmental scanning is a collection of problems from the external environment for information management, organizations and use of the method of strategic decision-making process.

General Motors PESTEL/PESTLE Analysis & Recommendations - Panmore Institute