The key strategic issues for GM are its organizational efficiency, its production processes, and market responsiveness.
GM can improve its situation by altering its organizational structure to promote a lean management process. It should change its production processes to reflect higher efficiencies in supply chain and platform distribution, and increase its market responsiveness by shortening its time from design development to rollout.
General Motors (GM) is one of the world's largest companies, with manufacturing operations in over 30 countries and product sales of nine million units in more than 200 nations over the world.1 In spite of its rich history of rising from humble beginnings in 1908 to its apex of controlling 65% of domestic car sales in the mid-1970's, GM today is one of the least profitable vehicle manufacturers in the world. In fact, as of the date of this case study, GM's return on invested capital is only 1/6th that of one of its major competitors. This represents a significant dilemma that must be addressed and resolved if the company is to maintain its viability. The purpose of this paper is to examine the critical strategic issues facing GM and offer recommendations on specific steps that can be taken to address the deficiencies.
The analysis of critical strategic...
First, the external environment is reviewed to identify those opportunities and threats which may be present. These include industry issue, competitor actions, and customer trends. Further external considerations may include supplier and supply chain management as well as environmental factors. Second, the internal environment is analyzed to determine both strengths and weaknesses so that the former can be maximized and the latter attenuated. Finally, the results of the SWOT analysis are synthesized into identifiable, key strategic issues that can be prioritized for management's focus. Once identified in terms of their urgency, the issues can be addressed in such a manner as to bring about the most positive result in the most efficient and timely way.
External. In terms of industry-wide strategic management considerations over the past 25 years, GM has not done a good job responding to the changes facing the industry. Like most American car manufacturers, the company was unprepared for the 1973 energy crisis and the subsequent revelation of its product's fuel inefficiency. As the market demand changed to smaller, more fuel-efficient vehicles, GM was not positioned to make the necessary adjustments and thus lost market share to the new competition; the Japanese. The foothold gained by the competition in that era has been expanded in recent years and although GM has restructured several times, it has never regained the market share necessary for profitability.
From a competitor standpoint, the Japanese automakers were particularly well situated to threaten GM's market share. They were already proficient at manufacturing smaller vehicles, had a tighter management structure, a better cost efficiency, and out-performed GM and