GM Case Analysis

GM Case Analysis

1. Analyze GM using the competitive forces and value chain models.

Porter's competitive forces model

Porter's value chain model

2. Evaluate the current business strategy of GM in response to its competitive environment. What is the role of Internet technology in that strategy? How successful is that strategy?

The current business strategy of GM in response to its competitive environment is based on the belief that by intensively weaving Internet technology into all of its business processes, GM could become a smarter, leaner, faster company, more in tune with customers. This technology would help GM reduce from 24 to 12 months the time to design, engineer, and manufacture a new vehicle, cutting up to 10% of the cost of making a vehicle by eliminating supply chain inefficiencies. Internet technology could be the catalyst for GM to reconstruct its entire value chain, transforming itself into a customer-focused business that provide many different electronic services to consumers, as well as cars.

Two decades of restructuring and reorganization have brought about deep changes in GM, paring down the waste and overbloated bureaucracy. The company has slashed the time required to produce a car from 48 to 18 months, eliminating $1 billion in engineering costs. It has also developed new online sales channels and sources of revenue. GM is becoming highly skilled in selling over the Internet.

3. Evaluate each of GM's e-commerce and e-business initiatives described in this case. How much value can they bring the company?

Selling Vehicles Online

GM does not actually sell vehicles directly online but provides Web sites with a range of services for both customers and dealers.

GMBuyPower.com, est...

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Selling Vehicles Online

The laws in most US states make it extremely difficult other than licensed auto dealerships to sell new vehicles, due to the lobbying power of the National Auto Dealers Association (NADA). Dealers are vital to GM for several other reasons, including their close connection to their customers and to the automobile-purchasing public.

Building Vehicles to Order

Build-to-order requires producers to carry larger work-in-process inventories, a reversal of the 20-year trend of just-in-time component supply deliveries. Producers would now need to hold, skillfully, inventories of certain kinds of parts (modules), such that one can be flexible enough to take a generically defined car, then at the last minute suddenly have a defined car.