Competition and Bankruptcy of General Motors SWOT Analysis

Paper Type:  Essay
Pages:  7
Wordcount:  1861 Words
Date:  2022-06-16

Introduction

Competition from international firms adversely affected the position of General Motors in the market. After the financial crisis of 2008, the economy of the United States became unsustainable for the average person and individuals had to seek cheaper products and services. The international market responded to this need for cheaper products and the automobile industry in the United States experienced a shift. Many people bought products from international companies because of their availability (Bosco & Plante, 2013). Consequentially, the sales at General Motors declined immensely and the company faced imminent bankruptcy. In the period following the Financial Crisis, the company's shares decreased by 22%. International companies proved to be too competitive because of their low cost structures that were ideal for the harsh economic times.

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Additionally, General Motors was unable to sustain competition from other evolving brands because of its unproductiveness. The problem particularly emerged when the company dropped its plan for the electric car. Other companies adopted the idea at a time when there was a lot of concentration on environmental preservation (Bosco & Plante, 2013). The companies diversified their brands with this idea even though General Motors had been the first to think about the revolutionary electric car. Subsequently, the company could not compete with other players in the industry like Toyota who took on the idea for the electric car and diversified their products. Eventually, General Motors became bankrupt when it could not compete effectively.

Moreover, General Motors was highly impacted by the 2000 Financial Crisis because it offered loans. There was a section of the population that argued that the company was more of a lending institution than it was a car manufacturer. The company provided loans at a time when the financial institutions had favorable conditions to for this. At the same time, General Motors borrowed more from banks in order to sustain its growing business. However, individuals failed to pay the loans from the company and General Motors could no longer finance its activities (Grant, R2016). Furthermore, given the situation following the crisis, many investors did not have money to pump in companies like General Motors that did not showcase any promise. The situation led to the bankruptcy of the company that could not find solutions to the loan crisis and the investor position.

Another problem emanates from the quality of cars that General Motors produced. Many of them failed to meet the standards in place and could not compete in the market. For instance, the Chevy Vega performed very poorly in the market and was unable to register a good return on investment. In 2007, the quality issues in the company led to its poor performance in the financial market; its stock feel by over 23% (Grant, 2016). By the time General Motors was making these realizations, it was too late since consumers had already moved to other brands.

All these issues had immense negative consequences to the company because it lost it lost its market share. The decrease in stock meant that the value of General Motors as a brand became much lower. The result was the fall of its market share that ensured the company went bankrupt eventually. It could not compete favorably with other giants that were growing at a fast rate. The company lost its credibility in the automobile industry and struggled to remain afloat financially. It lacked a loyal clientele because many people did not trust this brand after a series of low quality cars. Hence, the same meant lower sales and the lack of profits to keep General Motors afloat. All these issues had adverse impacts on the employees. They had high turnover rates as many could not stay with a company that seemed to be crumbling. The employees also faced financial difficulties because there were payment issues due to the bankruptcy. Some employees also lost their jobs when the company started performing poorly.

Analysis of the Journal Article

The article highlights the participative leadership theory. It is a theory that emphasizes shared decision-making between management and the employees. It is used to motivate the employees and help them grow (Nahavandi, 2006). The article illustrates the lack of participation from the employees at General Motors and presents its negative consequences. It posits that only the engineers and managers were allowed to be part of major decision-making about the designs and process of manufacturing of the cars (Helper & Henderson, 2014). The employees only followed orders as they were told and in accordance to their stipulated roles. The situation created a hostile environment in General Motors because the management and its employees had a poor relationship. The success of General Motors in the future would, therefore, depend on how successfully the company employs participative leadership. There is need to ensure the employees are part of every process. The approach would allow the employees to feel motivated and may enhance the pool for ideas that make the company more competitive.

The trait theory also applies to the leadership illustrated in the article. The theory opines that the behavior of a leader is essential in their success. Leaders have different traits that manifest themselves through the type of style they choose to employ. For instance, the article illustrates the presence of authoritative traits among the leaders in General Motors. In this case, the management at the company wanted the employees to conduct their duties in the way the leaders wanted (Helper & Henderson, 2014). The managers had authority over how the employees acted and threatened their job security. Anyone who did not follow the rules in place faced employment termination. Hence, this approach prevented the employees from feeling a sense of security and being creative. The authoritative leadership style reflected traits of leadership that encouraged groupthink and killed the ability of the company to be competitive. Moving forward, General Motors would require leaders who employed different traits. It would need democracy to encourage creativity as opposed to authoritarianism. The success of the company relies upon the ability of the leaders to relate well with their employees and motivate them to think outside the box for ideas that would enhance uniqueness.

The transactional leadership theory is also identified in the article. In this case, the article identifies the management of Toyota as being illustrative of transformational leadership qualities (Bayou & De Korvin, 2008). For instance, the leadership allowed the growth of the employees by giving them the opportunity to solve complex problems as they emerge and contribute to the quality of products in the company. The employees in Toyota were allowed to influence the change process because they could identify problems, analyze, and solve them as they emerged. However, this was not a culture at General Motors as the employees simply followed what they were told and could not be facilitators of quality. The article, therefore, reflected the need to adopt transformational leadership in General Motors as a requirement for success. The same would permit a change process that would influence quality with the employees being a key part of it.

SWOT

Strengths

One of the strengths of General Motors is its strong brand. Before the company went bankrupt, it was one of the most reputable in the automobile industry. The organization built a strong brand and the image was still in place in the years following the bankruptcy. There was still a section of the market that trusted General Motors because of its brand reputation and strength. The brand image was especially strong in the United States and it still prevails to this day.

General Motors is also well-endowed with a highly knowledgeable human resource team. It has some of the best engineers in the market who have the expertise to ensure the company remains unique and competitive (Bayou & De Korvin, 2008). The problem with General Motors has never been in the ability of its human resource that possesses the skills to take it to the next level.

Weaknesses

General Motors has the weakness of having a bureaucratic structure that prevents creativity and competitiveness for the company. As illustrated in the above discussion, the management makes all of the decisions and is quite authoritative in nature. The same prevents its highly qualified personnel from reaching their full potential and being impactful to the success of the company.

Additionally, General Motors does not have any strong presence in markets outside of the United States. The United States is its primary market even though it has grown smaller over the years as competition stiffens (Bayou & De Korvin, 2008). The lack of international presence is problematic because it limits the profitability of General Motors. It limits the company's ability to increase its market share and compete favorably.

Moreover, the company does not have diversification. Other automobile companies are developing different products that make it easy for them to remain competitive. General Motors gives its consumers very limited options and thus reduces its ability to compete favorably.

Opportunities

There is an opportunity for General Motors to expand to developing nations and make a name for itself. The market in developing countries is growing and requires international presence in the automobile industry (Grant, 2016). The company also has an opportunity to venture into the electronic industry. The rise of the green planet campaign has created a market for hybrid vehicles that is still growing. General Motors can take the opportunity to diversify its products.

Threats

There is the threat of the rise of other means of transportation. The government in the United States is urging its citizens to use bicycles, walk, or take buses and other public means of transportation. The encouragement comes as way to preserve the environment and promote a healthy nation. The same reduces the demand for cars in the market and places General Motors in a difficult position. Another threat is increasing competition from other companies. General Motors suffers with a small market share that threatens its redundancy in the market. The luxury consumer prefers cars from other brands that make it difficult for General Motors to compete.

Based on the results above, I would implement many strategies to ensure the success of General Motors moving forward. The first aspect is to change the organizational structure and enhance the decision-making process. I would remove the bureaucracy by eliminating hierarchies and making the organization more decentralized (McKee, 2012). The rationale is to give everyone the power to be part of the decisions so as to bring in the expertise of the human resources. The second strategy would be to venture into the electric car industry. I would manufacture new models of high class vehicles that are unique and conserve the environment. Another strategy would be to manufacture low income vehicles for developing countries. There is a demand for good road resistant vehicles that are affordable in this market. Hence, I would ensure General Motors meets this need through an expansion strategy to the most economically advanced developing nations. All of these aspects would ensure the success of the company that will manage to remain more competitive in the future.

References

Bayou, M. E., & De Korvin, A. (2008). Measuring the leanness of manufacturing systems-a case study of Ford Motor Company and General Motors. Journal of Engineering and Technology Management, 25(4), 287-304.

Bosco, C., & Plante, C. (2013). Bankruptcy of...

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Competition and Bankruptcy of General Motors SWOT Analysis. (2022, Jun 16). Retrieved from https://proessays.net/essays/competition-and-bankruptcy-of-general-motors-swot-analysis

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