General Motors

General Motors Corporation has failed to adequately respond to shifts in its general and competitive environments. We will argue that past success led to over-confident management and inertia, causing lack of foresight in anticipating change, and causing it to undertake obligations that now constrain its ability to react. We will first introduce GM’s traditional business strategy, and what its position is relative to its competitors. Then, we will describe GM’s global, economic, demographic, political/legal, sociocultural and technological environments, showing how GM has fallen behind in each. Each section will end with a discussion of how the environmental changes in question have impacted GM’s position in its competitive enviroment, ultimately leading to its current state of poor sales and near-bankruptcy. We believe GM’s management now needs to be proactive in rectifying its current situation, instead of adopting short-term, stop-gap measures.

GM’s traditional strategy is to have a full array of cars, trucks and minivans for each of its brands[1]. It has particularly relied on big cars and trucks – like SUVs, the GMC Yukon and the Chevy Tahoe[2] - as opposed to direct competitors like Toyota, that are known for smaller, more fuel-efficient cars. Also, GM follows the core assumption that job satisfaction leads to profits[3]. This strategy worked well for GM in the past when it controlled the greatest share in the auto market. Between the 1930s and 1980s, GM held a 41% to 46% share of the US car market[4]. It was dependent on this strategy and did not undertake intensive product innovation or streamlining of production processes[5]. Recently, however, this share slid to 26%[6] as its competitors were positioned to capitalize on the environmental shifts that disadvantaged GM.

Global Environment

The global environment poses both