Upon your request, I have prepared the enclosed report on the effect of external environmental changes on General Motor’s strategy. The content of the report includes an evaluation of General Motors current overall strategy and recommended reaction for the President’s newly imposed policy.
Saab is a product differentiator with specific target customer groups.
Safety-oriented, high-quality, environmental-friendly, Saab has its unique value proposition. Unlike brands like Chevrolet which is known for a broad range of products, smaller brands like Saab focus on specialized market instead. On its website, Saab emphasizes how the turbo-charged technology is “reliable, durable and exhaust-driven”[i], which makes it different from other brands. It has a mid-high price range among competitors. That’s probably why Saab has competitors like BMW, Volvo and Mercedes. Customers for Saab cars are people who care more about the car’s safety features and less about the price.
Industry factors show that Saab has a pretty strong competitive advantage.
Auto manufacturing industry is in mature stage of its development. The trend towards environmental-friendly and fuel-saving have had great impact on the industry in the past few years. There are very few barriers to entry for potential competitors. However, the fact that we are heading towards a recession is hurting the demand for cars. So there are very limited threats of new entrances. I think the power of suppliers is neutral. There are several suppliers available for providing raw materials, mainly steel. However, there are not that many suppliers for key parts such as the engine of a car. The power of buyers is high, as customers’ concentration is low and that customers don’t have a high switching cost. The availability of substitutes is very high, considering public transportations are popular nowadays. (See attached Exhibit 1) The industry is well concentrated, as “the eight...