General Motors has several internal and external influences that are challenging them to reduce their operating costs and become more efficient. In doing an analysis of the General Motors using Porter's Competitive Model these influences become clear and opportunities for the company to reduce costs and increase efficiency using information systems becomes obvious. Porter's Competitive Model is a model used to describe the interaction of external influences; specifically threats and opportunities that affect an organizations strategy and ability to compete [Laudon & Laudon, 2005, p. 103].
Starting at the center of the model is the current industry, which includes General Motors and their typical competitors, such as, Ford, DaimlerChrystler, and the Japanese [Laudon & Laudon, 2005]. All of these traditional competitors are able to produce cars at a much cheaper cost than General Motors. Looking at the supplier portion of the competitive forces model, part of the reason General Motors was unable to produce cars inexpensively in comparison to their competitors was that they were producing a lot of their own parts. Their competitors were able to purchase parts from outside vendors at lower prices. General Motors viewed this as an opportunity and has since shed a lot of workers and factories and are currently searching everywhere for the lowest prices on parts. Also General Motors was very slow at producing cars because of old information systems and outdated processes. A lot of General Motor's systems could not communicate with each other, which was causing a major lag in the production of automobiles. By integrating these systems they were able to become faster and leaner and were able to increase their customer focus [Laudon & Laudon, 2005]. In the competitive forces model, General Motors also has influence from new products and services to reduce costs and increase efficiency. General Motors wants to experiment with new ways to serve their customers, one of which was online shopping, allowing customer to shop for car models and colors online and giving them dealerships in the area that were currently in possession of the car they preferred. By utilizing the Internet, GM was able to provide additional services to their customers and allow them to also purchase vehicles online. General Motors also found an opportunity to build vehicles to order. This allows them to reduce the cost of inventory and sales incentives by finding ways to make cars that customers have actually ordered [Laudon & Laudon, 2005]. Another new technology-based service General Motors has been experimenting with is called OnStar. OnStar is a navigation, Internet, safety, and communications capability that is available on a majority of GM models. Customers have to subscribe to the service but with the service they receive roadside assistance, stolen-vehicle tracking, and concierge support such as making dinner reservations [Laudon & Laudon, 2005, p. 111]. OnStar is a comprehensive service, however, has not been successful in gaining interest of a lot of GM customers. New entrants to the automotive market have been a threat to General Motors. Some of these entrants include Nissan and Hyundai. Although, they have been around for a while, they are increasingly gaining a large portion of the market and have been very efficient in product development and bringing new models to the market quickly. In response to this threat General Motors has attempted to stream line their product development portion of their business. In the past, General Motors would have to go through several departments and systems to take a car from design phase to actual production. The average was typically 48 months for this process. After some analysis, General Motors has formed a single committee that now handles the entire product development process. They removed all of their former design and engineering systems and replaced them with a single...
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