General Motors (GM) is one of the largest companies involved in the business of designing, building, selling and servicing automobiles and parts in the global market. Company owns several brands such as Chevrolet, Cadillac, Buick, Pontiac, GMC, Oldsmobile, Opel, Hummer, Saturn and Saab Founded by William “Billy” Durant in 1908, GM held only Buick Motor Company initially, but in a matter of few years acquired more than 20 companies including Oldsmobile, Cadillac, and Oakland, today known as Pontiac. As demand for vehicles started increasing to unexpected levels during the 20s, GM set the pace of innovation in production, design, and marketing for others to follow [www.gm.com]. Due to the challenging times in America and political turmoil in Europe, GM went through uncertain times during 30s. Post World War II, automobile market opened up again with increased consumer optimism and GM responded to the situation with continued innovation. The 60s and 70s saw an unprecedented revolution with increased prices and foreign competition. Responding to the environment, GM downsized its vehicles, making it lighter and fuel efficient. GM led the automotive technology revolution by introducing catalytic converter in reducing emission and by offering airbag in their cars. During 70s, GM vehicles were built to run on low-lead or unleaded gasoline. 80s and 90s marked globalisation in the automobile industry. While Japanese, Korean and German manufacturers where leading the American automobile market, GM started aggressively to expand globally. By new millennium, GM had become a global company with strong presence in emerging markets such as Brazil and China. GM renewed focus on innovation with push to electric vehicle technology, hydrogen powered fuel-cell concept and flex fuel vehicles. However, recession with global credit crisis pushed the car sales to near depression levels and dried up operating capital for GM. US treasury has offered a bridge loan with the condition that the company will undertake restructuring to come out of the crisis. Post-bankruptcy filing on June 1, 2009, new general motors company has been created on July 10, 2009 with U.S Treasury, Canadian Government, and UAEW Retiree Medical Benefit Trust as its major shareholders. This new GM is smaller, leaner company than its predecessor with fewer brands, more focussed dealer network and competitive labour agreement with it’s unions.
PESTEL framework helps understand different external factors that may have influence of the business strategy of the organisation.
PESTEL Analysis for General Motors
Government laws and regulations have a great deal of impact on the automobile industries. While the labour laws and taxation of the land will have an impact on the companies which has the manufacturing facilities on the land, restrictions on trade and other regulations of market will have an impact on the sales. Following political factors have influenced the global automobile industry in the past decade •
Political uncertainty in oil producing countries like Iraq has made the gasoline price go up in the last one decade and hence demand for gas guzzling SUVs and other heavy vehicles has slowed down •
With the growing awareness about global warming, emissions norms in most of the countries have been tightened •
With the GDP growth of the developed countries continue to remain low, majority of the countries have maintained aggressively low interest rates to stimulate the economy Economic
High Gasoline price
Increased volatility of the raw material price including steel price •
Decreasing oil reserve is expected to have a major impact on the automobile industry •
Increase in disposable income amongst the middleclass population of emerging markets like India and China has boost the demand for small and medium size cars •
Growth from non-traditional markets like Asia...
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