The automobile industry value chain analysis

The automobile industry value chain analysis prick 2 Fol outseting on from your analysis in Question 1, prove the matched postion of General Motors Europe (GME) at the fourth dimension of the case. terror of presentationThe automobile industry is facing the mature stage, although the blue barriers to entry considering the grand center of capital required for companies to manu itemure and design their cars and the very low exchange be consumers face when ever-changing carshowever it doesnt mean there be no new entrants to Europe for instance Asian car manufacturing business as Toyota Nissan and others to be actively present in the securities industry.Threat of arguingThere is a very blue holy terror of rivalry in spite of appearance the industry, as automaker should always be updated with new technologies, innovation and issue out with new models and design. Moreover for GME the exit barrier is relatively high due to layments made throughout the past decades. With t he emergence of Asian carmakers in Europe there had been a diversification considering models and prices, in other quarrel it is a diversity of rivals.Threat of SubstitutesSubstitutes inwardly the industry ar much or less depending on consumers and their preference of commuting and travelling, it incorporates cycles, b habits, underground and besides could be planes and just walking. Consumers arent shootended by taking public transports within the most European countries, also traffic jam in some places are reason for non using a car, which decrease the substitution monetary value., plus the high price of gas play a major role.Threat of SuppliersAs automakers manufacture their cars so the threat is considerably low, as there are a big flake of providers GME can cull from, which make suppliers give more discounts, also cars elements are more or less standardised. Most of the eon car companies attach with one supplier and there is no forward integration as suppliers ar e pocketable comparing the automaker and in contrary GME can integrate backwardly the supplier or in some cases they create an alliance to surmount the be.Threat of BuyersExcept big companies buying lots of cars, solobuyers represent an insignificant threat but at the same time its bargaining power is high as the customer has plenty of divers(prenominal) brands, models and prices to choose from. The large number of consumers are facing as said before low switching be and the loyalty brand isnt very high which means that GME has to draw and quarter and retain consumers by incentives for example due to price sensitivity, as consumers are looking for the best deals concerning quality/price.Value chain analysis primary election Activities The Primary activities for GME are the followings Product Designing, resourcefulnesss purchase, Production, Marketing and Distribution and finally client Service.Product Designing is becoming of the key features within the industry. As straigh t off cars are almost standardised, so with the right tools GME cars have already an count on of strength and power. GME is at the same trying to offer cars that are non only powerful but also less fuel consuming.Resource purchase the purchase of the right material is very important, as seen in Porters Five Forces, suppliers have very low power on GME in other words the organisation can almost select its preferable price over the supplier.Production GME was the largest manufacture of cars in Europe the production reached its peak in the early 1990s. However, its methods have showed an inadequacy, as they have been producing more than the demand.GMEs Marketing Distribution efforts havent done an efficient job of pleasing the public. This could be by displaying cars in showrooms, announcement etc. in order to baffle automobiles GME uses trucks and trains to deliver them to dealers.Customer Service Support generally supporting the customers by and by a sale. GME has an 800 numb er so if customer needs help or have an enquiry they can call for free.Support Activities sustain the periodic trading operations of GME but are not directly implicated in the manufacturing process of GME vehicles. These activities include Human Resources, communications and Consumer crediting.Section 3 prise the proceeding improving options taken or proposed by GME at the time of the case.General Motors Electric knew that it could only improve from within (internally) as big economic factors like exchange rate, inflation rate etc are beyond their reach.All in(predicate) businesses have mainly two aimscut costsincrease salesIn GMs case increased sales was not an accessible option, so therefore the company had to focus on performance improving options, here below is what GM proposed at the time of the case.GM reduced its workforce by 20% in an attempt to pull ahead productivity and reduce costs by $600 millionUse competitive pricing and offer additional servicesGME formed a s trategical alliance with Fiat SPA in 2001 a restructuring plan called expulsion Olympia was produced to again reduce costs and decrease production ability by 15%Closing down Luton plant to again reduce costsMoving production to cheaper areas in this case a German plant was closed down and manufacturing transferred to PolandIntegration of operationsAbandon cost incurring practices like using different parts and wiring for different carsStrategically GME have achieved both some success and failure in its operations to improve the situation in Europe, for example the reduction of employees and closures of unprofitable plants are fully justified as the business cant lapse to record huge losses year on year, in fact these decisions should have been made faster reflecting GM poor guidance structure unable to make quick decisions in a ever changing market. GM was also correct to cut out the practice off using different parts and wiring for different cars as this reduces overheads as any loss making business must cut costs at every opportunity. However there are also strategic failures GM implemented for example a strategic alliance with an Asian manufacturer would have been more beneficial then with Fiat as this alliance could have given GM access to superior management and technology resources, in return GM could have offered some concessions to the US market. Another example of poor strategic decision making is the use of competitive pricing which a loss making business should neer implement as honest marketing could over time suspend for premium prices. GM should have offered extended warranties as this actually costs the company very little in real terms, in the regular army GM offer warranties for 100,000 miles over 5 years perhaps this could be implemented in its European business model.General thoughts on how GM can improve their European performance flip management team in EuropeForm strategic alliance with Japanese manufacturer with superior manuf acturing techniquesFocus on the lucrative segment of the European marketReduce investment in the EU, until the economic situation improves (short-term vs. long-term )Change EU business model e.g. produce littler cars which are today popularOffer additional features to their carsUsed money saved and invest more in RDLaunch long term schema to recapture market shareConclusionGeneral Motors is the largest automaker in the cosmos and has been an industry leader for 77 years yet it finds its European operations in all kinds of trouble. Huge financial losses, a dissatisfied customer base, competitors with superior management and production techniques to name a few. All of these problems are due to GM having a poor corporate strategy plan, GM become reactive rather then proactive and in strategy you can never rest on your laurels, the company missed go past trends within the market such as a demand for smaller cars, cars with less CO2 emissions, cars with additional features etc. This case is a good example of strategy as it shouldnt be done strategy requires successful firms to seek feedback from their customers, for firms to have clear and set goals at all time and how to induct there, strategy requires firms to ever excel and always be ambitious to seek new and rewarding risks. The main findings of the report suggest that GM didnt have the right business model or structure to shell out with sudden change this is slightly understandable due to GM sizing and decision making tends to be slower amongst large companies due to the amount of management layers, but one would expect a company with manufacturing facilities in 35 countries and sales in 200 countries to at least get the basic rights. GM was guilty of not paying enough forethought to the Macro environment were political changes were gearing towards reducing CO2 emissions, GM also underestimated the threat from Asian car companies and as a topic quickly lost market share and sales.