International Business Strategyassignment on General motors competitive advantage strategy
Task: How to analyze General motors competitive advantage strategies using International Business Strategy assignment research assignment skills
This International Business Strategy assignmentwill analyse general motorts competitive advantage strategy. The global automobile industry is becoming increasingly volatile due to large-scale disruptions brought by emerging trends and changing global commercial environment. The global automobile industry is projected to reach ¢9bn by 2030 as the increasing popularity of electric vehicles, autonomous vehicles and sustainability-conscious development programs gained significant attention from mainstream automakers such as Tesla, Toyota, Ford And General Motors. Companies are aggressively investing in R&D pipelines, localisation initiatives and innovation programs to transform workflows and diversify product portfolios through establishing benchmark standards in the electric mobility sector. Since its establishment in 1908, the Detroit-based American multinational company: General Motors established itself as a leading global automaker in terms of revenue, product offerings and regional market shares. In 2021, GM generated $127bn in revenue by selling commercial and personal vehicles. However, since 2016, sales volume continued to drop drastically due to customer shifts towards electric vehicles, low responsiveness and strict environmental policies despite having a 15% market share in the US and a workforce of 157k people. In 2016, the company invested $1bn to acquire Cruise Automation for leveraging autonomous vehicle technology (Anwar, 2019). In 2022, the company additionally invested $3.45bn in Cruise Automation to increase its ownership stake to support its integrated autonomous vehicle strategy ( https://www.gm.com, 2022). However, fluctuating microenvironmental factors, economic recessions coupled with growing cybersecurity issues, acquisition complexities and geopolitical uncertainties remain major concerns for GM to capitalize on emerging market opportunities and futuristic advancements. This International Business Strategy assignmentinvestigates the acquisition process of Cruise Automation by GM and discusses competitive advantages gained from the initiative. The study further uses theoretical concepts such as Porter's Five Forces Model and Resource-based View models to examine interlinks between sustainability and competitive advantages.
2. Acquisition of Cruise Automation
The International Business Strategyassignment research shows the competitive landscape of the global automobile industry was undergoing concurrent changes in pre-Covid global markets, thanks to large-scale digital transformation, improved R&D programs and unique value propositions brought by Industry 4.0. As consumers gradually shifted their focus to autonomous vehicles and carbon emission standards, GM faced massive limitations to capitalize on such market opportunities ( Bloodgood, 2018). In essence, the brand acquired several subsidiary brands such as SAIC, Wuling and Buick to ensure customer satisfaction and become an energy-efficient automobile brand (https://www.gm.com, 2022). In 2016, the brand initially invested $1bn in the San Francisco-based software company: Cruise Automation to streamline its development of autonomous vehicle technology. Cruise Automation was founded in 2013 and pioneered an innovation-seeking entrepreneurship spirit and electric vehicle technologies to bring a legitimate revolution to the autonomous vehicle industry (https://getcruise.com, 2022). The International Business Strategyassignment showsacquisition was strategically designed to gain unique value propositions by using talent pools of Cruise Automation and technological advancements. According to the CEO of GM Mary Barra, the acquisition of Cruise Automation helped the brand's commitment to carbon-neutral policies and accelerated the company's ability to drive sustainable operations from autonomous perspectives. The company allocated a fund of $2.31bn in terms of equity to acquire SoftBank Vision Fund 1's equity in Cruise Automation ( TechCrunch-com.cdn.ampproject.org/v/s/techcrunch.com, 2022). The company also committed to investing an additional $1.35bn in Cruise Automation to maximize flexibility and modernization projects while creating a prominent value-accretive pathway to commercialise the potential of autonomous vehicle technology (www-CNBC-com, 2022). The company involved Moelis & Company LLC as a prominent financial advisor to secure legitimate profitability from the aforementioned subsidiary program. With the combined effort of GM and Cruise Automation, the company launched the "Recurring Liquidity Opportunity Program '' to acquire more ownership of the brand. Anwar (2019) commented that the acquisition of Cruise Automation was a significant initiative for GM to enhance market share and customer base creating significant value for GM shareholders. The collaborative partnership between GM and Cruise Automation ensured ample opportunities in terms of financial stability and mass production facilities for Cruise Automation to scale up its innovative products and accelerate commercialization initiatives of AV technologies (mobility21.cmu.edu, 2022). Leslie (2021) mentioned that the JV project will be beneficial for GM to amplify its commitments toward carbon-neutral businesses and vehicle-related financing services.
3. International Business Strategy assignmentCompetitive Advantages
3.1 Competitive Advantages
As per the International Business Strategy assignment reports, GM remained one of the leading manufacturers globally thanks to its diversified brands, globally distributed supply chain and dealership networks and innovative subsidiary management programs. However, the company struggled to cope with multifaceted challenges ranging from technical issues, environmental protection policies and product differentiation initiatives to supply chain disruptions and production halts caused by the Covid-19 pandemic and volatile industry dynamics (Barabba, 2022). In essence, GM considered venture acquisition programs as an integral part of its advancement strategy to safeguard financial, reputational and operational excellence. In 2021, the company invested $7.2bn in innovation and high-end development programs to redefine competitive advantages. Meanwhile, the acquisition of Cruise Automation can be proven significantly beneficial for GM for its fruitful contributions and competencies in the autonomous vehicle industry. The acquisition will be suitable for improving value propositions by diversifying the product portfolio and developing automated and fully functional specialities in electric vehicles ( Arena, 2021). As GM already had a 15% market share in the US before the acquisition, the ongoing M&A process will help to make informed decisions regarding self-driving cars and offer sustainability-conscious mobility solutions. Cole (2020) argued that the acquisition was imperative for GM to support its integrated autonomous vehicle strategy by considering the economies of scale and the skilled workforce of Cruise Automation. As the company introduced the Recurring Liquidity Opportunity Program, it will be an extraordinary opportunity for shareholders of GM and Cruise Automation shareholders. The International Business Strategy assignmentfindings also show the company can also improve its heterogeneous offerings and market shares by strategically commercializing AV technologies and self-driving cars (Arena, 2020). As GM remains one of the most valuable US automakers, the acquisition will help to create substantial employment opportunities alongside driving environmental sustainability and developing and manufacturing autonomous technologies (https://getcruise.com, 2022). The merger will also facilitate establishing benchmark standards and prominent alternatives to fossil fuels and eliminate dependencies on oil and gas alongside facilitating underprivileged people and underserved communities which further triggers greater consistency and credibility. However, Barabba (2022) stated that differences in operations and organizational culture alongside communication and collaboration issues between cross-functional teams and inactive participation from executive-level leaderships can hinder projected benefits and competitive advantages of acquisition.
While exploring the fruitful benefits of merger and acquisition, Leslie (2021) argued that organizations need to be decisive regarding resource utilization schemes and leadership programs to take a holistic approach to lead a subsidiary organization. The acquisition of Cruise Automation will be GM to leverage positive economies of scale while securing legitimate access to a skilled workforce and capital expenditures. As per the International Business Strategyassignment research, it will help increase bargaining power as well as competitive advantages over mainstream competitors ( Cho et al. 2021). As Cruise Automation gained significant attention and recognition in the local markets, GM can capitalize on the emerging economies of scope created by Cruise Automation. It will be beneficial for adding immediate value propositions through developing innovative EVs and AV technologies ( Upadhyay and Sampalli, 2020). Such initiatives can facilitate GM to redesign its heterogeneous offerings and target niche-specific customers. The acquisition can also introduce a work-based learning environment and reinforce competitive advantages by establishing synergies between distributed workforce and operations while diversifying market risks and ensuring disciplinary actions (Cole, 2020). As Cruise Automation already pioneered in AV technologies, the merger will help to ensure faster implementation of its autonomous vehicle strategy which can lead to enhanced productivity and higher market share.
3.2 Porter's Five Forces Model
The global automobile industry is becoming highly competitive thanks to large-scale demand for autonomous vehicles and EVs, mainstream global brands and the availability of disruptive technologies. The industry is becoming increasingly prominent as it contributes to almost 12% of the global GDP growth. Therefore, analyzing competitive advantages based on a well-recognised framework will be suitable for automakers to make informed decisions regarding intrinsic propositions and the stability of acquisitions. Porter's Five Forces Model is an innovative framework that facilitates brands to develop distinguishable organisational strategies to compete with key competitors (Upadhyay and Sampalli, 2020). According to Porter, organisations need to consider a structured approach to stakeholder management to understand the competitive nature of the industry. The framework encompasses five key forces such as threats of new entrants, threats of substitutes, bargaining power of customers, bargaining power of suppliers and rivalry among competitors.
International Business Strategy assignmentThreats from New Entrants
Risks associated with new entrants are relatively low for GM as it takes enormous amounts of resources, strategic direction and infrastructure to establish a strong position in the automotive sector. Market entry barriers also remained significantly high in the autonomous vehicle industry due to high initial investment barriers and uncertainties (Bruijl and Gerard, 2018). New companies can face substantial challenges due to several factors ranging from economies of scale, brand loyalty and government regulations to investment barriers, customer switching costs and supply chain issues.
Rivalry among Competitors
The International Business Strategyassignment research shows that Rivalry defines the competitive struggle brands go through to secure market share and resources. The autonomous automotive industry is highly competitive as mainstream companies such as Tesla, Toyota, Ford, BMW and Hyundai continue to invest in cutting-edge technologies and R&D pipelines for secure strategic competitive advantages (Jeloneket al. 2022). However, the growth rate and demand dynamics remained significantly high in the AV industry which is likely to influence the competitive structure of the industry, fixed costs and brand value. GM needs to diversify its branding strategies and reinforce competitive advantages through diversifying offerings.
International Business Strategy assignmentBargaining Power of Suppliers
The bargaining power of suppliers refers to the power of suppliers in controlling and influencing the seamless flow of information and resources within the value chain. As geopolitical uncertainties, economic downturn and travel restrictions already affected global supply chain routes, labour markets and cost of materials, the bargaining power of suppliers remained significantly higher in the automotive industry (Irfan et al. 2019). High switching costs and unavailability of potential suppliers also remained major barriers in the automotive industry.
International Business Strategy assignmentBargaining Power of Buyers
The bargaining power of customers is also high in the AV industry as consumers are continuously seeking innovative and quality products. In essence, automakers need to ensure greater quality assurance and value-added credentials to eliminate threats of backward integration and volatile price structure (Caballero-Morales, 2021(. As costs of acquisition and retention remain significantly high, GM can reduce operational costs and introduce niche-specific marketing campaigns to promote sustainability and affordability.
Threats of Substitute
Threats of substitutes were also found to be high for GM as the industry has already adopted AV technologies on a global scale. Mainstream companies like Tesla and Toyota introduced innovative AV technologies and electric vehicles to influence the perceptions and behaviours of customers ( Bloodgood, 2018). However, GM already established itself as a prominent automaker, therefore, must be equipped with cutting-edge technologies and digital transformation programs to safeguard organisational competencies and adaptability properties.
4. Sustainability Achieved Via Cruise Acquisition
4.1 International Business Strategy assignmentSustainable Competitive Advantages
In addition to advances in electric motors, the car of the future is becoming smarter and more associated. Yet again, most media attention is focusing on driverless vehicles and the sequence of events for complete driving mechanisation. When it comes to passenger vehicles,, independent entity characteristics will most probably continue a high price characteristic for a considerable time. It would seem that autonomous driving designed specifically for public transport services, such as Cruise Origin, will reap the greatest benefits from AV advanced technologies. In the face of those same two components, the future vehicle will look very distinct from the typical Conventional vehicles people are all intimately acquainted with. In this particular respect, the operating system and knowledge IP are expected to account for more than half of the property's value, while the power supply and all electronic components used will be the most significant hardware components. In this due consideration, as more EV frameworks installed with Super Cruise are announced, General motors manufacturers will be highly well-positioned to gain financially from continued improved consumer expectations in the following decade (irjevskis, 2019). There are several reasons how it was that GM is more highly probable than Hyundai (Buy up) to be impactful in trying to transform its brand products. General motors Cruise is a pioneer in autonomous vehicles, with important stakeholders including Lloyds banking group (Ossoff), Microsoft (MSFT), Honda (HMC), and K - mart (WMT). The International Business Strategy assignmentfindings outlines some issues such as that major corporations are collaborating with GM Cruise expresses independently and upholds Cruise's statements that he continues to be a market leader in this storage.
Furthermore, General motors Cruise's purpose-built AVs have seemed to be some of the first fully scaled automated driving cab companies. Even though there is great potential for self-driving car taxi services around the world, this will have an important impact on the company's perceived notion of all vehicles are equipped with Super Cruise. Finally, General motors are expanding its rapid charging infrastructure, working to develop technology for fuel cells and trying to improve real worth services such as the On Star. This ecological system of merchandise and services is necessitated for the successful modernization of General motors brands on the one contrary and allows the business to broaden into other regions such as advertising transportation and distribution on the contrary. Aside from General Motors' performance reinforced in areas that influence brand perception, the corporation is also very economically successful. This often goes under the radar because more people are focused on their expected outcomes and hopes and are unconcerned about slightly elevated marketing strategies (Zhao et al., 2020). In addition to the above-mentioned smoother transformation of the automobile sector, General Motors remains a significantly lean and efficient and more financially beneficial legacy ICE manufacturing company than its significant peer, Ford (F). Despite great business consolidation and a start concentrating on highly lucrative modelling techniques, the gap between both General Motors and Ford's engineering and manufacturing operating margins remains significant. As a matter of fact, GM has a considerable competitive benefit in the form of a lean and efficient and more financially beneficial vehicle industry, allowing it to continue pursuing profitable growth in autonomous vehicles, supercapacitors, supercapacitors, and interconnection.
4.2 Resource-Based View Model
According to GM's assertion accessed during this International Business Strategyassignmentresearch, this agreement was primarily about trying to acquire talent so instead of advanced technologies. The racial group is on for all world economic car manufacturers to incorporate the movement of digital disruption that seems to be wanting to come to the auto industry – or take the chance of being left bereft. GM has worked hard in the last several years to establish itself as a leader in electric vehicles, automotive telecommunication technologies, and, more recent times, self-driving mechanisms. The forthcoming Chevrolet Bolt, 200-mile rechargeable batteries crossing SUV with a widespread price, demonstrates that this endeavour entails much more than conversation taking aim at trying to reassure Stock Market that it will not be "interrupted"; similarly, GM's $500 million money invested in ride-sharing corporation Lyft, reported earlier for the year, demonstrates that this exertion is much more than simply communicate. However, in order to build all of these technological advancements, engineers and architects with the essential information, knowledge and experience, and athletic ability must be hired and retained. All of the long-established automakers have encountered a problem: Those individuals are in a growing market in the existing economy, but few are prepared to relocate to GM's conventional home station in central and southern Detroit (Altintaset al., 2022). Rather, they're flocking to businesses like Tesla Inc. and Alphanumeric characters, as well as small start-ups in Tech Sector. GM, like a few competitors, including BMW (BAMXF -1.24%) and Ford (F -0.21%), has begun to develop a presence in Technology Companies in order to attract the best potential talent. And, more like one of those competitors, as well as leading automotive manufacturers such as Dionysus, General motors has been trying to acquire or invest heavily in encouraging smaller firms in the geographical area. According to Exchange data, GM is paying a high price for 50 company starters. That implies that there is more to the narrative than General motors is revealing. It's possible that a feature of Cruise's current technology will enable GM to make an important step against fully self-driving automobiles. GM has already been continuing to work on a package of identity technology solutions dubbed "Super Cruise" over several decades (Bloodgood, 2018). The first incarnation of that scheme was supposed to hit the customer base this fall on the 2018 Cadillac CT6 station wagon, but General motors announced in February that it would be postponed until next year. That appears to suggest that, despite the fact that General motors have been showing off a working prototype of Super Cruise for many decades at least, the company isn't satisfied with the existing state of its capability to bring it to the economy. It's conceivable that the Cruise Manufacturing team, or some element of its advanced technologies, will assist GM in bringing a good platform to commercialise faster. More information will most likely become available in the coming months.
GM needs to establish strategic synergy between operational settings, organisational structure and leadership programs to manage value-creating processes and reduce complexities and vulnerabilities associated with an unconditioned acquisition.
GM can widely invest in cutting-edge technologies and niche-specific digital marketing campaigns to promote its superior brands in heterogeneous markets while employing a skilled workforce based on a competency-based engagement and recruitment program.
Addressing cultural differences and managerial insufficiencies also remained crucial for GM to redesign strategic partnerships with Cruise Automation. As oper the International Business Strategyassignment reports, the company can consider a centralised documentation and reporting mechanism and top-down management hierarchy to maintain communication and collaboration between cross-functional teams.
Internationalisation perspectives and technological advancements along with changing environmental regulations and stakeholder expectations are also influencing the competitive landscape and global value propositions. Such factors combined with unprecedented economic and supply chain challenges brought by the Covid-19 pandemic imposed significant financial and operational barriers for automakers to ensure continuity and sustainability. Moreover, the industry is undergoing legitimate modifications as regulatory compliances, skill-based education systems and the availability of cutting-edge technologies such as artificial intelligence, IoT, automation, machine learning, AR VR and additive manufacturing continue to influence the perceptions of stakeholders. As an intensified competition, low robustness in supply-demand dynamics of automotive vehicles and growing digitalisation programs continue to impose substantial operational, financial and reputational roadblocks, GM is focusing on innovative technologies and venture acquisition programs to become a new energy vehicle brand. As the popularity of AI-powered solutions and autonomous vehicles rose drastically, GM expanded its ownership stake in Cruise Automation to enhance organisational competencies and adaptability properties. According to the study findings, several factors such as increasing popularity of environmental protection measures, changing stakeholder behaviours alongside disruptive technologies and adequate investment from mainstream brands are shaping the competitive landscape of the automotive industry. The International Business Strategy assignmentalso found that the Acquisition can facilitate the brand to develop a suitable and dedicated department for autonomous vehicles which is responsible for delivering critical automobile technologies, electrical design, safety integration and control and software mechanisms.
Altintas, G., Ambrosini, V. and Gudergan, S., 2022. MNE dynamic capabilities in (un) related diversification. Journal of International Management, International Business Strategy assignment28(1), p.100889.
Anwar, M., Alam, M.K. and Gleason, S.E., 2019, November. Traction Power Inverter Design for EV and HEV Applications at General Motors: A Review. In 2019 IEEE Energy Conversion Congress and Exposition (ECCE) (pp. 6346-6351). IEEE.
Arena, M.J., 2021. Adaptive Space: Shifting from Structural to Social Design. Management and Business Review, 1(1). Barabba, V.P., 2022. The Benefit of Leadership’s Improved Thinking and Decision-Making that Overcame the Desire of Some to Focus Exclusively on the Existing Business. In A Systems Thinking Decision-Making Process (pp. 155-164). Springer, Cham.International Business Strategy assignment
Bloodgood, J.M., 2018. Knowledge acquisition and firm competitiveness: the role of complements and knowledge source. Journal of Knowledge Management, 23(1), pp.46-66.
Bruijl, D. and Gerard, H.T., 2018. The relevance of Porter's five forces in today's innovative and changing business environment. Available at SSRN 3192207.
Caballero-Morales, S.O., 2021. Innovation as recovery strategy for SMEs in emerging economies during the COVID-19 pandemic. Research in international business and finance, 57, p.101396.
Cho, R.L.T., Liu, J.S. and Ho, M.H.C., 2021. The development of autonomous driving technology: perspectives from patent citation analysis. Transport Reviews, 41(5), pp.685-711.
irjevskis, A., 2019. The role of dynamic capabilities as drivers of business model innovation in mergers and acquisitions of technology-advanced firms. Journal of Open Innovation: Technology, Market, and Complexity,International Business Strategy assignment 5(1), p.12.
Cole, A., 2020. Fundamental valuation of the General Motors Company: assessing the value in the midst of a pandemic (Master's thesis).
https://getcruise.com/ https://mobility21.cmu.edu/gm-completes-cruise-automation-acquisition/ https://news.gm.com/newsroom.detail.html/Pages/news/us/en/2022/mar/0318-cruise.html#:~:text=DETROIT%20%E2%80%94%20Today%2C%20General%20Motors%20Co,by%20the %20fund%20in%202018. https://techcrunch-com.cdn.ampproject.org/v/s/
techcrunch.com/2022/03/18/gm-buys-softbank-stake-in-self-driving-car-unit-cruise/amp/amp_gsa=1&_js_v=a9&usqp=mq331AQKKAFQArABIIACAw%3D%3D#amp_tf=From%20%251 %24s&aoh=16622142378342&referrer=https%3A%2F%2Fwww.google.com&share=https%3A%2F%2Ftech crunch.com%2F2022%2F03%2F18%2Fgm-buys-softbank-stake-in-self-driving-car-unit-cruise%2F https://www.gm.com/
https://www-cnbc-com.cdn.ampproject.org/v/s/www.cnbc.com/amp/2022/03/18/gm-to-buy-softbanks-stake-in-cruise-self-driving-unit.htmlamp_gsa=1&_js_v=a9&usqp=mq331AQKKAFQArABIIACAw%3D%3D#amp_tf=From%20%251% 24s&aoh=16622142378342&referrer=https%3A%2F%2Fwww.google.com&share=https%3A%2F%2Fwww. cnbc.com%2F2022%2F03%2F18%2Fgm-to-buy-softbanks-stake-in-cruise-self-driving-unit.html
Irfan, M., Zhao, Z.Y., Ahmad, M., Batool, K., Jan, A. and Mukeshimana, M.C., 2019. Competitive assessment of Indian wind power industry: A five forces model. Journal of Renewable and Sustainable Energy, 11(6), p.063301.
Jelonek, D., Tien, N.H., Dao, M.T.H. and Minh, D.T., 2022. Comparative analysis of business strategy of Vietnamese real estate developers: the use of Hoffer matrix. International journal of multidisciplinary research and growth evaluation, 3(1), pp.197-204.
Leslie, A.J., Kiefer, R.J., Meitzner, M.R. and Flannagan, C.A., 2021. Field effectiveness of general motors advanced driver assistance and headlighting systems. Accident Analysis & Prevention, International Business Strategy assignment159, p.106275.
Upadhyay, D. and Sampalli, S., 2020. SCADA (Supervisory Control and Data Acquisition) systems: Vulnerability assessment and security recommendations. Computers & Security, 89, p.101666.
Zhao, F., Tan, H. and Liu, Z., 2020. Analysis of the Business Models of the Intelligent and Connected Vehicle Industry. In MATEC Web of Conferences (Vol. 325, p. 04002). EDP Sciences.International Business Strategy assignment