Porter’s Five Forces Analysis of General Motors
Key Facts
| Name | General Motors Co. |
| Industry | Automotive and Suppliers |
| Founded | 1908 |
| Headquarters | Detroit ,Michigan, United States |
| CEO | Mary T.Barra |
| Revenues | US$127billion,2021 |
| Profit | US$10billion, 2021 |
| Competitors | Toyota,Tesla ,Ford,Honda |
Company Overview
Headquartered in Detroit, Michigan, United States General Motor operates in Automotive, Cruise and GN Financials. The Company General Motors founded in 1908 in Flint by William Durant.Its reported recover revenues are US$ 127billion, compared to previous year US$ 122 billion, with net assets valued at US$ 244 billion as of December, 2021. The Company General Motors ranked 25th by Fortune 500 and 69th by Forbes in the category of “The Global 2000” as of 2022.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis is a widely used model to evaluate companies’ strategies in reference to its industry for neutralizing the competition and increase the margins, it is developed by Professor Micheal E. Porter in 1979,at Harvard Business School.
General Motors Rivalry among Existing Competitor
- General Motors Business Segments : General Motors is operating in manufacturingand sellingCars, Trucks and Crossoversthrough GM North America (GMNA) and GM International (GMI),also provides automotive financing through GM Financials and developing high-tech solutions through Cruise (80% holding and investment in an highly tech driven AV Company)
- General Motors ReportedRevenues:The total reported revenues from automotive division is 113.5 Billion US, which is a 5% growth in FY 2021 compared to 108.6 in FY 2020. The GMNA contributed 101.3 Billion US, which is a 5% growth in FY 2021 compared to 96.7 Billion in FY 2020.The GMI contributed 12.1 Billion US, which is a 5% growth in FY 2021 compared to 11.5 Billion US$ in FY 2020. The GM Financials contributed 13.4 Billion US$ in FY 2021.
The famous brands of GM are Chevrolet, Cadillac, Baojun, Buick and Wuling.
- General Motors Major Markets: The biggest market for GM is China and 2nd biggest market is North America with reported sold units 2.8 and 2.2 million,declared by GM in their Annual report. The other notable market is 0.43 million sold units by other Asia Pacific, Middle East and African countries, while 0.2 million units sold by Brazil, South America.
- GM & Competitive Rivalry with Toyota, Honda and Ford: GM is facing tough competition from close rivals in the market including Honda with a sales of US$ 120 billion, while Toyota with a sales of US$ 215.6 Billion and Ford with a sales of US$ 136 Billion as of Year 2021.
- GM & Competitive Rivalry with Tesla (Energy Solution): GM is in close competitive rivalry with Tesla specially for vehicle chargers and solar panels to EV customers.GM is targeting US$ 120 Billion market to US$ 150 Billion market .
- GM & Competitive Rivalry with Toyota: Sales of GM supersede Toyota by selling 2,274,088 vehicles which is 2.5% rise in FY 2022, higher than Toyota’s 2, 108, 458, declared on 4th January 2023 by Reuters.
- GM & Competitive Rivalry with Ford: Both companies are strongly growing in the same industry Ford is focusing electrical vehicles while GM is focusing on self-driven cars specially.
General Motors Threat of New Entrants
- High Capital Investment & Brand Loyalty: Due to high capital investment and established brand loyalty it is difficult for any new entrant to enter the market and compete GM but competition can be faced like any technological company like Tesla.
- Technological Advancement & Research & Development Cost: It is also another factor which requires a higher mastery in technological advancement and backed by research and development cost, which is also difficult to arrange by any new entrant. Start Ups are working in this area of expertise but they even need a high capital investment
General Motors Bargaining Power of Suppliers
- Supplies Various from Various Suppliers – Identical Raw Material: GM is purchasing various supplies including raw material from steal to lead, which is supplied by various suppliers, an identical raw material not giving any influencing power to the supplier. Even GM mentioned combined purchases from GM’s biggest supplier’s totaled 12% of the total purchases.GM is also sourcing sophisticated raw material for EVs including silicon carbide power device solutions and creating a highly effective EV Supply Chain.
- Suppliers Collaboration: GM is maintaining highly reliable relations with all suppliers of GM for better service coordination and effective Supply Chain Solution.GM arranged 30th Annual Awards which is attended by 134 suppliers from 16 countries and 31 suppliers from 12 countries.
General Motors Bargaining Power of Buyers
- CruiseDriverless Cars – High Product Differentiation: General Motor’s Cruise reported 600 trips of over 20k miles logged by Cruise members, for completely driverless rides which is now open for public is a remarkable milestone. So General Motors is among those companies who are delighting their customers.
- Electrical Vehicles are in great demand and GMs’ BrightDrop launched first commercial vehicleEV600 EV and EV410 with sales and contracts with FedEx, Walmart (plan to purchase 5000 EV600 and EV410 both) and Merchant’s Fleet plan to purchase 5400 EV410,declared in Q4 by GM.
- Customer Satisfaction : General Motor’s Cadillac scored 80 while Lexus by Toyota competed by getting a scored 84 in Consumer Satisfaction Index in a survey for selected automobile brands in USA. The other competitors including Audi by Volkswagen scored 82, Infiniti by Nissan also scored 82 and Acura by Honda also scored 82.
- Customer Satisfaction in High Electrification & Software Technology Environment: General Motor is serving globally with 155,000 employees globally. In such high electrification environment with software enabling technological environment customer satisfaction is highly dependable on highly trained staff and excellent training and customer service for cut throat competitive environment.
General Motors Threat of Substitute Products or Services
- Electrical Vehicles-Two Wheelers-Substitute Transportation: Electrical Vehicles can be the possible market substitution, which is already a master product of GM so any new transportation can be substitute like electrical two wheelers.
- COVID-19 & Post-Recession Market -Year 2020- In FY 2020 overall automotive industry suffered in different regions due to various different reasons.GM also suffered due to COVID in China from 12.2% in 2019 to 11.6% in 2020.Currently GM is not experiencing any sales drop due to recession but taking possible measures to be prepared for recession.
References
- Forbes,Profile,General Motors
- Statista (February 7, 2022) General Motors Company’s sales and revenue streams between FY 2013 and FY 2021 (in billion U.S. dollars) Statista. Statista.AvailableatStatista
- General Motors, About US, Our vision is a world with zero crashes, zero emissions and zero congestion. Available at General Motors
- General Motors,GM Reports 2021 Full-Year and Fourth-Quarter Results, Including Record Earnings, New Release Details
- Forbes, The Global 2000 2022, Business-Editor’s pick, Forbes Global 2000 List 2022, The Top 200.Available at Forbes
- The Birthplace of General Motors, Available at General Motors
- General Motors, Annual Report ,Available at General Motors or General Motors
- General Motors,4th Quarter Results, Available at General Motors
- Statista (September 8, 2022) U.S. consumer satisfaction: car and light vehicle brands 2022, Consumer satisfaction with selected automobile and light vehicle brands in the United States in 2022 (index score), Available at Statista
- Statista (February 7,2022) General Motors Company’s sales and revenue streams between FY 2013 and FY 2021 (in billion U.S. dollars).Available at Statista
- CNN Business,(July 26,2022) GM reports strong sales but says it’s prepared for possible recession. Available at CNN Business
- Guardian (October 11,2022) General Motors takes on Tesla with new energy division. Available at Guardian
- Toyota Report 2022 Available at Toyota
- Reuters,(January 5,2023) GM reclaims U.S. auto sales crown from Toyota, Available at Reuters
- CNBC (November 13,2022) Ford vs.GM :Same industry ,two increasingly different companies. Available at CNBC