International business strategy for General Motors Essay Example

  • Category:
    Business
  • Document type:
    Essay
  • Level:
    High School
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    2
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    1456

International Business Strategy for General Motors

Introduction

Globalization and the emergence of international markets have led to an increased need for international expansion by multinational organizations. Such expansions facilitate increased market bases as well as reducing competition pressures on the existing saturated markets. This has been the case with the automobile industry. Despite the increased industry consumer base, the major industry players such as Toyota, Ford and General Motors have increasingly expanded their production, subsequently increasing the market supply against the existing demand. This essay reviews the internationalization case study for General Motors and its respective internationalization strategies. In this regard, the essay offers the strategies analysis as well as their respective critical reviews and alternatives.

Internationalization Strategy

Wide Distribution Chain Localization Strategy

One of general motors’ internationalization strategy is the development of a wide distribution base across the globe In this regard, the organization has heavily invested in its distribution chain. This is a part of the overall organizational supply chain system. The General Motors organization has development an efficient distribution chain through the establishment and development of regional supply bases. As such, the organization has established outlets and regional distributors. The distributors are charged with the responsibility of distributing the respective organizational goal across their regional jurisdictions. As such, in its internationalization distribution chain strategy, the organization decentralized the distribution chain operational decision mandates. In this regard, the respective distributors are tasked and mandated with the responsibility of selecting, developing and managing their regional distribution networks as evidenced in the distribution flow chart below (“General Motors”, 2014).

International business strategy for General Motors

This is an imperative internationalization process that allows for localization of decision making. A localization approach seeks to employ unique foreign markets strategies and market characteristics in a bid to acquire increased market competitiveness. Rezende (2006, p.6) conducted a study to evaluate the role and merits of the utilization of a localization internationalization strategy by multinational organizations. The study established that through the adoption of a localization approach, corporations gained an increased market insight allowing for efficient market niche identification and targeting. In addition, the localization approach enhanced increased market reputation through the establishment of a connection between organizational strategies and the market unique needs. Therefore, based on this analysis, it is apparent that General Motors localization approach in its distribution chain allows for increased market penetration and access in the long run. Therefore, this has offered the organization a supply chain competitive edge over competitors such as Toyota and Ford. This is evidenced by the expansive organizational distribution chain across Europe and Asia in economies such as China and Taiwan.

Product Standardization

Despite its adoption of a localization approach in its distribution chain, General motors’ has adopted a standardization perspective in its production and design stages. In its organizational mission, the organization seeks to design and develop high quality motor vehicles with a lengthy lifespan at consumers’ affordability. As such, it is imperative for the organization to retain quality standards for its products. Due to its increasing demands across the globe, the organization developed an internationalization approach through which its devolved production functions to respective assembly and manufacturing institutions across the globe (“General Motors”, 2014). These manufacturing and assembly institutions are mandated with the responsibility of meeting local and regional demands on the organizational products. However, in order to enhance standardization and quality retention, the organization centralized all its production activities. In these regard, the organization retains the supply chain management functions such as procurement and inventory management at the headquarters (Hill, Cronk and Wickramasekera, 2011, p.23).

More so, the corporation has centralized the manufacturing function of designing its vehicle models. In this regard, the centralization of the designing process ensures that the organization develops a single template that is adopted and replicated across the market. The development and adoption of a standardization approach in multinational organizations internationalization strategies allows for increased brand reputation and positioning in the market. Lewis, Pun and Lalla (2006, p.966) conducted a study evaluating the implications of product standardization as an internationalization strategy. The study established that multinationals with standardized products acquired an increased brand recognition and loyalty with overall global sales balancing. In this regard, such products acquired an international reputation as their consumers would purchase and acquire the products regardless of their geographical location. Therefore, the adoption of this manufacturing approach by the corporation has increased its overall brand and organizational reputation in the global market. As such, the brand has increased and enlarged its overall reputation and market positioning over the years. However, a review by Lee and Trim (2008, p.242) established that the development and adoption of a standardization approach by multinational organizations served as a market penetration challenge. In this case, the review established that a majority of the global market have unique needs and wants that demand for the development of unique products.

Therefore, in order to facilitated and enhance increased market penetration success, the review recommended that organizations should consider the diversification of their product development strategies to incorporate localization. Therefore, based on this review the essay establishes that the General Motors product standardization approach denies it an increased market penetration due to the lack of specific foreign market needs focus. For instance, the Chinese market is known for its culture demand for small products. Therefore, through their market product localization approach, Toyota developed small vehicle brands for the Chinese market. Although the product failed to succeed due to a, low market base, it was an imperatively major step in tapping into the Asian unique market needs. Thus, this essay concludes that the lack of a localization and diversification internationalization strategy, denies General Motors a competitive market advantage over peers in the automobile industry.

Marketing Strategy

In a bid to increase and expand its overall international market strategy to allow for increased market recognition, Hoeffler and Kevin (2003, p.426) argued that increased marketing allows for the development and establishment of increased brand recognition in a market. Under this approach, General Motors conducts its marketing function through an organizational approach. As such, the organizational marketing function promotes the entire organizational industry products under same marketing campaigns as demonstrated below

International business strategy for General Motors 1.

The adoption of this approach enables the organization achieve a cost reduction on its marketing activities. Rather than duplicating its overall marketing activities for the respective products, the organization saves on such duplication costs through the development of a comprehensive marketing campaign for all its products. Further theoretical arguments argue that the adoption of organizational brand marketing allows for the propulsion and increased sales of its products. On one hand, the approach enhances the lengthening of products lifecycle for products under the maturity and decline stages (“General Motors”, 2014). On the other hand, the approach enhances ease introduction of new products, as opposed to specific products branding approach that requires an increasingly intensive market campaign for new products (Hill, Cronk and Wickramasekera, 2011, p.273).

Conclusion

In summary, this essay reviews the concept of internationalization under the current global economic developments. In this regard, the essay establishes that internationalization is an imperative trend for organizational growth and development in the current global competition trends. In this regard, the essay evaluates the internalization strategy adopted by General Motors offering a critical review of the strategies merits and challenges, while offering strategic internationalization strategies alternatives. In this regard, the essay review focuses on the organization distribution, production and marketing strategies.

On one hand, a review on the organizational distribution strategy establishes that it applies the localization management system where each regional distributor manages their respective distribution networks. Moreover, a review on the organizational production strategy, establishes that it has gained an increased reputation However, it further establishes that the approach leads to market focus and targeting failure. Finally, a review on the organizational marketing approach establishes that its diversification and organizational based advertising offers it an increased consumer base by branding its product under the organization, consequently reducing its overall marketing costs.

References

General Motors, 2014, Organizational Products. [Online] Available at <http://www.gm.com/>. [Accessed July 12, 2014].

Hill, C. W. L., Cronk, T., & Wickramasekera, R. 2011, Global business today: An Asia-Pacific perspective, McGraw-Hill Australia, North Ryde, N.S.W.

Hoeffler, S. & Kevin, L.K. 2003, «The marketing advantages of strong brands», Journal of Brand Management, vol. 10, no. 6, pp. 421-445.

Lee, Y.-I., & Trim, P. R. J. 2008, Strategic marketing decision-making in Japanese and South Korean companies, McGregor, NY.

Lewis, W.G., Pun, K.F. & Terrence R.M. Lalla 2006, «Empirical investigation of the hard and soft criteria of TQM in ISO 9001 certified small and medium-sized enterprises», The International Journal of Quality & Reliability Management, vol. 23, no. 8, pp. 964-985

Rezende, S. 2006, «Multinationals and Interdependence in Internationalization Processes (1)», Brazilian Administration Review, vol. 3, no. 1, pp. 1-16.