Q. Conduct a SWOT analysis for any one automobile brand of your choice. How will this analysis help in planning marketing strategies for the brand? Ans. SWOT Analysis General Motors: Introduction General Motors is an omnipresent company in the United States, a company so essential to the overall health of the U. S economy that it spawned the phrase “as GM goes, so goes the nation”. Long known for the manufacturing of cars, trucks and automobiles, General Motors has also engaged in finance and insurance.
Following is SWOT analysis of General Motors However, most recently the global recession has had a devastating impact on its, cash flows, financial condition and operations. To survive, the company has had to accept a government bailout plan and its employees the United Autoworkers of America, has also made concessions. This SWOT analysis is about General Motors. Strengths Branding – Born in Detroit Michigan in 1910 General motors has produced a stable of automobiles such as Chevrolet, Pontiac Cadillac and Buick which have become household names in the U. S.
As such, the General Motors Brand is well rooted not only in America but throughout the world. Worldwide Presence – General Motors truly has an international presence with factories in Poland, Russia, South Africa Ecuador, Egypt, Germany, Argentina, Australia, Belgium, Brazil, China, Colombia, South Korea, Spain, Sweden, and Thailand. The company is even in Viet Nam. In addition, it also has assembly, manufacturing, distribution, office and warehousing operations in 55 other countries. Weaknesses Diminishing Dealer Network – General Motors has compiled a list of more than 1,000 dealerships market for closure.
The company has announced that it will not renew its franchise agreements with nearly one quarter of its U. S. dealerships. As of December 31, 2008, GM had 715 dealerships in Canada, as recent as May of 2009 plans called for a anywhere from 40 to 200 closures. Insufficient Liquidity – General Motors has experienced a reduction in liquidity to $14 billion in FY2008 from $27. 3 billion in 2007. Losses are attributed to lower sales volumes and a reduction in working capital. Both research and development, as well as relationships with suppliers are negatively affected by the reduced liquidity.
Inadequate Performance among Some Business Segments – In 2008 the GME segment accounted to 21. 8% of the total revenues and its revenues decreased 8. 8% to $32,440 million. Other business segments experiencing declines include GMNA which fell 23. 9% to $82,938 million, and GMAP which stood at $12,477 million for FY 2008, a decline of 15%. Low Debt Ratings – Four independent credit rating agencies assess GMs debt ratings and ability to pay interest, dividends and principal on securities. Moodys Investor Service, Fitch Ratings DBRS and Standard & Poors evaluate GM.
As of 2008, all four had downgraded their assessment ratings for GM. Opportunities Growth Potential in India and China – There are positive projects for GM business in China and India. In China the market for new cars is in the midst of a 14% growth rate projected to reach over $97 billion in 2008. Meanwhile in India, the market for new cars grew by 15. 5% in 2008 to a dollar value of $28 billion. A sign that India will play an even bigger is the projected increase to 2. 5 million units by the end of 2013. Increased Global Truck Market – Steady growth rates are projected in the next few years.
The market’s volume is expected to rise to 21. 5 million units by the end of 2013. The light commercial vehicles segment was the market’s largest in 2008, generating total volumes of 9. 8 million units, equivalent to 58. 1% of overall value. Rising Demand for Hybrid Vehicles – General Motors produces six hybrid models in the US including the Saturn Vue and Aura Hybrids, Chevrolet Malibu and Tahoe Hybrids, GMC Yukon Hybrid as well as a Cadillac Escalade Hybrid. The company is also investing in hybrid and plug-in vehicles, for both cars and trucks.
It is anticipated that GM will produce up to nine hybrid models following the introduction of the Chevrolet Silverado Hybrid and GMC Sierra Hybrid. International demand for light hybrid electric vehicles (HEVs) is expected to increase. It is expected to rise to 800,000 units in 2009 and estimated to reach 4. 5 million units in 2013. Therefore, a positive outlook for light hybrid electric vehicles and plug-in vehicles market would boost the demand for GM’s products. Threats The Continuing Global Recession – Dire predictions for the global economy were realized in 2009 and stalled economic growth continued into 2010.
The economic decline reduced consumer demand for less fuel efficient vehicles, including full size pick-up trucks and sport utility vehicles, which had been GM’s most profitable products. In addition, the economic climate has resulted in tighter credit markets making it harder for consumers to finance automobile purchases. Weakness in Global Automobile Industry – Consumer Requirements for commercial vehicles declined in the NAFTA region, Western Europe and Japan. The Western European automobile markets suffered as well particularly the volume markets of Spain down 28. 1%, Italy down 13. % and the UK down 11. 3%. Germany declined 1. 8%) and France 0. 7% also experienced downward trend in the second half of 2008. In total, 8. 4% fewer automobiles were sold in Western Europe. The Japanese car market also declined, with a drop in sales of nearly 4% in 2008. Intense competition – GMs financial status makes it vulnerable to fierce competition from fits such as AB Volvo, Bayerische Motoren Werke, Daimler, Fiat Group Automobiles, Ford Motor, Honda Motor, Hyundai Motor, Isuzu Motors, Mazda Motor, Nissan Motor, PACCAR, PSA Peugeot Citroen, Renault, Toyota Motor and Volkswagen.
Many have responded to the crises by adding vehicle enhancements, providing subsidized financing or leasing programs in order to sell more vehicles. They are also offering option package discounts, other marketing incentives and are reducing vehicle prices in certain markets. These actions are expected to have a negative effect on GM’s vehicle pricing, market share and operating results particularly on the low end of the market. General Motors, one of the world’s largest automakers, traces its roots back to 1908.
With its global headquarters in Detroit, GM employs 204,000 people in every major region of the world and does business in some 140 countries. A marketing plan documents and maps out the key elements of a company’s marketing strategy, which flows from the company’s long-term strategic plan. Components of a marketing plan include an analysis of the company’s strengths, weaknesses, opportunities and threat, also known as a SWOT analysis; market segmentation; and strategies to drive sales and profit growth in each of these segments. SWOT is an important foundational element of the marketing plan.
SWOT — the internal strengths and weaknesses, along with the external opportunities and threats — offers guidance for the marketing plan. Management can evaluate how to leverage the strengths to take advantage of opportunities and protect the company against threats. It also can take measures to remedy the weaknesses and prevent competitors from using them as opportunities. SWOT analysis synthesizes the information for managers to make informed decisions on marketing and advertising strategies. Analysis A marketing plan starts with an analysis of the company, customers, competitors, external partners and the overall economy.
The company’s strengths may include its financial position and cash balance, product quality and brand recognition. Its weaknesses may include an inability to attract qualified candidates due to tightness in the labor market. Its market opportunities may lie in foreign markets with emerging and growing middle classes. It may also find opportunities in local markets indirectly by taking advantage of financial difficulties faced by some of its smaller competitors. However, entry of new competitors and emerging new technological innovations may represent threats because they can alter customer buying habits.
External partners, such as suppliers and regulatory agencies, and the overall economic environment must also be evaluated for potential threats and opportunities. Segmentation The division of a market into groups based on demographic and other factors is known as market segmentation. This allows advertising messages to be targeted specifically to maximize the sales opportunities in each segment. Using the SWOT analysis results, a company will know where the best opportunities are, including niche areas or specific demographic groups that might be underserved by its competitors.
Similarly, it also will know potential weaknesses in its own product offerings that might be exploited by its competitors to gain market share and take steps to correct them. Strategy The four “P’s” of a marketing strategy are product, price, promotion and place (distribution channels). Once again, SWOT analysis forms the basis of strategic choices. For example, product decisions are based on the market opportunities, the company’s own internal research and development and manufacturing strengths, the availability of adequate financial resources, and the brand recognition.
Pricing considerations include sales volume sensitivity to price changes and the impact of discounts and flexible payment terms. The strengths and weaknesses of the distribution channel are important considerations; also important to the marketing plan are the type and mix of channels — for example, retail or direct — and the transportation and warehousing logistics. Promotion considerations include designing advertising campaigns based on a brand’s strengths — for example, value and quality — and the timing of media buys.