Analysis of the General Business Environment using PESTLE Analysis The general business environment of a company constitutes all those forces which can impact its operations, sales, and financial performance in a positive or negative way (Frederic, Agnes, & John, 2011). The forces which collectively form the external business environment for General Motors include political and governmental forces; economic forces; social, cultural, and demographical forces; technological forces; legal forces; and environmental forces (Blythe & Megicks, 2010)
These forces include income levels, life styles and preferences, social classes, age groups, population density, etc. (Cadle, Paul, & Turner, 2010)
e. finding the future leadership for their organization from these line managers and lower level employees (Cornelius, 2001)
It uses all the three competitive strategies to encounter the environmental and rivalry threats. The most important strategy is to differentiate its vehicles from those manufactured by its competitors (Davidson, Simon, Woods, & Griffin, 2009)
Secondly, it keeps an eye on the performance of different departments and sections and assesses the areas where they need improvements. Similarly, the performance of employees is measured by their immediate supervisors who use different performance appraisal techniques for this purpose (Deresky, 2002)
1. Analysis of the General Business Environment using PESTLE Analysis The general business environment of a company constitutes all those forces which can impact its operations, sales, and financial performance in a positive or negative way (Frederic, Agnes, & John, 2011)
General Motors operates through fully-owned subsidiaries and joint ventures outside the United States. It has currently employed more than 212,000 individuals from different nationalities and regions that work in 396 different facilities and sections (General Motors, 2013)
General Motors operates through fully-owned subsidiaries and joint ventures outside the United States. It has currently employed more than 212,000 individuals from different nationalities and regions that work in 396 different facilities and sections (General Motors, 2013)
General Motors operates through fully-owned subsidiaries and joint ventures outside the United States. It has currently employed more than 212,000 individuals from different nationalities and regions that work in 396 different facilities and sections (General Motors, 2013)
Economic Forces: Economic forces are the second most critical forces in the automobile manufacturing industry. The economic situation, inflation, unemployment, costs and availability of raw material, interest rates, exchange rates, industry patterns, GDP growth rate, and various other economic factors of target countries impact the business operations, profitability, and policies of General Motors (Jobber, 2009)
The company has various departments including Production, Supply Chain, R&D, Sales and Marketing, Customer Relations, Quality Assurance, Finance, Human Resource, Audit -- all these departments collaborate with each other in order to achieve the organizational objectives in the most effective and cost-efficient way (General Motors, 2013). The middle level managers are responsible to get the work done through line managers and lower level employees (Mondy, 2009)
Keeping in view the changing technological demands, it can expand its operations in hybrid and electric car categories. One major opportunity for General Motors is to target middle and upper middle income groups by selling its family and personal cars at competitive prices (Paley, 2006)
Human Resource Management General Motors designs its human resource management policies in the light of internationally accepted management theories, models, and practices. From recruitment and selection of new employees to the training and development of existing workforce -- each and every HR policy complies with the local employment laws and the best industry practices in the automobile sector (Redman & Wilkinson, 2001)
Using transactional leadership styles, the managers ensure that every employee at General Motors works with full commitment and dedication towards the achievement of his assigned targets or fulfillment of normal job responsibilities. They use both intrinsic and extrinsic motivational techniques to keep the morale and satisfaction of these employees at the highest level (Rowley & Jackson, 2010)
It can reduce its heavy costs of manufacturing by making its production operations more efficient. These strategies will help it in achieving greater competitiveness in the industry (Williams, 2012)
However, GM "has been through bankruptcy and back, exiting Chapter 11 reorganization in 2009. Since then, the manufacturer of automobiles under brands such as Chevrolet, Buick, and Cadillac has done well and was the largest auto manufacturer by vehicle unit sales in 2011"(Chu, 2012)
GM's cash flow statement is below: View: Annual Data | Quarterly Data All numbers in thousands PERIOD ENDING 9-Month 09/2012 6-Month 06/2012 3-Month 03/2012 12-Month 12/2011 Cash Flow From Operating Activities Net Income (Loss) 5,105,000 9,287,000 Depreciation 7,344,000 Amortization 200,000 Deferred Income Taxes (311,000) Operating (Gains) Losses (4,933,000) (Increase) Decrease in Receivables (1,572,000) (Increase) Decrease in Inventories (2,760,000) (Increase) Decrease in Prepaid Expenses (195,000) (Increase) Decrease in Other Current Assets (522,000) (Increase) Decrease in Payables 2,095,000 (Increase) Decrease in Other Curr Liabs. (943,000) Other Non-Cash Items 4,719,000 6,441,000 2,499,000 476,000 Net Cash from Continuing Operations 9,824,000 6,441,000 2,499,000 8,166,000 Net Cash from Operating Activities 9,824,000 6,441,000 2,499,000 8,166,000 Sale of Long-Term Investments 3,349,000 2,040,000 1,016,000 5,613,000 Sale of Short-Term Investments 14,236,000 11,217,000 6,036,000 Purchase of Property, Plant, Equipment (837,000) (4,669,000) (304,000) (837,000) Acquisitions (16,000) 57,000 56,000 4,768,000 Purchase of Long-Term Investments (4,941,000) (2,874,000) (1,369,000) (543,000) Purchase of Short-Term Investments (8,685,000) (6,925,000) (4,742,000) (15,633,000) Other Investing Changes Net (7,387,000) 329,000 (1,985,000) (6,108,000) Net Cash from Investing Activities (4,281,000) (825,000) (1,292,000) (12,740,000) Issuance of Debt 7,930,000 5,278,000 2,394,000 9,034,000 Issuance of Capital Stock 3,000 3,000 11,000 Repayment of Debt (5,267,000) (4,077,000) (2,057,000) (8,468,000) Repurchase of Capital Stock (100,000) Payment of Cash Dividends (679,000) (459,000) (217,000) (916,000) Other Financing Charges, Net (261,000) (179,000) (151,000) 81,000 Net Cash from Financing Activities 1,723,000 566,000 (28,000) (358,000) Effect of Exchange Rate Changes (17,000) (69,000) 128,000 (253,000) Net Change in Cash & Cash Equivalents 7,249,000 6,113,000 1,307,000 (5,185,000) Cash at Beginning of Period 16,071,000 16,071,000 16,071,000 21,256,000 Cash at End of Period 23,320,000 22,184,000 17,378,000 16,071,000 * = Data not available (Forbes, General Motors cash flow, 2013)
GM's cash flow statement is below: View: Annual Data | Quarterly Data All numbers in thousands PERIOD ENDING 9-Month 09/2012 6-Month 06/2012 3-Month 03/2012 12-Month 12/2011 Cash Flow From Operating Activities Net Income (Loss) 5,105,000 9,287,000 Depreciation 7,344,000 Amortization 200,000 Deferred Income Taxes (311,000) Operating (Gains) Losses (4,933,000) (Increase) Decrease in Receivables (1,572,000) (Increase) Decrease in Inventories (2,760,000) (Increase) Decrease in Prepaid Expenses (195,000) (Increase) Decrease in Other Current Assets (522,000) (Increase) Decrease in Payables 2,095,000 (Increase) Decrease in Other Curr Liabs. (943,000) Other Non-Cash Items 4,719,000 6,441,000 2,499,000 476,000 Net Cash from Continuing Operations 9,824,000 6,441,000 2,499,000 8,166,000 Net Cash from Operating Activities 9,824,000 6,441,000 2,499,000 8,166,000 Sale of Long-Term Investments 3,349,000 2,040,000 1,016,000 5,613,000 Sale of Short-Term Investments 14,236,000 11,217,000 6,036,000 Purchase of Property, Plant, Equipment (837,000) (4,669,000) (304,000) (837,000) Acquisitions (16,000) 57,000 56,000 4,768,000 Purchase of Long-Term Investments (4,941,000) (2,874,000) (1,369,000) (543,000) Purchase of Short-Term Investments (8,685,000) (6,925,000) (4,742,000) (15,633,000) Other Investing Changes Net (7,387,000) 329,000 (1,985,000) (6,108,000) Net Cash from Investing Activities (4,281,000) (825,000) (1,292,000) (12,740,000) Issuance of Debt 7,930,000 5,278,000 2,394,000 9,034,000 Issuance of Capital Stock 3,000 3,000 11,000 Repayment of Debt (5,267,000) (4,077,000) (2,057,000) (8,468,000) Repurchase of Capital Stock (100,000) Payment of Cash Dividends (679,000) (459,000) (217,000) (916,000) Other Financing Charges, Net (261,000) (179,000) (151,000) 81,000 Net Cash from Financing Activities 1,723,000 566,000 (28,000) (358,000) Effect of Exchange Rate Changes (17,000) (69,000) 128,000 (253,000) Net Change in Cash & Cash Equivalents 7,249,000 6,113,000 1,307,000 (5,185,000) Cash at Beginning of Period 16,071,000 16,071,000 16,071,000 21,256,000 Cash at End of Period 23,320,000 22,184,000 17,378,000 16,071,000 * = Data not available (Forbes, General Motors cash flow, 2013)
GM's cash flow statement is below: View: Annual Data | Quarterly Data All numbers in thousands PERIOD ENDING 9-Month 09/2012 6-Month 06/2012 3-Month 03/2012 12-Month 12/2011 Cash Flow From Operating Activities Net Income (Loss) 5,105,000 9,287,000 Depreciation 7,344,000 Amortization 200,000 Deferred Income Taxes (311,000) Operating (Gains) Losses (4,933,000) (Increase) Decrease in Receivables (1,572,000) (Increase) Decrease in Inventories (2,760,000) (Increase) Decrease in Prepaid Expenses (195,000) (Increase) Decrease in Other Current Assets (522,000) (Increase) Decrease in Payables 2,095,000 (Increase) Decrease in Other Curr Liabs. (943,000) Other Non-Cash Items 4,719,000 6,441,000 2,499,000 476,000 Net Cash from Continuing Operations 9,824,000 6,441,000 2,499,000 8,166,000 Net Cash from Operating Activities 9,824,000 6,441,000 2,499,000 8,166,000 Sale of Long-Term Investments 3,349,000 2,040,000 1,016,000 5,613,000 Sale of Short-Term Investments 14,236,000 11,217,000 6,036,000 Purchase of Property, Plant, Equipment (837,000) (4,669,000) (304,000) (837,000) Acquisitions (16,000) 57,000 56,000 4,768,000 Purchase of Long-Term Investments (4,941,000) (2,874,000) (1,369,000) (543,000) Purchase of Short-Term Investments (8,685,000) (6,925,000) (4,742,000) (15,633,000) Other Investing Changes Net (7,387,000) 329,000 (1,985,000) (6,108,000) Net Cash from Investing Activities (4,281,000) (825,000) (1,292,000) (12,740,000) Issuance of Debt 7,930,000 5,278,000 2,394,000 9,034,000 Issuance of Capital Stock 3,000 3,000 11,000 Repayment of Debt (5,267,000) (4,077,000) (2,057,000) (8,468,000) Repurchase of Capital Stock (100,000) Payment of Cash Dividends (679,000) (459,000) (217,000) (916,000) Other Financing Charges, Net (261,000) (179,000) (151,000) 81,000 Net Cash from Financing Activities 1,723,000 566,000 (28,000) (358,000) Effect of Exchange Rate Changes (17,000) (69,000) 128,000 (253,000) Net Change in Cash & Cash Equivalents 7,249,000 6,113,000 1,307,000 (5,185,000) Cash at Beginning of Period 16,071,000 16,071,000 16,071,000 21,256,000 Cash at End of Period 23,320,000 22,184,000 17,378,000 16,071,000 * = Data not available (Forbes, General Motors cash flow, 2013)
Toyota has attempted to dominate the global automobile market, and has done so successfully, but does not compare favorably with GM in its productivity and profitability measures. In contrast, GM is taking a more cautious approach than it did prior to its bankruptcy and has not been willing to win market share at the risk of its profits (Higgins, 2012)