Table of Contents

Executive Summary

Introduction

One: Mission statement

Two: Key Business Processes

Three: Environmental Factors

Four: S.W.O.T. Analysis

Five: Information Systems

Conclusion

1
Executive Summary

This report presents an analysis of the mission statement of General Motors as well as
its key business processes. It also illustrates how the key business processes integrate
with the information systems and our suggestions and recommendations to those
processes that would better suit General Motors.

The report also identifies the environmental factors which affect the company in terms
of political, economic, social, ecological and technological factors and the impact that
these factors have had on General Motors and the strategic diversity the company has
had to adopt to accommodate these changes.

For any business to sustain its survival and maintain a market edge over its
competitors it must maximise on its strength and available opportunities, re-evaluate
its weaknesses and determine was on how to aptly handle its threats. This report
outlines our S.W.O. T. (Strengths, Weaknesses, Opportunities and Threats) analysis
of General Motors briefly indicating how each element plays an integral part in the
day to day operations of the company.

Finally the report explores ways on how new information systems can help General
Motors create great efficiency by automating and streamlining parts of its business
processes. The report concludes by incorporating our recommendations of appropriate
information systems for each department within the company.

2
Introduction

General Motors is the world’s largest automaker with 386,000 employees in over 50
years. Despite this sheer size, its auto sales have declined from about 60 percent of the
U.S. vehicle market in the 1970’s to only 28.3 percent today. This decline is attributed
to stiff competition from Ford, DaimlerChrysler and the Japanese all of whom enjoy
lower production costs, have a reputation for cars with better styling and quality than
General Motors.

General Motors adoption of a vertically integrated corporation which at one time

manufactured up to 70 percent of its parts, as a power source of competitive
advantage, enabled the company to build cars at lower costs than its rivals. However,
over time, these policies worked in favour of General Motors competitors who were
then able to make motor vehicles at much lower costs because they could purchase
their vehicle parts from outside vendors and also bargain on pricing.

For the past 15 years, General Motors has struggled to overcome the above legacy,
inefficient product processes and thousands of outdated information systems that
could not communicate with each other. Although the company has now become
much leaner and more efficient by shedding off tens of thousands of workers, closing
dozens of plants and squeezing costs of motor vehicle parts by scouring the globe for
the lowest prices much still needs to be done.

It is our recommendation that General Motors use Internet and other leading-edge
information systems technology to reconstruct its entire value chain, transforming
itself into a customer-focused business that provides many different electronic
services to consumers as well as motor vehicles.

3
Mission Statement

General Motors mission statement states that “GM is a multinational corporation

engaged in socially responsible operations, worldwide. It is dedicated to provide
products and services of such quality that our customers will receive superior value
while our employees and business partners will share in our success and our stock-
holders will receive a sustained superior return on their investment”.

We analysed the above mission statement using Druckers five questions namely:-

 What is our business?

 Who is the customer?
 What is the value to the customer?
 What will our business be?
 What should our business be?

We arrived at the conclusion that there was a need to modify General Motors mission
statement since the above questions were not fully exhausted. The current mission
statement does not indicate that GM is a producer of motor vehicle; neither does it
take into consideration the Global Sullivan Principle. As a marketing tool, it does not
mention that it is dedicated towards providing products and services to customers who
are targeted in 200 different countries.

Our recommended General Motors mission statement should read as follows:

“GM is a multinational producer of motor vehicles engaged in socially responsible

operations worldwide and committed to achieve the best in every facet of our
business. Under the aspects of Global Sullivan Principles, GM is dedicated to provide
products and services of such quality that our customers who are targeted in 200
different countries will receive superior value while our employees and business
partners will share in our success and our stock-holders will receive a sustained
superior return on their investment”.

4
Key Business Processes

Key business process is defined as the execution of a series of activities that work
together to produce a well defined set of products and services which leads to the
achievement of a measurable business result. They also represent unique ways in
which organisations coordinate work, information, and knowledge, and the ways in
which management chooses to coordinate work.

Integration between Business Process and Information Systems

Although each organisation has its own set of business processes, many other
business processes are cross functional, transcending the boundaries between sales,
marketing, manufacturing, research and development. These cross functional
processes cut across the traditional organisation structure, grouping employees from
different functional specialities to complete a piece of work.

Information systems can help organisations achieve great efficiencies by automating

parts of these processes or by helping organisations rethink and streamline these
processes. By integrating these processes, organisations can become more focussed on
efficient management of resources and customer services.

Suggestions and recommendations of key business processes

Functional Area Business Process

Manufacturing and Production Assembling the product, checking for
quality, producing bills of materials
Sales and Marketing Identifying customers, making customers
aware of the product, selling the product
Finance and Accounting Paying creditors, creating financial
statements, managing cash accounts
Human Resources Hiring employees, evaluating employees’
job performance, enrolling employees in
benefits plan

Environmental Factors

5
There are numerous factors which affect organisations in each sector of the
environment. Each of these factors interact with each other and for purposes of
analysis, this report looks at how political, economic, social, ecological and
technological factors affect General Motors.

Political Factors
 USA foreign policy: The negative perception by the society about President
George Bush’s administration has brought about lack of interest in buying
vehicles manufactured by American car producers. This perception has
heightened with the war in Iraq and has had a negative impact on sales figures
for General Motors vehicles around the world.
 Government regulations issued with a view to protect, promote and develop
local vehicle manufacturers limits imports of vehicles and enables General
Motors sustain its sales growth.
Economic Factors
The state of the economy at present and in the future can affect the fortunes and
strategy of any organisation. The specific economic factors that affect General Motors
are:-
 The stage of the business cycle – When the economy is in a depression,
recession, recovery or prosperity stage, the purchasing power of potential
customers is lowered thereby restricting purchases to only what is absolutely
necessary
 Inflationary or deflationary trends in the price of goods and services – If
inflation is very severe wage and price controls may be imposed. Again, this
becomes a deterrent which would make potential customers shy away from
buying General Motors
 Fiscal policies – New tax rates imposed by the government to organisations
have the effect of making them increase their selling prices thereby making
what would probably be an affordable vehicle, beyond the reach of most
customers. When imposed on individuals, it means less income and as a result
less money to spending.
 Monetary policies, interest rates and devaluation or revaluation of the currency
– In relation to other countries, fluctuation in exchange rates has effect of

6
 giving others an unfair advantage. If the currency of one country becomes
stronger or improves against the US Dollar then the cost of purchasing a
General Motors vehicle becomes affordable.
Social factors
 Demography - Urbanisation, growth rates, household size, population
distribution and rural/urban migration depending on age, location and race all
have the effect on contributing towards increasing or decreasing sales of
General Motors vehicles.
 Housing – A high population creates room for more sales. This is on the
assumption that more people that make the population are inclined towards
buying GM vehicles
 Social preferences – Life style changes determine the demand of GM vehicles
 Values and attitudes – Strategy of GM is adversely affected by different values
and attitude of its customers and employees.
 Educational and social levels – Peoples perceptions are different and vary
from country to country. Success of promotions carried out by General Motors
marketers is dependant upon the society’s perception
Technological factors
 Changing technology – Affects the product or service life cycle. Whilst the
product at first may experience remarkable sales growth, when it matures it
finally declines. However, the receptive attitude of General Motors customers
can sustain their volatility.
 Amount spent on research and development – Spending more money on
research and development can help General Motors ensure that it meets the
changing values of its customers, ensure that it manufactures vehicles that are
in line with changing trends in preference including styling and brand type.
 Raw materials – New technology can enable General Motors produce vehicles
using materials such as plastic and fiberglass hence reducing the cost of
manufacturing
 Internet – This technological change can enable General Motors sell their
vehicles through the internet. With the advent of e-GM, a web service for its
customers, GM has been able to establish a long-term business strategy which

7
 can ease business-to-business and business-to-customers through online
services.
S.W.O.T. Analysis
Strengths
• World’s largest vehicle manufacturer with production in 32 countries
• World’s sales leader since 1930’s with a 15% global vehicle market
• Leadership in America controlling a third of the entire US market
• Trucks and SUVs vehicles sales record in North America - increased market share
• Sales in over 190 countries with a strong position in emerging economies
• Technological potential, global partners and ventures with other automakers
• GMAC – Major GM’s subsidiary specialising in financing GM vehicle purchases
• Averages a profit of US $ 701 per vehicle up by 108 % from 2001
Weaknesses
• GM’s share of the automobile market has fallen. (Automaker’s stock has stumbled
70% in the last five years)
• Second lowest productivity average with 24 labour hours per vehicle
• Under utilisation of its plants and technology
• Cost structure – Pension liabilities and cost of health care for all employees
currently stands at US$24 per hour at GM compared to $12 at foreign factories
• Peace with the labour union (United Auto Workers) has decimated GM’s pension
fund since the GM family of 7.5 million is comprised of employees, retirees and
their respective family members
• Bureaucratic culture where each unit markets to the same consumer separately and
differently with almost the same product
• Low profitability due to inefficient production processes
• Inefficient investments – addressed emission standards cost GM US $ 2.2 Billion
compared to Honda’s US $ 53 Million
Opportunities
• Use of knowledge gained from its subsidiaries, partnerships, buyouts, joint
ventures – Daewoo, Saab, Isuzu, Fiat, Opel, Vauxhall, Toyota (Nummi)
• Expansion of their global presence - having their own European model operation
• Expand in emerging economies especially Eastern Europe

8
• Use of substitutes in the production (plastic and fiberglass) and component
manufacturing operations in countries with cheap labour cost
• Leadership in environmental investigation and safety
• Product differentiation through options and name recognition
• Lead on growing light truck sector
• GMAC financing to increase US sales
• Create new model types and styles to change consumer’s demand
• Reduce costs of inventory and sales incentives by finding ways to make cars that
customers have actually ordered. Build to order can generate production cost
savings of US $ 20 billion per year
Threats
• Future cost have environmental and safety regulations – US Federal Legislation
and Regulations as well as Foreign Legislation and Regulation
• Declining quality of the infrastructure in the country
• Stiff competition from domestic and foreign automakers that enjoy lower costs
• Global economy which affects customers’ purchasing power
• Macro economy – Incomes, unemployment, inflation, interest rates, recession
• The permanent increase in oil prices force potential customers to venture into
buying other motor vehicles with less fuel consumption
Industry Analysis
• New technology is changing manufacturing process and product design
• There is a worldwide stagnation in demand which leads to a decline in sales
• Create mega dealers and auto supermarkets to bring services closer to consumers
• Demand for excellent world class product in every respect is high
• Evident worldwide overcapacity of different models of vehicles
Competitor Analysis
• Sheer size and market share make new entrants an unlikely to be a threat
• Vertical integration of GM does not encourage purchases from suppliers hence
they lose out on price bargaining
• Ford, DaimlerChrysler and Japanese manufacturers have better styling and
quality; an approach which GM should consider adopting to sustain its
competitive edge

9
• Cost of GM motor vehicles is perceived as being too high
• Buyers are nowadays inclined to buy sport utility and pickups which are not
manufactured by General Motors
• GM enjoys a healthy product line and segmentation in pricing and functions
Information Systems

Using information systems at each part of the organization creates great efficiencies
by automating and streamlining parts of the business. We recommend the following
information systems at each department within General Motors:
1. Human Resource Information Systems
These are systems that maintain employee records, track employee skills, job
performance and support planning for employee compensation and career
development.
LEVEL RECOMMENDED I.S. PURPOSE
Operational Employee Records Track employee
training, skills and
performance appraisal
Knowledge Career Path Designs career paths for
employees
Management Compensation Analysis Monitors the range and
distribution of
employees wages,
salaries & benefits
Strategic Human Resources Plans the long-term
Planning labour force needs of the
organization

2. Finance and Accounting Systems

These are systems that keep track of the firm’s financial assets and fund flows.
LEVEL RECOMMENDED I.S. PURPOSE
Operational Accounts Receivable Track outstanding debts
Knowledge Portfolio Analyses Designs portfolios
investments
Management Budgeting Prepares short-term
budgets
Strategic Profit Planning Plans long-term profits

10
3. Sales and Marketing Systems
These are systems that help the firm identify customers for its product or services.
They also assist to develop product or services that meet customer needs, promote and
sell them as well as providing ongoing customer support.
LEVEL RECOMMENDED I.S. PURPOSE
Operational Order processing Enters, processes and
tracks orders
Knowledge Market Analyses Identifies customers and
markets using data on
demographics, markets,
consumer behaviour and
trends
Management Pricing Analyses Determines prices for
products and services
Strategic Sales and Forecasting Prepares 3-5 year sales
forecast

4. Manufacturing and Production Systems

These are systems that deal with planning, development, production of products and
services and controlling the flow of production.
LEVEL RECOMMENDED I.S. PURPOSE
Operational Machine Control Controls the actions of
machines and equipment
Knowledge Computer-Aided Design Designs new products
using the computer
Management Production Planning Decides when and how
many products should be
produced
Strategic Facilities Location Prepares and decides
where to locate new
production facilities

In addition to the information systems mentioned here above, we also recommend the
following office automation systems:

11
 E-mail System: Improve GM’s internal and external communication, creating
an effective and efficient service
 Word Processing System: Office system technology that facilitates the
creation of documents through computerized text editing, formatting, storing
and printing
 Document Imaging System: System that converts documents and images into
digital form so that they can be stored and accessed easily by the computer
 Timesheet System: - Enables employees to fill in the timesheet forms online
so that management can approve and track the timesheet online.

Conclusion
Whilst it would be make a lot of business sense for a company like Ford to close
down more plants and accept a smaller portion of the U.S. market this strategy would
not work in favour of GM because then the company would produce and sell fewer
vehicles, meaning less income for those big pension and health-care costs. GM has to
maintain its cash flow to cover these costs until a future date when it is hoped that the
elderly retirees diminish in number whilst also making improvements in quality,
efficiency, design and brand appeal.

Although GM has cut the time to assemble a vehicle from an average of 32 hours in
1998 to 24 hours in 2003, Japanese competitors are still faster in getting new models
into the market. Honda’s new vehicle development cycle is only 14 months and the
company is working towards compressing development time down to 12 months. GM
should look at this as a challenge to embrace and strategise with a view to improve its
development cycle to match its competitors if not exceed them.

Whilst these recommendations provided are meant to help GM sustain its market
share, they cannot be fully appreciated until they have been put to test and the results
obtained critically analysed to create room for adjustments where necessary and
where applicable.

REFERENCES/BIBLIOGRAPHY

12
Bocij, P., Caffey, D., Greasley, A., Hickie, S. (2003) Business Information Systems –
“Technology, Development and Management for the e-business”, 2nd edn, FT Prentice
Hall, pp. 8 – 32, 43 – 58, 514 – 545
Curtis, G. and Cobham, D. (2002) Business Information Systems – Analysis, Design
and Practice, 4th edn, FT Prentice Hall, pp. 1 – 40, 45 – 69, 331 – 370
Laudon, K. C., and Laudon, J. P. (2005) Essentials of Management Information
Systems – “Managing the Digital Firm”, 6th edn, Pearson Prentice Hall, pp. 74 – 113,
40 – 72, 444 – 483
Laudon, K. C., and Laudon, J. P. (2003) Essentials of Management Information
Systems – “Managing the Digital Firm”, 5th edn, Prentice Hall, pp. 36 – 67, 70 – 103,
380 – 410
McLeod, R. Jr. and Schell, G. P. (2004) Management Information Systems, 9th edn,
Pearson Prentice Hall, pp. 14 – 21, 25 – 44, 75 – 96
Obrien, J. A., and Marakas, G. M. (2005) Management Information Systems, 7th edn,
McGraw Hill International, pp. 4 – 38, 39 – 60

INTERNET SOURCES

http://www.gocfi.com/resources/CFI-tradeline04-gm.html
http://www.ollie.dccd.edu/mgmt1374/book_contents/3organizing/org_process/org_pr
ocess.html

13