MGT 607 Module 1 Assignment 1 – External Analysis

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Module 1: Assignment 1 – External Analysis (General Motors) Julie Doyle 2/25/24 The General Motors Company (GM) was founded in 1908 in Detroit, MI and has been a leader in the automotive industry. GM was the first to introduce the electric self- starter vehicle in 1912, an invention soon made the hand crank obsolete. By 1929, GM surpassed Ford Motor Company, becoming the leading American car manufacturer. In 1931 GM became the world’s largest manufacturer of motor vehicles and by 1941 GM was making 44% of all the cars in the United States, becoming one of the largest industrial corporations in the world (Encyclopedia Brittanica, 2024). GM built the first modern electric car designed for a mass market, the EV1, in 1996. The EV1 became the focal point of national discussion about innovation and the promise of reducing air pollution and dependence on oil with electric cars. GM canceled the EV1 program in 2003, citing high production costs and a small market. However, concerns about air pollution, climate change and interest in lower energy cost per mile created a market for electric cars and in 2010 GM once again entered the market with the Chevrolet Volt, a hybrid car with a gasoline-charged electric motor. (National Museum of History, 2023).
The EV1 (National Museum of History, 2023) Since producing the Chevrolet Volt, GM has continued to increase production of electric vehicles, now producing several models. GM has remained competitive in the electric vehicle market as a large manufacturer. Below is a chart of the largest EV manufacturers worldwide, including battery electric vehicles (BEV), plug-in hybrid vehicles (PHEV) and fuel cell electric vehicles (FCEV).
Data Source: EV Volumes (Daly, 2023) Using a PESTEL analysis, we can identify the most significant opportunities and threats GM faces by looking at the external factors on the Electric Vehicle (EV) Market. Below I examine GM’s macro-environment as a global automotive company. Political Factors Affecting General Motors Over the last decade, a variety of support policies for EVs were instituted in key markets which helped stimulate a major expansion of electric car models. The measures – primarily purchase subsidies, and/or vehicle purchase and registration tax rebates –   were designed to reduce the price gap with conventional vehicles. Such measures were implemented as early as the 1990s in   Norway , in the   United   States   in 2008 and in   China   in 2014 (IEA, 2021). Increase in taxation of the traditional gasoline powered vehicles means there is a political trend toward EV. Many countries have
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electrification targets or ICE bans for cars, with 8 countries plus the European Union announcing net-zero pledges. Norway has committed to net-zero emissions from cars by 2025 (IEA, 2021). (IEA, 2021) GM has made a shift of their own to capitalize on these trends. GM CEO Mary Barra stated CM still plans on moving all electric vehicles sales by 2035 (Shepardson, 2023). There has also been a shift in governmental promotion of public transport with many Asian and European nations encouraging their citizens to use public transport. An additional external factor that poses a threat to GM EV market is the increase in use of ride-sharing programs that may potentially reduce consumers likelihood of purchasing automobiles. Economic Factors Important to General Motors
Political policies can also have a great economic impact for GM. In 2022, The White House released a fact sheet regarding President Biden’s Economic Plan, explaining how the administration plans to improve the EV manufacturing market by creating new economic opportunity, thousands of well paid and union jobs across the country (The White House, 2022). This increase gives an economic push toward an increase of electric vehicle production. Other external factors that give GM economic opportunity are the high growth rate and stability of the market, giving GM the chance to grow. The U.S. reported the seventh consecutive year of growth in vehicle sales in 2016 ( Mohatarem, 2017). The US car market declined 23% in 2020, though electric car registrations fell less than the overall market (IEA, 2021). While the rate of growth of U.S. electric vehicle sales slowed in 2023, the demand continues to rise (CBS News, 2023). T he company still plans to build factory capacity to manufacture 1 million EVs per year by the end of 2025. (CBS News, 2023). Gm is losing money on every electric vehicle it sells, per CBS News, but GM says it’s on track to generate pretax profit margins in 2025 as it produces higher margin EVs, works out kinks in batter manufacturing and sees battery cost reductions. Because GM is working actively overcome economic threats, it is giving itself the chance to expect growth. Social Factors Influencing General Motors Social factors such as the values, culture, belief systems and attitudes of the general population have not only impacted but created change in business and policies across the world. Specifically, our society is increasingly concerned about climate change and reducing the impact we have on the environment causing an increase in
demand for electric vehicles to decrease our carbon footprint. There is a strong notion that electric vehicles are a technology that benefits everyone, with environmental benefits, such as less pollution and cleaner air, translating into better health for everyone.   This, in turn, led to a greater desire for support to make the technology affordable (Adi, 2022). These external social factors give GM the opportunity to promote sales growth with EV. As mentioned earlier, there has been an increase in public transportation options an infostructure as well as an increase using ride-sharing as a means of transportation. GM would put itself at risk if it did not do it’s part to commit to combating climate change. Fortunately, GM has recognized this need and has designed their website to show their commitment and provide information and education to the public to communicate how they are working to make EV accessible to everyone, “From performance vehicles to work trucks, from daily drivers to commercial delivery, we’re creating EVs for every purpose” (General Motors, n.d.). Technological Factors for General Motors Several technical issues continue to encumber the adoption of electric vehicles. First, long charging times present a significant obstacle. Currently, most electric vehicles require several hours to charge their batteries completely. Those models that do not require this amount of time have the most expensive batteries, and therefore the highest final prices (Poczter & Jankovix, 2014). While battery life and accessibility have been a threat to the EV industry. GM has been working to alleviate these issues. GM “works with the new EV buyers to ensure they have the proper installation support, tools, and knowledge to confidently charge at home (General Motors, n.d.). GM has been able to overcome this threat with new battery technology, Ultium. The Ultium platform includes
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new electric motors, platforms, battery designs, and software   for its next wave of EVs (Tariq, 2023). Another external technological factor that poses a threat has been a lack of accessible charging stations and infrastructure. GM is also working to overcome this challenge and is helping to accelerate infrastructure growth to make more than 3,250 fast-charging stations by the end of 2025 (General Motors, n.d.) Environmental Factors for General Motors The largest external environmental factors GM faces are changes in climate patterns and the growing concern in both government and society about our air quality. GM must continue with their plan to increase EV production and infrastructure to reduce carbon emissions and create a healthy environment. If GM fails to make progress in these areas, they risk failing to meet the needs and wants of consumers. There has also been a focus on businesses becoming more sustainable. Communities are interested in the positive or beneficial effects of business, including the effects of corporate social responsibility activities.   The company must satisfy communities’ interests in the sustainability and minimization of the environmental impact of the business (Meyer, 2023). GM has developed a corporate social responsibility strategy to recuce the threat of environmental factors. Legal Factors Relevant to General Motors GM could face penalties if they fail to meet the laws that govern the automobile industry. These laws are ever-changing and GM must not only be in compliance with the current laws, but make an effort to predict what regulations may come next. It’s
inevitable that there will be stricter emission and environmental regulations. By satisfying the requirements of the law, GM will reduce the risk of tarnishing the good reputation it’s built for itself over the last century. REFERENCES
Adi. (2021, October 15). How social attitudes affect adoption of electric vehicles . The Horizons Tracker. https://adigaskell.org/2022/01/18/how-social-attitudes-affect- adoption-of-electric-vehicles/ CBS News. (2023, November 30). General Motors believes it will start making money on electric vehicles in 2025 as higher margin models arrive. https://www.cbsnews.com/detroit/news/general-motors-believes-it-will-start- making-money-on-electric-vehicles-in-2025-as-higher-margin-models-arrive/ EV1 electric car . National Museum of American History. (2023, September 1). Retrieved February 24, 2024, from   https://americanhistory.si.edu/explore/exhibitions/ev1- electric-car Daly, L. (2023, June 1). The largest EV companies in 2023 . The Motley Fool. Retrieved February 25, 2024, from   https://www.fool.com/research/largest-ev-companies/ IEA (2021), Global EV Outlook 2021, IEA, Paris https://www.iea.org/reports/global-ev- outlook-2021, Licence: CC BY 4.0 Committing to an all-electric future: General Motors . Committing to an All-Electric Future | General Motors. (n.d.). https://www.gm.com/commitments/electrification Meyer, P. (2023, August 9). General Motors’ stakeholders & Corporate Social Responsibility Strategy . Panmore Institute. https://panmore.com/general-motors- corporate-social-responsibility-strategy-stakeholders
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Mohatarem, G.M. 2017. Global automotive industry outlook. Presentation to the Society of Automotive Analysts Automotive Outlook Conference, Detroit, January 8. Retrieved December 21, 2017 from   https://societyofautomotiveanalysts.wildapricot.org/resources/Documents/ SAA_Automotive_Outlook_2017_Mustafa-Mohatarem.pdf n.a. (2017). What is PESTLE Analysis? A Tool for Business Analysis. Retrieved February 25, 2024, from   http://pestleanalysis.com/what-is-pestle-analysis/   Poczter, S. L., & Jankovic, L. M. (2014). General Motors:  The Electric Revolution. Journal of Business Case Studies (JBCS) , 10 (2), 185–190. https://doi.org/10.19030/jbcs.v10i2.8507 Shepardson, D. (2023, December 13). GM still planning to end gas-powered vehicle sales by 2035 -- CEO ... GM still planning to end gas-powered vehicle sales by 2035 -- CEO. https://www.reuters.com/business/autos-transportation/gm-still- planning-end-gas-powered-vehicle-sales-by-2035-ceo-2023-12-13/ Tariq, A. (2023, August 2). Everything we know about GM’s Ultium Battery Technology . TopSpeed. https://www.topspeed.com/everything-to-know-gm-ultium-battery- technology/#:~:text=That%20said%2C%20GM%20Ultium%20battery,promises %20a%20450%2Dmile%20range. The Editors of Encyclopedia Brittanica (Ed.). (2024, February 22). General Motors . Encyclopædia Britannica. Retrieved February 25, 2024, from   https://www.britannica.com/topic/General-Motors-Corporation
The White House. (2022, September 14). FACT SHEET: President Biden’s Economic Plan Drives America’s Electric Vehicle Manufacturing Boom. The White House. Retrieved February 25, 2024, from  https://www.whitehouse.gov/briefing-room/statements- releases/2022/09/14/fact- sheet-president-bidens-economic-plan-drives- americas-electric-vehicle- manufacturing-boom