BUS 800 GM CASE FINAL)

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Toronto Metropolitan University *

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800

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Apr 3, 2024

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External Analysis 1. The Macro Environment (PESTEL) Component Factors Opportunity or Threat 1.1. Political ▪ Government laws on emissions, safety requirements, and electric vehicle subsidies influence GM's operations and entry into the EV market. The government's pursuit for electrification and tighter emission regulations may generate opportunities. ▪ GM's history includes a government bailout during the financial crisis. Continued government support and policies related to the automotive industry, including incentives for EV adoption and charging infrastructure, can impact GM's growth prospects. Opportunity 1.2. Economic ▪ As demand for electric vehicles rises due to environmental concerns and altering consumer tastes, GM's emphasis on EV production positions the company to capitalize on this market trend. Economic downturns could reduce demand for new vehicles, reducing GM's sales and profitability. ▪ Fluctuations in exchange rates can impact its profitability and competitiveness in international markets. Opportunity 1.3. Sociocultural ▪ Growing environmental awareness and a shift towards sustainable transportation can benefit GM. Consumers are becoming more interested in Opportunity

ecologically friendly vehicles, and GM's promise to an all- electric future match with this trend, luring eco-conscious customers to increase market share. ▪ GM's focus on becoming the world's most inclusive company reflects the importance of social factors, including workforce diversity and corporate social responsibility. 1.4. Technological ▪ The emergence of tech businesses in the automotive market, such as Tesla, might put GM's traditional automotive business model under threat. In the face of disruptive technologies, GM must remain competitive and agile. ▪ Success will be based on its ability to innovate and develop advanced electric vehicle technology, including battery range, charging infrastructure, and autonomous driving capabilities. Threat 1.5. Environmental ▪ Commitment to zero-emission vehicles aligns with environmental goals. As more countries and regions implement strict emission regulations, GM's focus on electric vehicles can enhance its market position. ▪ Environmental regulations can become more stringent, increasing compliance costs for GM and affecting its profitability. the proper disposal and recycling Opportunity

of batteries become critical environmental considerations. 1.6. Legal & Regulatory ▪ Legal protection of GM's intellectual property, particularly its EV technology and autonomous driving systems, is critical to preventing infringement and maintaining a competitive advantage. ▪ Potential legal issues related to accidents or malfunctions may arise, requiring GM to address liability concerns Threat 1.7. Strategic Implication 1.7.1. Strategic Opportunities ▪ Growing demand for EVs can boost GM's revenue. ▪ Growing awareness of environmental issues and a shift towards sustainable transportation can benefit GM. ▪ GM's technological advancements in EVs, such as the Ultium battery platform and the Vehicle Intelligence Platform, provide a competitive advantage. ▪ Government support and incentives for EVs can create a favorable legal environment for GM's operations. 2. Porter’s Five Forces Analysis 2.1. Threat of N ew Entrants Due to the substantial capital investment required to establish production facilities and develop new technologies, the threat of new entrants in the automobile industry is relatively low. The shift towards EVs, on the other hand, has attracted new companies, particularly in the electric vehicle category. The rise of EV start-ups and IT businesses with significant resources entering the market poses a possible threat to established automakers such as GM. To disrupt the

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established automotive industry, new entrants may use advanced technology, innovation, and consumer-centric approaches. 2.2. Bargaining Power of Buyers In the automotive industry, buyer power is moderate. Customers can easily compare pricing and features and have access to a large selection of car alternatives. Customers' bargaining power has grown as EV adoption grows and more manufacturers enter the market, as automakers attempt to meet consumer expectations and preferences. Furthermore, government incentives and subsidies for EV purchases can have an impact on customer decisions. 2.3. Threat of Substitutes The threat of EV alternatives is relatively low. While traditional internal combustion engine (ICE) vehicles continue to be a viable alternative, the global push for sustainability and environmental consciousness favours the adoption of EVs. The rising infrastructure for charging stations, as well as government regulations encouraging EV use, make ICE vehicles less appealing. Other modes of transportation, such as public transportation, biking, or ride-sharing services, may, however, serve as limited alternatives for individual vehicle ownership. 2.4. Bargaining Power of Suppliers Suppliers in the automotive industry have substantial bargaining leverage, particularly for critical components like as batteries and innovative technology. As GM transitions to an all-electric future, ensuring a consistent and cost-effective supply of batteries becomes critical. This reliance on battery suppliers such as LG Chem has an influence on GM's bargaining leverage. Furthermore, the availability of new technology and software solutions might influence supplier power. Maintaining excellent connections with important suppliers and negotiating long-term contracts will help lessen supplier power concerns. 2.5. Intensity of Rivalry Among Competitors In the automobile sector, competition is fierce, with several big manufacturers fighting for market dominance. GM is competing against major automakers like as Ford, Volkswagen, and Toyota, as well as new EV start-ups such as Tesla, Lucid, and Rivian. As manufacturers compete to build new EV models and gain an early advantage, the transition to an all-electric future has increased competitiveness. Tesla's and other newcomers' fast growth poses a threat to GM's market position. To obtain an advantage in the EV market, competitors are likely to engage in price wars, aggressive marketing, and ongoing innovation. 2.6. Industry Attractiveness In summary, the attractiveness of the EV market for General Motors lies in the opportunities for innovation, sustainability, and meeting evolving consumer preferences. The electric vehicle (EV) market presents both attractive and challenging aspects for General Motors (GM). The emergence of new players and continuous technology innovation make the market enticing, encouraging GM to invest in EVs and differentiate its offerings. GM's commitment to sustainability and carbon-neutrality further enhances its appeal to environmentally conscious consumers. However, intense competition among existing automakers and EV start-ups creates a

competitive landscape, potentially impacting profitability, which is unattractive. Additionally, the significant bargaining power of suppliers, particularly for key components like batteries, can affect production costs. 3. Driving Forces 3.1. Political/Economic Forces ▪ Stricter pollution laws and policies in favour of sustainable transportation are pushing automakers to convert to EVs. To encourage EV adoption, governments around the world are providing incentives such as tax credits and subsidies. ▪ International efforts to address climate change and promote sustainable practises are encouraging governments to work together. Trade agreements and collaboration on EV technology are aiding global EV industry growth. ▪ Advances in EV technologies, battery production, and economies of scale are driving down the manufacturing costs of EVs. 3.2. Technological Change ▪ Breakthroughs in battery chemistry, energy density, and charging capabilities are enhancing the range and performance of EVs ▪ The expansion of charging infrastructure, including fast-charging networks, is critical for widespread EV adoption. 3.3. Environmental Concerns ▪ Consumer choices are being influenced by rising environmental consciousness, with more individuals opting for ecologically friendly transportation solutions. ▪ Companies that embrace sustainable material sourcing and recycling practices will enhance their brand image and meet the demands of environmentally conscious consumers, potentially improving long-term profitability.

4. Key Success Factors Key Success Factors ▪ Technological Innovation ▪ Cost Efficiency ▪ Sustainable Practices ▪ Brand Reputation Resources and Competitive Capabilities ▪ Strong R&D Capabilities ▪ Efficient Manufacturing ▪ Marketing and Distribution Competitive Disadvantages/Shortcomings ▪ Falling Behind in Technology ▪ Limited Charging Infrastructure ▪ Lack of Sustainability Focus Strategic Impacts of Key Success Factors ▪ Market Leadership : GM can position itself as a market leader in the EV industry by excelling in technology innovation and cost efficiency, giving it a competitive advantage over competitors. ▪ Market Penetration : With a strong focus on charging infrastructure and affordable EV options, GM can penetrate new markets and attract a wider customer base. ▪ Competitive Positioning: Emphasizing sustainable practices and building a positive brand reputation will differentiate GM's EV offerings and enhance its competitive positioning. 5. Innovation and the Industry Life Cycle ▪ The industry fits this pattern as it has experienced gradual growth initially, with EVs being a relatively niche market. In recent years, the industry has seen significant growth and acceleration as more consumers and governments embrace electric vehicles to reduce carbon emissions and combat climate change. This increased awareness, along with advancements in battery technology and charging infrastructure, has led to a surge in EV adoption. ▪ The EV industry has been subject to forces of innovation, particularly in technological advancements. The push for sustainability, government regulations, and consumer demand for greener transportation have driven automakers like General Motors (GM) to invest heavily in research and development to improve EV technology, increase battery

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range, and reduce costs. This investment has resulted in incremental innovations, making EVs more practical and appealing to a broader market. ▪ GM's strategic focus on technological innovation, sustainability, and cost efficiency aligns with incremental and radical innovations. Incremental innovation involves continuous improvements to existing technology, while radical innovation involves significant breakthroughs that transform the industry. GM's efforts in developing advanced battery technology, creating (Ultium), and building a vehicle intelligence platform shows incremental and radical innovation to enhance their EV offerings and competitive position in the market. 6. Company Outlook for Profitability 6.1. Impact from Macro Environment The industry is undergoing substantial changes as a result of political, economic, technological, and environmental considerations. Governments around the world are enacting legislation and incentives to encourage EV adoption, and there is a growing demand for environmentally friendly transportation. This provides opportunity for GM to capitalise on the growing interest in EVs and match its strategy with the changing macroenvironment. 6.2. Competitive Forces on Profitability The industry is subject to intense competition, particularly from established players like Tesla and new entrants like upstart EV manufacturers. The industry's competitive forces can put pressure on profitability, but GM's position as one of the major automakers with a long history and established resources gives it some advantage in managing the competitive landscape. 6.3. Driving Forces The shift towards electrification and sustainability is a major trend in the industry. GM's strategic focus on EVs, as evidenced by its Ultium platform, battery advancements, and commitment to a range of BEVs, positions the company well to benefit from the prevailing driving forces and evolving customer preferences. 6.4. Market position Due to its long history in the automotive industry and its dedication to electrification, GM has a relatively strong position in the EV market. While Tesla dominates the all-electric industry, GM's high brand awareness and large production capabilities provide it a competitive advantage in challenging other EV manufacturers. 6.5. Strategy on industry Key Success Factors GM's strategic focus on technological innovation through Ultium, its investment in charging infrastructure, and commitment to sustainability align well with the industry's key success factors. GM appears to have significant opportunities for competitive success and attractive profit margins. The macro environment is favorable for EV adoption, and GM's strategic focus on EVs and alignment with key success factors position the company to capitalize on the

growing market. While competition is fierce, GM has a competitive edge because to its market position and established resources. 7. Current and Generic Strategy 7.1. Mission Statement GM’s current mission statement is "zero crashes, zero emissions, and zero congestion". It aims to achieve this through its commitment to producing electric vehicles (EVs) and reducing its environmental impact (Case, 3) 7.2. Firm's Strategy GM looks to be pursuing a strategy of product differentiation. The company's focus on an all- electric future, the development of advanced EV technology, and the integration of software and intelligence in its vehicles demonstrate its attention on generating unique and original goods that stand out in the market. Differentiation Factors include: Advanced EV Technology : GM's Ultium batteries and vehicle intelligence platform set the company apart from traditional internal combustion engine (ICE) automakers. The focus on developing efficient and powerful battery technology and integrating advanced software positions GM as a potential leader in the EV market (Case, 6). EV Portfolio and Vision : GM has outlined a plan to increase its offering to twenty to thirty BEVs by 2025, which represents a significant portion of its overall vehicle lineup. This vision aligns with its commitment to an all-electric future, which sets GM apart from many of its competitors. Sustainability Targets : GM's commitment to achieving carbon-neutrality, eliminating tailpipe emissions from new vehicles by 2035, and incorporating sustainable materials in its vehicles by 2030 highlights its dedication to environmental responsibility and resonates with environmentally conscious consumers (Case, 8). Brand Portfolio : Although GM discontinued some legacy brands like Saab, Saturn, and Hummer during its restructuring phase, GM has retained core brands like Chevrolet, Cadillac, GMC, and Buick. These brands offer a diverse portfolio of vehicles catering to different market segments, contributing to product differentiation (Case, 2). GM's present strategy seems to be working well. The company's focus on electrification has resulted in increasing market share for its EVs, with Chevrolet's share of US BEV sales rising to 9.6% in 2021. GM's commitment to an all-electric future and the development of advanced EV technology has positioned it competitively in the rapidly growing EV market (Case, 8).

8. SWOT Analysis 8.1 Strengths Strong EV Vision: GM has a clear and ambitious vision to transition towards an all- electric future, positioning itself as a leader in the EV market. Advanced EV Technology: The development of Ultium batteries and the vehicle intelligence platform showcases GM's capability to innovate in the EV space. Brand Portfolio: GM retains well-established brands like Chevrolet, Cadillac, GMC, and Buick, providing a diverse range of vehicles to cater to different market segments. Historical Significance: GM's historical and structural importance to the US economy has garnered government support during times of crisis, which helped the company survive and restructure. 8.2 Weaknesses Late Entry into EV Market: GM's transition towards EVs came later than some competitors like Tesla, resulting in a need to catch up in terms of brand perception and charging infrastructure. Legacy Costs: GM's historical legacy and pension liabilities can be a financial burden on the company's operations. Traditional Vehicle Dependence: While GM is transitioning to EVs, its current revenue still heavily relies on traditional internal combustion engine vehicles. 8.3 Opportunities EV Market Growth : The global shift towards EVs presents significant growth opportunities for GM, especially with increasing demand for environmentally friendly vehicles. Regulatory Support : Favorable environmental regulations and government incentives for EV adoption can boost GM's sales and market share. Charging Infrastructure Development : Expanding charging networks and infrastructure will enhance the adoption of EVs, presenting opportunities for GM to collaborate with charging providers and increase consumer confidence. 8.4 Threats Intense Competition: The EV market is highly competitive, with established players like Tesla and new entrants presenting significant threats to GM's market share. Changing Consumer Preferences: Consumer preferences can shift rapidly, and if GM fails to meet customer demands for EVs, it may lose market share. Supply Chain Disruptions: Dependence on complex supply chains, especially for battery components, can lead to disruptions and impact production.

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Attractive aspects of GMS’s situation include its clear vision for EV adoption, its commitment to an all-electric future aligns with the growing global demand for EVs and positions the company for long-term success in the EV market. GM’s advanced EV battery technology also contributes to attractiveness as it gives them a competitive advantage in the industry. GM’s brand recognition also makes it attractive as it has a strong existing presence and can leverage customer loyalty. On the unattractive side, the late entry into the EV market gave competitors a chance at a head start. There might also be legacy costs that could hinder future investments in technology unless other capital is raised to offset it. Strategic implications for improvement include: ▪ Increasing efforts on EV development. ▪ Expand charging infrastructure. ▪ Enhancing brand perception. ▪ Sustainability and ESG Focus. ▪ Efficient manufacturing and supply chain management. ▪ Strategic partnerships. ▪ Continued innovation efforts. 9. Competitive Advantage and VRI N 9.1 Resources ▪ Ultium Battery Technology: GM's development of the Ultium battery technology is a critical resource in the EV market (Case, 6) ▪ Vehicle Intelligence Platform (VIP): The VIP embedded in GM's EVs provides advanced computing power and over-the-air software updates, enhancing vehicle connectivity and safety. (Case, 7) ▪ Brand Portfolio: GM's strong brand portfolio, including Chevrolet, Cadillac, GMC, and Buick, provides a valuable resource that can differentiate the company's EV offerings from competitors. ▪ Historical Importance and Government Support 9.2 Capabilities ▪ EV Technology Innovation: GM's capability to innovate in the EV space, as demonstrated by the development of Ultium batteries and the VIP, is a dynamic capability (Case, 6). ▪ Reputation and Brand Management: GM's capability in reputation and brand management is essential for creating and maintaining a positive brand image. ▪ Manufacturing and Scale: GM's expertise in large-scale automobile manufacturing is a valuable capability that can enable the efficient production of EVs.

▪ Strategic Vision and Leadership: Under the leadership of Barra, GM has demonstrated a strategic vision for the company's future, particularly in the transition to EVs (Case, 2). 9.3 Strategic implications to sustain success ▪ Continuous Innovation and R&D ▪ Customer-Centric Approach ▪ Differentiation and Brand Positioning 10. Strategic Issue EV manufacturing is an important part to focus on but in order to increase EV adoption amongst consumers, GM needs to focus on its charging infrastructure. How can GM strengthen its charging infrastructure to support widespread EV adoption? Observations: ▪ Charging Infrastructure Growth: The case highlights the significant growth in public charging infrastructure, with over forty-nine thousand charging stations in the United States by 2021. However, compared to other markets like China, the US still lags in the number of charging stations, and distribution is concentrated in certain regions, such as California. To encourage widespread EV adoption and address customer range anxiety, GM needs to focus on expanding and strategically distributing its charging infrastructure (Case, 4). ▪ Competitor Actions: Competitors like Tesla have invested heavily in their own charging networks, offering exclusive access to their EV customers. While GM announced plans to help dealers install chargers, it's crucial to assess whether this approach can compete effectively against the growing charging networks of Tesla and other emerging players. GM may need to consider alternative strategies, such as partnerships with existing charging infrastructure providers, to accelerate the development of its network (Case, 5). Possible solutions to this issue include allocating sufficient resources to the charging infrastructure initiative. GM must invest in innovative technologies that improve charging speed, reliability, and user experience. GM could also explore strategic partnerships with established charging infrastructure providers, leveraging their expertise and existing networks. By addressing the charging infrastructure issue with a customer-centric approach and leveraging strategic partnerships and innovation, GM can enhance its competitive position in the EV market and progress the adoption of its electric vehicles.

Reference Edmondson, A. C., Edmondson, A. C., Kanter, R. M., Kanter, R. M., Murray, M., Murray, M., Sesia, A., Rigol, N., Rigol, N., Roth, B. N., Trelstad, B., Mehta, S., Bigio, B., Bigio, B., Seijts, J., Pangarkar, N., Pangarkar, N., & Yadav, N. (n.d.). General Motors: Mary Barra’s leadership in the electric vehicle era ^ W31010 . HBR Store. https://store.hbr.org/product/general-motors-mary-barra-s-leadership-in-the-electric- vehicle-era/W31010

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BUS 800 GM CASE FINAL)

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