Management Economics: Factors Influencing Demand for General Motors

This document discusses the management economics of General Motors, focusing on the factors that influence its demand. It provides an overview of General Motors, its products and services, and its market analysis. The document also explores how factors such as customer preferences, pricing, and other variables impact the products and services of General Motors. The conclusion highlights the importance of understanding these factors in making strategic decisions.

Management Economics

Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY.................................................................................................................................................3
1. Overview of General Motors its products/services and history............................................................3
2. Market Analysis of General Motors to evaluate factors which influence its demand..........................4
3. How factors influence the products and services of General Motors...................................................9
CONCLUSION.............................................................................................................................................12
REFERENCES..............................................................................................................................................13

INTRODUCTION
Management economics identifies demand forecasts as a theory that enables essential parts
including such taxes and expenditure, money, etc. to be efficient in conjunction. In addition,
management inside a company uses the concept to tackle such business-related problems, and
requires a range of different concepts and decision-making strategies (Belleflamme, Omrani and
Peitz, 2015). In other terms, management economics has been one of the central tenets which
distinguish different economic theories as a comparison between marketing plans for making
reasonable decisions. Such choices are concentrated towards efficiency gains and ultimately lead
by organizational creativity and outcomes. In this reason, General Motors is chosen to interact
with the automobile industry as it conducts market in multiple nations, where the availability of
raw materials and changes in economic environment have a higher impact on its production
costs. In the present study, different variables are analyzed in order to examine this dimension,
which also helps to decide if demand for GM products is elastic or inelastic.
MAIN BODY
1. Overview of General Motors its products/services and history
The automotive industry relates to a most evolved market that commercially extends
international business. Each year businesses that operate in this period used to produce and
export millions of vehicles, trucks and other transports. In the end, this will benefit a world's
growing economies, and also play a prominent part in either intentionally or unintentionally
providing jobs to millions of people. In addition to this, the automobile industry is also
accountable for gasoline or oil use. Thus the, the idea of managerial economics selected from the
automotive sector is most advantageous because it evaluates all elements that are possible to
examine the very same. For instance, General Motors (GM) is one of's biggest organizations, but
it provides its products globally. This has produced a range of developments in the manufacture
of luxury vehicles such as Chevrolet, GMC, Cadillac and more that help this company sell the
largest amount of people globally compared to companies.
Products and services
It operates fabrication and manufacturing plants and processing facilities across the U.S. ,
Canada and several other nations. The main company’s products involve trucks and cars,

automotive parts and generators, and they are also engaged in financial services. GM
headquarters is situated in Detroit (Brandenburg and Rebs, 2015).
Through economic analysis, it has been analyzed that in the category of Automotive Assembly
Organizations, whose sales approximate. GM is on edge of most about 9.17 million year
including more than US$ 192.6 Trillion in sales. Therefore, it has shown that competition for
GM products is stronger than some other companies such as Toyota, Ford, Volkswagen and
more.
2. Market Analysis of General Motors to evaluate factors which influence its demand
There are a number of variables that have the potential to affect the market of specific
types of goods and services. It's because a commodity is introduced on the market and as a result

of which a critical quantity of variables respond positively as required by consumers demands
their consumer viewpoint. This becomes therefore necessary for a firm to concentrate on all of
those components that have a major effect. In the absence of express of these considerations a
corporation can have a lot of problems to enhance business requirement. Clients are one of the
significant indicators of all the variables, since they are only for those that can enhance business
request (Chen, Chen and Yang, 2017).
Price of substitutes: In modern economics a replacement good is a benefit which can be used
rather than the other. Though the range of financial services, similar products and services which
consumers access equivalently or equivalently, so obtaining more than one item gives rise the
consumer to seek fewer of all the other item. When the price of a product complementing a good
decline reduces the amount needed and the demand declines with the other. If the price of a
substitute good fall, the amount required for the good will increase, but the demand for the good
will be balanced by decreases. Influence on the price of alternative options for a specific area can
often have a direct effect on the very same supply. In this regard, GM's replacements comprise
traditional and electric efficient gasoline engine cars, zero emissions, and plug-in hybrid vehicles
etc. specifically affect their cars' market. But the threat level of these replacements is perceived
as week due to GM's extremely developed technology and fuel efficient automobiles.
Price of complements: This aspect increases the costs of products such as cars and numerous
larger vehicles that have an impact on the individual car market. Consequently, when the prices
of other suppliers, such as those in association with GM, are increased, their main competitors
are Volkswagen, Toyota and others. This would favor GM by adjusting market accordingly,
because when buying vehicle issues, customers would first prefer their customer's image
irrespective of cost (Dittrich and Srbek, 2016). For example – falling prices of other luxury cars,
this will bring benefits to GM by changing its take the pressure, as people start taking their brand
presence first instead of price, prior to actually purchasing any automobile worries.
Customer taste & preference: The consumer preferences are defined as qualitative (individual)
choices of different formats of utility-determined goods. They request that the customer classify
the packaging designs as per their level of usability. The ability to buy goods does not impact
customers’ preferences or dislikes. This factor produces a significant variation in any currency's
requests, either right or wrong. Customers now prefer to buy some efficient vehicles and use less

fuel, largely since they realize that emissions are that, mostly as a result of high-consumption
vehicles. Therefore, in the sense of the automobile industry, due to knowledge of those emissions
that is mostly caused by automobiles consuming fuel, consumers tend to buy certain cars that are
powerful and absorb less fuel. Some other point of changing consumer taste and preference is the
technologies and high-tech inventions that require buying those cars that are designed and
developed so according their lifestyle choices and standards of living (Giannakis and
Papadopoulos, 2016).
Customer income: Consumers from the automotive industry requested to buy those cars that
will provide them with better safety and pedestrian safety. It strongly anticipate cars to satisfy
their requirements as inexpensive according to their level of income, as fuel efficient, as less
emission leads, etc.
Demographics: Demographic data pertains to regularly presented socio-economic statistics,
involving employment, education, incomes, family, birth and longevity, and much more.
Demographic patterns are now influencing the picture of cars where the customer's behaviour is
strongly affected by sports car driven, self-driving vehicles, accessibility and so much more.
Then car riders drive to towns easily and reap the benefits of the trip by train. It will also help to
boost the amounts of profit in the car industry by raising automobile manufacturing. The demand
for GM Motors is growing steadily due to the success of the electric vehicles, as per statistical
data.

Therefore, it has been studied from around the variable research that shifts in consumer
prices and tastes have significantly impacted GM vehicle production. The highly innovative cars
such as fuel efficiency, plug-in hybrid vehicles, safe driving and more have helped to maintain
customers' preference for their products. It will also assist in satisfying their desires.
Consequently, demand for General Motors cars are rising dramatically on the industry that, see
below can also be generalized via its last ten years of production productivity (Gurgul and
Machno, 2016).
Sales Performance of General Motors from last ten years –

Year General Motors Annual
Revenue
(Millions of US $)
2018 $147,049
2017 $145,588
2016 $149,184
2015 $135,725
2014 $155,929
2013 $155,427
2012 $152,256
2011 $150,276
2010 $135,592
2009 $104,589
2008 $148,979

3. How factors influence the products and services of General Motors
There are multiple elements present, such as customer desires, alternate and alternative
pricing etc. impact the economy of General Motors automobiles, both positive and negative
ways. So this organization is continually continuing to improve in goods and services to address
these demands and uphold its marketing strategy. For example – changing the business
internationally reduce the challenge of alternatives and additives, giving GM benefits in moving
its strategy for zero emissions, zero accidents and zero pollution. By achieving substantial cost
efficiency gains and focusing on the potential of individual transportation, this will help drive the
changes in the business strategies for market expansion. In addition, the corresponding
corporation also plans to take constructive measures to boost overall market efficiency, including
transformational leadership for product line growth, realigning key competence, and industrial
base. These motives would contribute more to its increase its revenue rates (Ioannidis, Stanley
and Doucouliagos, 2017).

According to the numerical number quoted, it was analyzed that due to the continued car
improvements and the introduction of more creative features to fulfill customer needs, GM has
continued to retain its top leader in the automotive industry. GM is also expanding its employees
at national scale and systems to push the world-class innovation standards of sophisticated tech
to raise the effectiveness and functionality of its vehicles in order to accelerate product
production. For this phase, for appropriate marketing growth, the business organization is often
focused on increasing the excellent performance of element distribution within its inventory,
specifically certain cars that are not noticeable and noticeable (Koo and Yang, 2018). In addition,
the expansion of the use of visual techniques for reduced cost and time growth, with the
integration of their cars and combustion design engineers also lead to a significant variable in
transforming their goods. General Motors has also invested in newer and super effective vehicle
technologies, specifically in SUVs, pickups and convertibles, which exceed consumer
expectations. It also plans to give preference to potential investments in cars, in particular inside

its from now-generation fuel-efficient and charger-electric designs, which would boost its global
overall sales.
According to the demand rule, it was observed that the higher the cost of any product, the lower
the need for consumers to order. Therefore, in essence, demand from cars or other motor vehicles
is considered as elastic. Since buying cars doesn't automatically fall in the luxury category.
Consumers may resist current vehicle transaction particularly if its price is too high and even
beyond their level of income. Compared to certain things, buying a luxury car isn't essential or
absolute necessity for citizens. As a result, it has a strong effect on car demand on the markets,
where individuals especially in urban-status areas are seeking to purchase luxurious and highly
creative areas (Kumar and Agarwala, 2016).
In this way, General Motors needs to implement aggressive pricing strategy to improve
global revenue efficiency. It involved putting correct sale prices on products that provide
importantly ensuring for customers. In order to win the attention of new car owners General
Motors needs to constantly iron out the marketing cuts on car prices. Clear and straightforward
pricing primary point fails to draw attention of the consumer. It wants to reform its signal for this
reason as 'margin requirement commitment' will seek support from luxury car enthusiasts.
Pricing strategy of General motors
There are mentioned different pricing strategy that employ by the company as per the
organizational structure such as:
• Penetration Pricing: this allows companies to set the lowest product rates at the earliest stages
and, whether prices increase, they may make price adjustments. The business company
implements this method to raise customer awareness of goods and services established in the
market (Pais and Gama, 2015).
• Economic pricing: corporations mostly execute this platform to ensure the sale and attraction of
different products and much more company. It also tends to reduce the advertising and marketing
costs by making items online at a single point of sale in large quantities.
• Market Pricing: In this approach, the administrator analyzes the business environment and
rivalry that promotes setting the best product prices. This helps in gaining the strong competitive

advantage and attracts customers further towards the variables in this study (Lel and Miller,
2015).
• Skimming Pricing: this enables businesses to set the highest freight rate in the event that there
is no consumer demand. Because of the development of this strategy corporations are likely to
collect generally higher profits and also some make new market stranglehold on the market.
GM will keep sticking to its pricing policy, rather than chase the crown. In the entry - level
position truck market, the pricing strategy is to be market efficient although providing less
discounts on higher trim rates. Such higher trim rates have a far greater benefit than the basic
vehicles. This pricing strategy took a lot of investors by surprised because this year is when there
ever was a year for GM to increase market share and pursue the crown. Long-term sales champ
Ford has experienced year-round flat revenue growth as it plans to unleash the new 2015 F-150.
The company select to market pricing strategy to compete in the automotive industry (van
Kooten and Johnston, 2016).
CONCLUSION
As per the above discussion it has been concluded that the firm would use key models and
methods to make meaningful structural initiatives. A organization can reassess how climatic
environment significantly impact its investments and current price, and make the necessary
changes when incorporating rules and regulation on supply and demand for goods and services.
Management economics finds out via the perspective of the automobile industry that the sector
plays a major role in stimulating the economy by manufacturing millions of trucks each year. In
reality, global corporations also contribute to the decrease of deprivation that increasingly results
in social development.

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