International Business Strategy: Case Study of General Motors in India

This case study analyzes the failure of General Motors in the Indian market and suggests a conceptual framework for sustaining in the market. It discusses the importance of leadership consistency, local leaders, and strategic planning for business sustainability.

INTERNATIONAL BUSINESS STRATEGY

INTERNATIONAL BUSINESS STRATEGY
Table of Contents
Literature Review............................................................................................................................3
Justice and fairness of the case....................................................................................................3
Business sustainability in the case...............................................................................................4
Themes observed in the case.......................................................................................................5
Conceptual framework.................................................................................................................6
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Literature Review
Justice and fairness of the case
The move of exiting India came into effect when GM had given effort at expanding their share
market in the country but failed to achieve success. According to Kale (2017), the Opel cars were
a point of success for the company as a new entrant in the Indian Market and later with the
Chevrolet cars. However, the momentum of sustainability was disrupted due to lack of
leadership consistency, models and branding. Maruti Suzuki and Hyundai were the tough
competitors of GM in the small car sections that had been an extra factor of GM’s failure. GM
faced a crisis of business prosperity where it had to see less than 1% car sales and decided to
leave India. The verdict of GM for the quitting on Indian market in a purpose of selling still hold
them to grab a position as manufacturers where it gets it done at cheap cost and export the cars to
South and Central America, Mexico, etc. The strategic failure of GM in Indian market is
considered to be the inability of the company in understanding the attributes market and analyse
the preferences of the customers to make choices on viable cars. Entering the liberalised country
of India again in the year 1994 after exiting in 1954 have made them working with zeal (Chris
Culver,2014). India is not a country with poor opportunities but the American companies have
started restraining unnecessarily as the fastest growing and major economy of the world. India is
concerned about attracting and claim foreign direct investments more from China. There had
been key American players until now who achieved sustainability in modern India. In terms of
considering the justification of the country as a market, it is observed that the home companies
have been able to provide a tough competition to GM and hence, it is not that India is lacking
opportunity but have variable client handling plan. On the contrary, GM itself could not feel the
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need of operating in India as a sales unit and therefore, is still holding the place as a
manufacturer. The fine line of difference in both of its perspective lies on the economic
stabilisation. India wants a wider option, GM wants wider economic opportunity (Oehler, Horn
and Wendt, 2017).
Business sustainability in the case
According to Pradhan (2017), the sustainability of business in the case of General Motors is
encouraging the further efforts of the company in preparing for a faster and globally achievable
pace of growth. The changes include creating transparency. The sustainability motive of the
company is to maintain all over perceptions including business and environment. However, the
case study referred here is a result of unstable and inappropriate leadership moves that failed to
analyse the need of the Indian market and negotiate to operate sales. According to Chia and Dev
(2018), a clear understanding must have been prevailing in the minds of authorities that the
economic and social pursuits differ from region to region and along with culture. In order to
sustain in the market, it is essential for the organizations to manage and balance financial, social
and environmental risks, grab the opportunities and monitor the productivity and the profitability
of the company. General Motors tried to sustain in the market by promising that they would
increase the exports and keep the cost of sales stable. General Motors delivered promising cars
like Tavera, Beat and Cruz to the market but gradually all of these were washed out from the
market. General Motors had started a 50:50 joint venture with Hindustan Motors in 1994 and in
1999 bought the stake of Hindustan Motors and went solo. During the global economic crisis in
2008-2009, with a Chinese partner SAIC, General Motors started another 50:50 joint venture and
in the year 2012, General Motors bought 43% of SAIC’s holdings and raised the stake to 93%.
General Motors India reported to General Motors Asia which caused confusion between the two
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and the strategies followed. General Motors debut in India was under the Opel brand but in 2003
General Motors introduced the Chevrolet brand in the Indian market and stopped selling Opel
completely (Kahn and Agnew, 2017). Many giant automobile companies tried to set foot in
India as India is one of the largest automobile markets. Indian companies such as Tata Motors
became global competitors and holds 47% of the Indian market along with other companies like
Suzuki, Hyundai, etc.
Themes observed in the case
General Motors is a US-based automobile company, which came to India in 1994. It had come to
India before Volkswagen, Toyota and even Hyundai but in the long-run, the General Motors got
lost in the crowd. About 5-7 years ago, General Motors kick-started in the Indian Automotive
industry. General Motors had aimed at acquiring 5% of the market share. However, situations
rapidly changed, after CEO Karl Slym left the company. The difficulties faced by the company
were in terms of branding, leadership and model of the cars (Acharya, Schaefer and Zhang,
2015). Over the last 35 years, 9 CEO's had changed for the company. General Motors' debut in
India was under the Opel brand which was with Astra and Corsa. General Motors had started
with a positive note, the competition was tough as the market was small and companies like
Maruti Suzuki and Hyundai dominated the market. The sales for General Motor reduced over the
years and had stated that they would increase exports to Mexico and South America, keeping the
cost of production low.International business strategies are the plans that guide financial
transactions between the global companies in different companies. Nearly every company is
attracted by Internationalization and is being internationally accepted by every kind of economy
as it is the process of getting involved in the global market. Executives try to reduce cost and
expand in the foreign market. Similarly, General Motors had decided to increase exports to
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Mexico, Central and South America and the main focus of Mary Barra, the CEO of General
Motorswas profitability (Crane and Matten, 2016). There are two different modes of entry,
which can be used by companies to enter the foreign market.First of which comprises exports
and agreements in related to contracts. The second mode is to be part of wholly owned subsidies
and in joint ventures.In export and import involves the lowest risk and lowest market control.
The companies can get directly involved as an agent in the export.Internationalization has been
welcomed by various companies across the world, which encouraged the removal of trade
barriers among the countries. The most widespread reason behind internationalization is that it
diversifies risk (Fradkin, 2017).
Conceptual framework
By the end of 2017, General Motors decided to stop selling vehicles in India as the profitability
was reducing over the period of time and the reason behind them are discussed below.
Leadership – Being consistent in leadership is crucial to sustaining in the market over a long
period of time. Indian culture and market area unique mixture of Asian and Western values,
understanding which requires constant monitoring over a long period of time. 9 different CEO’s
had led General Motors in India over the last 34 years and the average span being 2.5 years and
to top the list, consistency is must in India.
Local leaders – Indian market requires customization as the fundamental structure of the market
is much different from one in West. Co-operation from the local autonomy is essential to sustain
in the market and carry out important decisions. To succeed in India, the US-based company
required to improve and set free the leaders so that they can analyse local issues, address them
and use it is as an opportunity (Ray and Ray,2011).
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Strategic planning- India based companies are developing and entering the global market and
increasing competition and therefore it is essential to plan strategies to encounter the new
competitors and retain its position in the market.A similar situation has been witnessed where
Mahindra and Mahindra, a local company has risen and challenged the world-famous
agricultural tractor business, John Deere. Hyundai has also captured a major part of the Indian
company by developing lower-priced quality cars and met the need of the middle-class Indians,
which the Indian population comprises mostly (Jhaet al. 2014).
Another crucial point which is to be considered while strategic planning, is that the planning is to
be based on scale and volume. General Motors should have aimed not only the higher income
groups but also the middle class and that is how they would be able to leverage dealerships and
sustain in the market. Understanding the scheme of scale Mary Barra, the CEO of General
Motors had committed to invest $1billion to expand the operations in India. However, at the end
of 2017, they have decided to withdraw the investment and make cars mainly for the Latin
America market. The technological centre is to be retrained in Bangalore. It has recently
consolidated its operations with Talegaon factory in Western India, which proves that it is no
exiting the Indian market completely. While re-entering India and gaining success is a long game
for General Motors, which can only be won with consistency, strategic planning and appropriate
leadership (Anagol,Cole and Sarkar, 2017). Thus, analysing the case studies it can be said that
following this framework General Motors will be able to sustain in the market and retain its
business.
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Reference
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Chia, R. and Dev, A.K., 2018. Need for an Integrated Sustainable Shipping Index. 37th Annual
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Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
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Fradkin, C., 2017. The internationalization of psychology journals in Brazil: A bibliometric
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Kahn, H.E. and Agnew, M., 2017. Global learning through difference: Considerations for
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Kale, D., 2017. Sources of innovation and technology capability development in the Indian
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Oehler, A., Horn, M. and Wendt, S., 2017. Brexit: Short-term stock price effects and the impact
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Pradhan, J.P., 2017. Emerging multinationals: A comparison of Chinese and Indian outward
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