MANAGING INNOVATION IN BUSINESS (CW1)

This report explores the concept of innovation and its importance in enhancing the growth and profitability of businesses, using General Motors as a case study. It analyzes the company's innovation history, existing performance, and capabilities, utilizing PESTLE and SWOT analyses to assess external and internal factors influencing innovation. The report also provides an overview of the automotive industry in 2018 and concludes with recommendations for General Motors to further enhance its innovative practices.

MANAGING
INNOVATION IN
BUSINESS (CW1)

Executive Summary
This report explores the concept of innovation and its importance in enhancing the
growth and profitability of enterprise. The present report is based on General Motors which is
one of the leading automotive companies of the world. This organisation manufactures and sells
vehicles, specially cars, and its parts with innovative and hi-tech features. The major objective of
this company is to enhance the satisfaction of customers by providing vehicles of high quality
which meet the needs, requirements and preferences of people. This report is sub-divided into
three parts.
The first part of report gains an insight into General Motors and its innovation history.
Here, PESTLE analysis is utilised to determine the external factors that act as drivers for
innovation within the organisation.
The second part illustrates the overall existing performance of company along with those
internal capabilities that encourage innovation within the organisation. In this context, SWOT
analysis has been conducted to assess the strengths and possible threats for the growth and
sustainability of company so as to bring innovations.
Lastly, the overview of industry in 2018 has been given to gain knowledge about the
present growth and the scope for bringing innovation within companies to facilitate growth in
future context.
It has been examined that General Motors is largely indulging in innovative practices and
methods over years to design and develop such products that can fulfil the demands of
consumers within market. Also, it has been analysed that company is planning to renovate its car
development processes so that General Motors can produce a larger quantum of cars and enhance
the processes so as to ensure less carbon emissions.
It has been recommended to company that they should use hybrid technology to produce
such cars that can meet the demands of the consumers in present context.

Table of Contents
Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................1
The Organisation and its Innovation History..............................................................................1
The Organisations existing Innovation Performance and Capabilities.......................................3
The Industry................................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
.........................................................................................................................................................7

INTRODUCTION
Innovation refers to a process wherein multiple activities are conducted to redevelop the
existing product in a unique manner or includes value addition to the goods and services so as to
meet the need and requirements of consumers (Pound, 2013). The present report is based upon
General Motors which is a multinational corporation that produces, develops and distribute
vehicles and their parts. This report explores the innovation history of company. Also, it
comprises of the existing innovation performance of enterprise together with the capabilities to
engage in innovative practices in future. Besides this, it includes the industry overview.
The Organisation and its Innovation History
General Motors (GM) is a multinational company headquartered in Detroit, Michigan,
USA. At present, enterprise render products and services in almost 35 countries. General Motors
is the biggest American as well as one of the largest automobile manufacturers across the globe
(Jurkovic and et. al., 2015).
During the period of first 50 years of company's functioning, General Motors invested
heavily in bringing innovation at regular intervals. Thus, this company succeeded in designing
and developing automatic transmission, high-octane leaded gasoline, electric starter, high-
compression V-8 engine and manual transmission with synchromesh which facilitated easier
shifting of gears (HISTORY OF GENERAL MOTORS TIMELINE, 2018). Besides this, the
enterprise also carried out bulk manufacturing of cars which possessed easily replaceable
components.
General Motors undertook Chevrolet in the year 1918. Chevrolet came up with a hi-tech
car “Corvair” in 1960. This was the first American car which possessed air-cooled engine that
comprised of aluminium (El-Refaie, 2013). Besides this, it was the exclusive vehicle which had
independent suspension in all the wheels of car. In 1960, GM also became one of those vehicle
manufacturers which strived to make use of computers and robots (cognitive computing) on the
plant floor. In addition to this, General Motors installed the first industrial robot on one of its
production lines in 1961. This robot used to make window as well as door handles, light fixtures,
knobs that facilitate gear shifting and other essential hardware which are key components of car
interiors.
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GM launched Oldsmobile Toronado in the year 1966 which possessed a 7.0 litre engine
and 385-gross-horsepower V-8 while it drove upon the front wheels of car. This was the most
powerful front-drive car that was launched within the automotive industry (Helper and
Henderson, 2014). In 1996, GM came OnStar which proved to be a massive success for
company. This was an in-built communication system within the vehicles which provide
amenities related to security, connectivity, emergency, navigation and Wi-Fi services.
In 2010, General Motors came up with Extended Range Electric Vehicle (EREV) which
functioned in both the ways: EV mode (engine off) as well as extended range mode (engine on).
(Source: History of General Motors Timeline, 2018)
PESTLE Analysis
There are various factors present within the business environment of General Motors that
act as drivers of innovation. These are discussed in brief below:-
Political: The Research & Development department of General Motors is situated within
US. With the passage of time, the Federal government of US have recognised the importance of
encouraging companies to bring innovation and thus, facilitate the growth of such enterprises
which come up with innovative products and processes. The government provides assistance by
way of tax policies and regulations such as provision of R&D tax credits to private companies.
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Illustration 1: HISTORY OF GENERAL MOTORS TIMELINE, 2018

Also, US Government does Direct Financial Investment in companies encouraging innovation
such as GM which drives the organisation to further bring such innovations in future (Greer and
Hauptmeier, 2012).
Economic: The increasing growth rate of developing markets tend to create opportunities
for General Motors to facilitate growth and expansion in such countries. Besides this, the major
revenue generating markets for enterprise such as China, US etc. foster the company to bring
rapid innovations within automotive sector.
Social: The rising demand for luxury cars and SUVs tend to create opportunities for
General Motors to bring up innovation in these vehicles. Further, the millennial population
within the revenue generating countries look for cars and other vehicles with hi-tech features and
innovative equipments. This drives General Motors to continuously come up with such features
and practices that facilitate safety and convenience of consumers.
Technological: With inflexion of time, automotive industry has also advanced. This
strives to act as a driver for innovation within General Motors. In this regard, company was the
first manufacturer to utilise robots as well as computers in operations.
Legal: Adhering to laws such as Anti-trust law within Automobile manufacturing
companies such as General Motors act as driver for the company to indulge in innovation while
manufacturing cars and other vehicles (Dodgson, 2018).
Environmental: Government supports those companies which engage in sustainable
practice and recycling of waste, this acts as a driver for General Motors to indulge in innovative
processes which ensure least harm to environment.
The Organisations existing Innovation Performance and Capabilities
General Motors is one of the leading vehicle manufacturing companies in the world. GM
is ranked #10 on the Fortune 500 ranking as per the records of 2018. At present, enterprise is
engaged in making use of advanced technology that can produce next generation light weight
cars and other vehicles. This assists company in designing and developing such vehicles that
emit zero emission.
Existing innovation performance
GM invest a large amount in Research & Development so as to ascertain the needs and
preferences of customers and designing and developing such products that ensures maximum
satisfaction of consumers. This helps the company in making use of such technology and
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processes that can facilitate the enterprise in bringing rapid innovations. General Motors carries
out process innovations and makes use of Hybrid technology, Alternative Fuel Vehicles, Plug-In,
etc. (Dodgson, 2018). In this regard, company's OnStar has been a pioneering innovation with
more than 7 million subscribers today.
SWOT Analysis
It is a tool used by General Motors to analyse its present performance as well future
capabilities to bring innovation within enterprise.
Strengths:
GM is working in Joint Venture with a number of local Chinese companies that help in
reducing the number of market entry barriers and foster the growth of entity within China by way
of indulging in innovative practices and processes with assistance from partner organisations.
General Motors has subscribed to Satellite technology. This indicates that all the cars and
other vehicles manufactured and sold by company are equipped with this advance technology.
This tool assists the customers in tracking the car in case of any emergency or theft.
One of the most innovative and unique products introduced by General Motors cars is a
subscription based equipment named OnStar which is an all-in-one assistant that provides
features like security, Wi-Fi, navigation etc. Company is capable of bringing more such
innovations in near future so as to gain a high stake in market and become the leading
automobile company across the globe.
Weaknesses:
U.S. is one of the most dominant revenue generating countries for General Motors where
the cars and other vehicles manufactured by company is warmly accepted by the population
largely due to the presence of innovative features and components. However, organisation has
still not been successful in building such a brand position and image in other countries (Acharya,
Schaefer and Zhang, 2015).
Over the passage of time, General Motors has been selling cars and other vehicles under
the name of subsidiaries and other partner organisations. GM hasn't sold any car under its own
brand name till now which is a major setback to innovation within the organisation as company
has not been successful in gaining recognition for the same in industry and market. Company is
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capable of selling and distributing vehicles in its own name so as to gain high brand image across
the globe.
Opportunities:
In present context, fuel prices are low which has increased the demand for SUVs
significantly. There is a huge potential and scope for General Motors to come up with innovation
in SUV so as to gain a high stake in market and foster business growth.
As the expectations of customers within automotive industry have increased, there is a
huge scope for General Motors to come up with innovative features and components that can
render a strategic edge to company over its rivals.
Threats:
Over years, General Motors has largely been involved in manufacturing such cars and
other vehicles which possess less fuel efficiency. Due to a substantial increase in fuel prices, the
demand for vehicles produced by company has decreased and customers are largely demanding
hybrid technology and more fuel efficient vehicles.
The Industry
With the passage of time, the automotive sector has witnessed a lot of transformation.
Last some years have seen innovation in cars with introduction of driverless cars, vehicle-to-
vehicle (V2V) communication and Automated Manual Transmission (AMT) (Noble, 2017).
Along with this, leading car manufacturers like Ford and Hyundai have launched a pre-collision
assist as well as pedestrian detection technology. Besides this, luxury cars are equipped with
swiveling bulbs which illuminate while they are around the corners of road (Acharya, Schaefer
and Zhang, 2015). Auto-high beam system helps the drivers in other cars to restrain from
blinding their view as well as giving maximum view to the driver inside luxury cars. In modern
world, the competitive business environment provides opportunities for companies like General
Motors to come up with innovative features and vehicles.
The analysis of automotive industry is done to gain knowledge of current and future
innovation trends prevailing within the sector.
Porters Five Force Model
Threat of new entrants: It is difficult for new companies to gain entry into automotive
industry due to the large investment required as capital. Also, funds are required for
redevelopment of products and processes to come up with rapid innovation (Grandori, 2012).
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Also, automotive companies need skilled and competent employees to perform task which act as
hindrance for new companies within this sector.
Bargaining power of suppliers: This is related to the suppliers of car parts, tires,
components, electronics and also include the assembly line workers (auto unions). Within US,
the auto unions are immensely powerful which reflects that the bargaining power of suppliers
prevailing there is quite high.
Bargaining power of buyers: The bargaining power of buyers within automotive
industry is quite high. This largely owes to the fact that buyers can easily switch to any other
brand provided it renders the same innovative features at a lower cost (Goolsbee and Krueger,
2015)
Threat of substitute products: There are a number of alternative modes of transport
which can be utilised by people, however, none of them render similar comfort and experience as
provided by self owned cars.
Competitive rivalry among existing players: There is immense competition within
automotive sector due to the presence of large number of well established firms that offer high
quality vehicles with innovative features. Any enterprise that brings rapid innovations with the
aim to fulfil needs and demands of customers have an edge over rivals in marketplace.
CONCLUSION
From the above report, it has been concluded that innovation is an optimum tool by
which company can gain a competitive edge in marketplace. Also, PESTLE analysis has been
used to determine the factors that act as drivers for innovation within the company. Besides this,
SWOT analysis is conducted by enterprise to gain an insight into the internal environment of
company with respect to innovation. The overview of industry is given with the help of Porters
Five Force Model to ascertain the scope for new entrants within automotive industry.
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REFERENCES
Books and Journals
Helper, S. and Henderson, R., 2014. Management practices, relational contracts, and the decline
of General Motors. Journal of Economic Perspectives. 28(1). pp.49-72.
Noble, D., 2017. Forces of production: A social history of industrial automation. Routledge.
Goolsbee, A. D. and Krueger, A. B., 2015. A retrospective look at rescuing and restructuring
general motors and chrysler. Journal of Economic Perspectives. 29(2). pp.3-24.
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalization in innovation. Routledge.
Greer, I. and Hauptmeier, M., 2012. Identity work: Sustaining transnational collective action at
General Motors Europe. Industrial Relations: A Journal of Economy and Society. 51(2).
pp.275-299.
Jurkovic, S. and et. al., 2015. Induction machine design and analysis for general motors e-assist
electrification technology. IEEE Transactions on Industry Applications. 51(1). pp.631-
639.
El-Refaie, A. M., 2013. Motors/generators for traction/propulsion applications: A review. IEEE
Vehicular Technology Magazine. 8(1). pp.90-99.
Acharya, V. V., Schaefer, S. and Zhang, Y., 2015. Liquidity risk and correlation risk: A clinical
study of the General Motors and Ford Downgrade of May 2005. The Quarterly Journal
of Finance. 5(02). p.1550006.
Pound, A., 2013. The Turning Wheel-The story of General Motors through twenty-five years
1908-1933. Edizioni Savine.
Grandori, A. ed., 2012. Interfirm networks: organization and industrial competitiveness.
Routledge.
Online
HISTORY OF GENERAL MOTORS TIMELINE. 2018. [Online]. Available Through:
<https://motorssite.org/history-of-general-motors-timeline/>
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