Managing Innovation in Business - PESTLE Analysis

Managing Innovation
in Business
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Executive Summary
Innovation is key element of every organisation and it is necessary that business carries
out continuous development and bring about products with new features ahead of its competitors.
This report is based upon General Motors which is a leading auto-mobile company
headquartered at Detroit, Michigan. The first part of the report comprises of the overview of the
organisation. In this section, drivers of innovation are ascertained with the help of PESTLE
analysis. The second part of report explores the existing innovation performance of company.
Also, by using SWOT analysis, this section ascertains the probable capabilities of company to
bring innovations in its products in future so as to ensure its long term sustainability in
marketplace. The third part of the report gains an insight into the auto mobile industry and use of
innovation by competitors by using Porter’s Five Force Model. Company is planning to develop
such vehicle development processes that lead to manufacturing of cars of entity at a larger scale
and working towards designing and developing fuel efficient cars. It is highly recommended that
enterprise engage in such practices that do not cause harm to environment by making sure that it
brings transformational change in the cars by engaging in the process of innovation.
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Contents
INTRODUCTION...........................................................................................................................4
The Organisation & its innovation History............................................................................4
The Organisations existing Innovation Performance and Capabilities..................................5
The Industry............................................................................................................................7
REFERENCES..............................................................................................................................10
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INTRODUCTION
Innovation is the process of creating something new in terms of product or processes
engaged in by the company. It is imperative for every organisation in today’s digitalised world to
make use of innovative practices while developing products and services and deliver quality
service to the customers. This report is based upon General Motors which is one of the largest
automobile companies based in Detroit, Michigan, United Kingdom. This report gains an insight
into the overview of organisational innovation history. Also, this report explores the existing
performance of company in relation to engaging innovative practices in daily operations. Along
with this, the capabilities of company to bring about innovative products by engaging in
practices that foster the growth of innovation in company are ascertained.
The Organisation & its innovation History
An American multinational brand, General Motors Company which is formally known as
General Motors (GM), was found in the year of 1908 by William C. Durant, Charles Stewart
Mott and Frederic L. Smith. At initial level this company was launched as a holding firm in
Michigan and in its initial years, GM used to be controlled by Buick make and just after that firm
spread itself through owning around 20 companies which included a number of number of
famous automotive firms like Pontiac, Oldsmobile along with the Cadillac (Pound, 2013). After
sometime, General Motors also added Chevrolet and Open from past two decades. Then after,
General Motors started becoming a leader in the sector it was doing business i.e. Automotive. On
the other hand, if it is analysed than GM have already produced around 9,700,000 vehicles which
is a huge number in this sector for a company to produce vehicles in this much of amount.
General Motors is an American multinational organisation headquartered in Detroit. Company
manufactures, designs vehicles and develops other related parts and also distribute them by
performing strong marketing activities. It also deals in selling financial services or products from
headquarter to all over the world. General Motors is being considered the biggest automobile
organisation in America. From the time of incorporation of this corporation is focusing on
innovation, for providing different or unique products in the industry. In initial years it
introduced electrical appliances related to cars. They introduced first electric starter and got it
patented, it also innovated an engine which supports turbo charging for a car. This company was
the first to manufacture rear wheel anti lock for their cars Tornado and Eldorado (General
Motors Accelerates Transformation, 2018). As General motors’ is highly focused on innovation,
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it has six science offices and laboratories at R&D headquarter. They manage good working
relationship with government and suppliers. General motors’ has purchased a start-up of self
driving vehicle for innovating and introducing self driving cars based on ride sharing. As in
recent years company has acquire Strobe for developing technologies related to self driving cars.
This is helping them in becoming much more stronger than they already are, in the sector in
which they are dealing.
Some sections of history that can be explored of this famous automotive brand is given beneath:-
1960’s: In middle of 1960s, General Motors had developed a strategy of bringing in both
the invention and innovation while introducing the car named Corvair which was carrying an air-
cooled engine (General Motors Celebrates a 100-Year History of Technological Breakthroughs,
2018).
1966: Then after a few years, company decided to change itself with the help of new
1966 Oldsmobile Tornado which was considered as a good example of innovation as it was
called as best and most powerful front wheel drive car.
Then in 1980s, when GM started getting huge success, it recruited 349,000 workers and
operated 150 assembly plants focusing on putting innovation among each and every vehicle that
they were designing from their targeted customers (General Motors Steps Up Pace Of Its Tech
Innovation, 2018).
From then, General Motors have kept its focus on innovation through building up car
models looking at the future trends. As of now, GM is trying to change the thinking of its
consumers from choosing electric cars than vehicles that requires fuel to run.
The Organisations existing Innovation Performance and Capabilities
General Motors is an American multinational corporation that engages in continuous
innovation so as to deliver cars manufactured by company to people. With the help of SWOT
analysis, the existing innovation performance and capabilities of company is assessed as
follows:-
STRENGTHS
The largest market of GM is in China where the company has tied up with several local
Chinese automotive companies to overcome most of the barriers related to foreign market entry
and trade. The free access of company in Chinese market encourages the company to
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continuously engage in innovative practices so as to deliver cars that meet the needs and
requirements of consumers.
General Motors possess a strong position in US market and is one of the largest
automotive manufacturers ahead of its competitors (SWOT Analysis of General Motors, 2018).
The widespread acceptance of cars manufactured and designed by company in US market
encourage the management of General Motors to largely engage in those practices that aim at
engaging in innovation and bringing new features in every upcoming car model of company.
The most unique innovation that has been brought by General Motors till date is OnStar
which is an all-in-one assistant present in cars manufactured by company and is used by over 7
million people today (Jurkovic and et. al., 2015). It provides facilities like navigation, security,
wifi, emergency solutions etc. Company is capable of bringing more such innovations by making
use of technology and digitalisation in the processes to serve people with latest features that are
beyond their expectations.
WEAKNESSES
Even being a very famous name for people all across the globe, company does not sell
any of the cars under its own name. Enterprise sells all the cars manufactured by company in the
name of subsidiaries and partner clients.
Although the company offers a balanced portfolio of small, medium sized and large cars,
its maximum reliance for sales revenue is upon SUVs. This is a weakness for company as the
other innovative products of company are not getting that much market. Company is capable of
bringing more innovations in the other cars so as to gain market share for other cars sold by
entity.
General Motors is a US based automaker and largely depends upon the home market for
generation of revenues. Adverse economic conditions or political instability can become
dangerous for the sales of cars of company. General Motors is capable of bringing innovations in
its cars and features ahead of its competitors and launching it successfully in other markets so as
to tap the advantage of satisfaction derived by people, especially the millennials due the latest
features being present (Gassmann and Schweitzer, 2014).
OPPORTUNITIES
Low fuel prices are encouraging the consumers to choose SUVs as these are fuel
efficient, thus company possesses an opportunity to bring continuous innovations in this product
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so as to gain maximum share in market and increase its profitability. Company is capable of
bringing developments and innovations in these cars so that customers are satisfied with the
product being offered in market and gain advantage of wide audience of these cars.
The new models of cars of GM gets released in 3-5 years during which customers do not
have any innovative feature as a remark of company’s manufacturing process (Cabigiosu,
Zirpoli and Camuffo, 2013). Company is capable of releasing new models every year by
bringing innovation in the existing processes and methods utilised by entity during its
manufacturing process and gain a strong market share so as to increase its revenues and
profitability.
THREATS
General Motors recalled a large number of cars due to faulty ignition switch which posed
a threat to brand image of company in market. The faulty switches had been tied to 124 deaths
and 275 injuries (SWOT Analysis of General Motors, 2018). Since the ignition switch fiasco, GM
has focused more on product quality and safety. Company has the capability to bring
innovations in new models along with keeping security quotient of customers in consideration so
that the corporate position and name is not hampered.
Fuel prices are increasing drastically in present context. General Motors is largely
involved in production of cars which have got less fuel efficiency. Increase in fuel prices pose
threat to demand for cars manufactured by enterprise as today, every consumer is interested in
hybrid technology vehicles and more fuel efficient vehicles. This has hampered the sales of
General Motors in long run and company has to spend a huge amount on carrying out research
for these technologies. Company is capable of bringing innovations in terms of engaging in
hybrid technology and less fuel emitting vehicles.
The Industry
As Automotive Industry over the years, kept its focus on innovation, this accelerated overall
transformation of the industry was related to manufacturing process, cost actions and increase of
capacity utilisation. Away with this, automotive industry have not only kept its focus on
advancing the vision related to minimal crashes, emissions and congestion but it has also
reserved some of strategies related to improvising capacity of utilisation in an optimised manner.
As of now, they have also decided to taking cost actions and optimizing capital expenditures to
drive annual run-rate cash (Schulze, Paul MacDuffie and Täube, 2015). This could be considered
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as an approach that this sector is following at this time. Apart from this, here an instance can be
taken of General Motors, as they have also decided to step up pace of its tech innovation. Firm’s
CEO Mary Barra and her team went to Silicon Valley in this year so that to look into what other
firms are doing considering brining innovation as the main aim and firms that were present in
that meeting was Oracle, Google, Cisco, Apple and so on. Discussion got warm when GM’s
quarterly reports came in front as they broke earning records on April 21. Firm’s seniors has
given reason behind this is that they have kept their focus on both innovation and IT sector
which could be considered as one of strongest relation that could take organisations to an all new
level.
Apart from this, front-line innovation among this industry can be seen with another
example of General Motors, as they decided to use Detroit-based Social Center of Expertise
(CoE), where staff keeps an eye or monitor along with contribute to social media conversations
about the company. In present context, most of automotive business companies uses Oracle-
based Social Media Management System and this could be taken as a consolidation of more than
30 separate tools previously used worldwide by firm’s special research teams. Here, it has been
analysed that, CoE agents could easily tap among databases of companies for a record of
ongoing interactions with each customer or sales lead. This integration enables, for example, an
agent for the Chevrolet brand to open case file and access any related call center communications
with a given customer, as well as access GM’s knowledge databases on various topics.
On the other hand, this sector has also kept an eye on enhancing or speeding up back-end
processes considering a number of tech innovative tools. This could be understood with the help
of an instance, GM’s engineering team has already made modifications in its high-performance
computing capacities for enhancing combustion process, collide, wind tunnel, and other
simulations. In present context, it is being computed that team of GM and its rivals runs around
150,000 of math-based simulations every month focusing on 3,000 teraflops of compute capacity
(Cabigiosu, Zirpoli and Camuffo, 2013). This innovative technique is leading General Motors to
exceed new safety, fuel-economy, and CO2-emissions requirements, all while cutting costs and
getting new vehicles to market faster.
CONCLUSION
From the above report, it can be concluded that it is essential for every business entity to
engage in the process of innovation so as to maintain its stake in market ahead of its competitors.
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Also with the help of PESTLE analysis, it has been analysed that there are certain factors from
external environment of entity that act as drivers for innovation. Along with that, by using
SWOT analysis, it has been concluded that company possess certain capabilities so as to bring
innovation in the processes and activities conducted by organisation. Furthermore, Porter’s Five
Force Model is used to observe the industrial performance in relation to engaging innovative
practices in the day-to-day tasks performed by entity.
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REFERENCES
Books and Journals
Schulze, A., Paul MacDuffie, J. and Täube, F. A., 2015. Introduction: knowledge generation and
innovation diffusion in the global automotive industry—change and stability during
turbulent times. Industrial and Corporate Change. 24(3). pp.603-611.
Gassmann, O. and Schweitzer, F., 2014. Managing the unmanageable: the fuzzy front end of
innovation. In Management of the Fuzzy front end of innovation (pp. 3-14). Springer,
Cham.
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.
Pound, A., 2013. The Turning Wheel-The story of General Motors through twenty-five years
1908-1933. Edizioni Savine.
Cabigiosu, A., Zirpoli, F. and Camuffo, A., 2013. Modularity, interfaces definition and the
integration of external sources of innovation in the automotive industry. Research
Policy. 42(3). pp.662-675.
Online
General Motors Celebrates a 100-Year History of Technological Breakthroughs. 2018. [Online].
Available through: <https://www.caranddriver.com/features/general-motors-celebrates-
a-100-year-history-of-technological-breakthroughs>.
General Motors Accelerates Transformation. 2018. [Online]. Available through:
<https://investor.gm.com/news-releases/news-release-details/general-motors-
accelerates-transformation>.
General Motors Steps Up Pace Of Its Tech Innovation. 2018. [Online]. Available through:
<https://www.forbes.com/sites/oracle/2016/04/28/general-motors-steps-up-pace-of-its-
tech-innovation/#undefined>.
SWOT Analysis of General Motors. 2018. [Online]. Available through:
<https://www.marketing91.com/swot-analysis-general-motors/>.
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