Strategic Management Analysis of General Motors Holden

This assignment provides a strategic management analysis of General Motors Holden, including Porter's Five Forces Model analysis and situational analysis. It identifies the positive and negative impacts on the company's business.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author note

1
STRATEGIC MANAGEMENT
Executive Summary
The assignment has thrown light on strategic management analysis of the company named
General Motors Holden. With the implementation of the Porter’s Five Forces Model analysis
along with the situational and competitor analysis, the overall positive and negative impacts
of the same on the business of the company has been identified and analysed effectively.

2
STRATEGIC MANAGEMENT
Table of Contents
1) Background of Study.............................................................................................................2
2) Porter’s Five Forces Model and Competitor Analysis...........................................................2
Porter’s Five Forces Model Analysis of GM Holden............................................................2
Competitor Analysis...............................................................................................................4
3) Situational Analysis...............................................................................................................5
References..................................................................................................................................7

3
STRATEGIC MANAGEMENT
1) Background of the Study
Holden is one of the Australian automakers with the headquarter in Port Melbourne,
Victoria. It is the subsidiary company of General Motors that is a renowned US-based auto
making organisation. However, in the year 2013, formally known General Motors-Holden
took the toughest decision to abandon the manufacturing operations in the Australian market
and the decisions followed decades of the government subsidiaries of Australia along with
rising Australian dollar and competition from the international industry as well (Roy Green
2017).
Due to the close down of the operations of General Motors Holden, there was
continuing failure and departure of Nissan and Ford. On 20th October 2017, the last existing
vehicle of Holden which was located at Elizabeth, situated in South Australia was closed, and
Holden continues an importer of the car (Sbs.com.au 2013) solely. Due to the departure of
Holden from Australia, it created a gaping hole in the entire economy as it was the most
suitable manufacturer.
The main reason for the closure of the GM Holden was numerous wherein the lack of
support from government was the main reason through subsidies for the decision of GM to
end the process of manufacturing. The other factors which were inclusive of the close down
of the GM, Toyota and Ford, were due to the mining boom which was for the first time
stronger than greenback in the year 2013. It was the time when the leading manufacturers
decided to close down their operations.

4
STRATEGIC MANAGEMENT
2) Porter’s Five Forces Model and Competitor Analysis
Porter’s Five Forces Model Analysis of GM Holden
Porter's five forces model is one of the essential tools for analyzing the forces that
help in shaping the competition within the competitive industry. It helps to adjust the strategy
which will help suit the competitive business environment, and it will help improve the
potential profit aspects. It is the business analysis model that assists in explaining the
different reasons which will provide the different industries with reasons to sustain the
various levels of profitability.
The rivalry between Existing Competitors- In the year 1970s and 1980s, the
competition in the automobile industry of US was intense as there was an increase of the
foreign rivals that include Honda, Toyota and Nissan (Ansoff et al. 2019). Although GM
Holden was the leader in the automobile industry, the competitors tried to compete with
Holden with other offers for instance- Toyota started to produce the cars at the lower price
than GM, whereas the car quality was high. Therefore, from the above, it can be concluded
that the rivalry between the competitors was moderate.
Threat or Barriers to Entry- During both the world wars, GM Holden tried to enlarge
their business and became established. Being the most successful leader of the respective
sector and it was a well-known brand, it made it difficult for the different competitors to
compete and enter the market. Especially for the small firms, competing with GM Holden
was hard and in the early 20s, GM tried to invent self-starters through differentiating
themselves from Ford and later in 1970s, European and Japanese organizations tried to
introduce the fuel-efficient models in the respective industry as well.
The threat of Substitutions- There is enormous effect and threat from the different
substitutions present in the market as the rising in the prices of the gas had a huge impact on

5
STRATEGIC MANAGEMENT
the GM. As the cars produced by GM are highly energy inefficient and it can affect the
overall profitability (Ansoff et al. 2019). The high availability of the substitutes against GM
Holden had weakened their position as there are a considerable variety of substitutes products
available in the market.
Bargaining Power of Buyers- Due to the highly improved information technologies
along with the globalization aspect, the different customers of GM Holden became aware of
the buying aspects and the products which are being bought by them. The moderate switching
costs are the primary external factor that creates a moderate force on the GM Holden
company, and the substitute availability is reasonable that was one of the positive aspects
which helped GM Holden in succeeding in the competitive business environment (Ansoff et
al. 2019).
Bargaining Power of Suppliers- For GM Holden, the cost of raw materials and the
machine parts of the supplier's threat were low. However, on the contrary, the powerful labor
union is one of the potential threats for GM Holden's economic capability and endurance. For
example- Liability of pension along with health-care products costs acquired an additional
1400 to the cost of every vehicle in comparison to the competitor products (Noe et al. 2017).
Competitor Analysis
The major competitors of the GM Holden were inclusive of the following aspects
which are described as follows:
Nissan is one of the major competitors of GM Holden, and it is one of the largest
manufacturers in the electric vehicle in the entire world. The average electric cars which are
being sold by the company per year is 275,000. Nissan has invested a lot of money on the
research and development, and the vehicles are being manufactured with major focusing on
safety, technology along with environment as well.

6
STRATEGIC MANAGEMENT
Hyundai is the other major competitor of GM Holden wherein it has been noticed that
they produce great products and services in the entire automobile sector and serve millions of
customers in the whole worldwide. The sales are mostly supported with 5000 showrooms
along with dealers, and Hyundai is considered to be the top competitors of GM Holden
(Ansoff et al. 2019).
3) Situational Analysis
Political Factors- GM Holden faced huge threats of the governmental promotion of
public transport along with other alternatives that led to the closure of the GM Holden
(Ansoff et al. 2019). For instance- The primary usage of the shared transportation such as
taxis and buses potentially reduced the GM customers likelihood of the purchasing of
automobiles, and the competitive threats of the tax policies threatened the GM Holden
through a potential increase in taxes that reduced the profitability of the firm.
Economic Factors- The external factor of the high rate of growth of the different
developing markets created enormous opportunities for General Motors Company to expand
and grow in such areas (Wheelen et al. 2017). However, despite the different growth
opportunities, General Motors need to address the rising competition with domestic or local
automotive firms to ensure competitive advantage.
Social Factors- The automobile industry is marked with a proper increase in the
usage of the electric vehicles and the particular aspect provided growth opportunities for GM
Holden through manufacturing and electric cars under GM brands (Zhao et al. 2016).
However, on the contrary, the increase in the vehicle sharing and ride-hailing programs, it has
been a considerable threat for GM Holden, and it affected the overall profitability and
productivity of the company that led to the closure of the manufacturing units in Australia.

7
STRATEGIC MANAGEMENT
Technological Factors- However, there are a considerable amount of technological
advancements such as an increase in the implementation of the self-driving vehicle
technology created enormous opportunities for the organization to provide competitive GM
automobiles with such technology. Additionally, the company had the other scopes and
opportunity to enhance and improve the sustainability standards based on the rising interest in
business sustainability aspects (Hanson et al. 2016).

8
STRATEGIC MANAGEMENT
References
Ansoff, H.I., Kipley, D., Lewis, A.O., Helm-Stevens, R. and Ansoff, R., 2019. Implanting
strategic management. Springer.
Hanson, D., Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2016. Strategic management:
Competitiveness and globalisation. Cengage AU.
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M., 2017. Human resource
management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.
Roy Green 2017 The truth about the Holden shutdown in Australia (online) Retrieved from
https://www.smh.com.au/opinion/the-truth-about-the-holden-shutdown-in-australia-
20171010-gyxogj.html [Accessed on 22 Mar 2019]
Sbs.com.au 2013 The ripple effect of Holden's closure (online) Retrieved from
https://www.sbs.com.au/news/the-ripple-effect-of-holden-s-closure [Accessed on 22 Mar
2019]
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic
management and business policy (p. 55). Boston: pearson.
Zhao, Z.Y., Zuo, J., Wu, P.H., Yan, H. and Zillante, G., 2016. Competitiveness assessment of
the biomass power generation industry in China: A five forces model study. Renewable
Energy, 89, pp.144-153.