Business Environment Analysis: General Motors and Ford Comparison

This report provides a detailed analysis of the business environment, focusing on General Motors (GM) and its operations. It begins with an introduction to the business environment and outlines the report's structure, which includes an examination of different company types (private, public, and voluntary) and their purposes, with examples like Nissan and Oxfam. The report then explores the scope and size of these businesses, comparing factors like employee numbers and operational locations. The analysis extends to the interrelationship of organizational structures within GM, specifically highlighting the connection between marketing, human resources, and finance. The report also applies Porter's Five Forces and PESTEL analysis to assess the impact of external factors on GM, including political, economic, social, technological, and environmental influences. Finally, the report examines the interrelationship of internal and external factors, comparing GM and Ford. This comprehensive analysis provides insights into the challenges and opportunities facing GM within its dynamic business environment.

BUSINESS AND BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1 Explain different types and purposes of the companies.........................................................3
P2 Scope and Size of the businesses............................................................................................4
LO2..................................................................................................................................................6
P3 Relationship of Organization Structure..................................................................................6
LO 3.................................................................................................................................................7
P4. Porter’s Five forces................................................................................................................7
LO 4.................................................................................................................................................8
P5. PESTEL Analysis..................................................................................................................8
P6. Interrelationship of internal and external factors analysis of General Motors and Ford.......9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment analyses all the internal and external factors that impact the functions
and operations of the company including the management, supply, demand, employees,
customers and even the regulations of business. General Motors (GM) deals in designing and
selling of vehicles and its parts and is headquartered in Michigan, America. It performs its
operations in many countries worldwide (About GM, 2020).
The report will describe the size and scope of different organisations along with highlighting the
interrelationship between the structure and functions of GM. It will also evaluate the impact of
internal and external factors on the business by using PESTLE and Porter’s five force model.
The TOWS matrix will be used to examine the interrelationship between these factors in GM and
Toyota which is its tough competitor.
LO1
P1 Explain different types and purposes of the companies
Private Company
Private companies are those organizations in the business market which do not allow
people to buy their shares and maximum board of members up to 200. These type companies
have different rule and regulations from other type of companies and anyone allows to start their
own business at private level with huge or small capital that they have in their hand. Nissan
Motor Manufacturing is a car manufacturing company that is operated by European division of
car manufacturing. It is headquartered in England, UK (Bashir and Verma, 2017). it is private
company of Nissan UK. It is car manufacturing company that deal with automobiles.
Purpose
 It has limited income of resources that focuses on making lower cost products as well as
quality so that it can meet large number of customer’s needs and in exchange can
generate high profit margin.
 It has focused on enhancing sales of the products so that it can enhance the profit.
Public Company
The shares of the business distribute with all the shareholders of the organization. There
are various shareholders in the business wherein more than 200 peoples are employed (Kaur and
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Sharma, 2018). This sector organizations allows anyone to become good shareholders by buying
their shares. Rule and regulations for the organizations are completely different from other type
companies in the business market. General Motors is a public limited company which operates
it’s business in UK. It deals with different type of products such as automobile, automobile parts
and commercial vehicles and offers vehicles financing services.
Purpose
 The main purpose of the company is to provide high quality automobiles as products to
the customers so that level of satisfaction can be gained by them.
 General Motors has strategy to offer safer, simpler and more sustainable transportation
automobiles solutions for the customers so that in return can generate high selling
revenue over the proposed product line.
Voluntary company
These sector organizations are in the market so that there is welfare of the society
wherein anyone can donate investment to have better functioning of the business (Čepel and
et.al., 2018). The main work of the companies is to aware the people about lifestyle that they can
have with the support of these organizations which are non-profitable. Oxfam is the great
example of voluntary organization that is headquartered in UK which has goal to redeem the
condition of people better. This charity spreads across the world and there are more than 290
different charities which are operating under the company.
Purpose
 This company does not work for the private gain.
 Decline poverty level in the UK’s country and gives education to poor so that they
become aware about their basic rights.
P2 Scope and Size of the businesses
Bases Oxfam Nissan UK General Motors
Size It has more than 20
charities that offers
welfare services in
societies so that poverty
It is a subsidiary company
of Nissan Motor Co. Ltd.
It was founded in 1984
that is UK based
It operates more than 396
locations across the world
and offers it’s product
services across the world.
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issues can be resolved. organization wherein
estimated 7000 employees
are provided their services
to the company.
It is world’s largest
automaker company. It
this company estimated
164,000 people are
employed and offers their
services to the company.
Scope This voluntary company
offers education facility to
people so that they can
have better lifestyle in
future for themselves. It is
going to great achievement
for the organization and
meets it from it’s
objectives.
It manufactures electrical
cars that is one of the
major advantages of the
company in future
perspective. for example,
government across global
is going to take initiatives
of decreasing the
greenhouse gas emissions
and improving fuel
efficiency initiatives
(Avidar, 2017). Thus,
type environmental
initiatives is going to
increase production costs
which ultimately increases
prices of the automobiles
in the market. But Nissan
manufactures electrical
cars so it can easily
comply with government
regulation without
investing more amount
over R&D.
It has great scope in
future because low fuel
price are hiking which
increasing demands for
the pickup SUVs and
trucks. In modern world
everyone wants to go buy
the autonomous vehicles.
It denotes that demands of
autonomous vehicles are
going to increased. So, it
golden opportunity for the
General Motors to expand
it’s product line with
good quality in the
market.
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Objectives Oxfam has objective to
give justice to the poor
people of the UK so that
they can aware about their
rights or for instance if
they do not receive then
they can fight for it
independently. Such
initiative will lead safety
and security in the UK that
the company is tended to
gain.
The main objective of the
Nissan UK is to provide
high quality Automobile
as product to the
customers so that they get
value of their money.
Other objective of the
company is to training the
youth of the UK an
increase their existing
skills.
The major objective of
the General Motor Ltd is
to earn customers for the
lifetime by establishing
brands that tends passion
and loyalty. It has
objective to enhance good
global presence in the
business market.
LO2
P3 Relationship of Organization Structure
There has to be a great interrelationship between managers of all departments with one
another of General Motors so that they can have better functioning in the automobile sector. All
departments of the company are completely interdependent on one to other so there have clarity
and direction in the company.
Interrelationship between marketing managers and others
 Human resource and marketing
Human resource plays vital role in growing sales of the company that can be possible when the
HR professionals recruits right talent and skill applicants for right place and organization have
right training session which ultimately increases productivity of the business. Marketing and HR
managers works together so that needs of customers can be fulfilled by inspiring the staff to put
more efforts in the workplace and understand requirements and needs of the customer so that
desirable outcomes can be received by organization (Shafiee, Razminia and Zeymaran, 2016).
But the major drawback of the interrelationship is that it needs high understanding level between
each other then, company can gain profitable results in the business.
 Marketing and finance
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Marketing is one of the most integral part of the company because it helps company to increase
price of the products but it is only possible when finance department provides adequate financial
support to the marketing department so that promotional activities can be done successfully. It is
very essential for the organization to enhance the sales of automobile products in respect of
generating profit so that General Motor can have large base in the automobile sector.
LO 3
P4. Porter’s Five forces
This model lays emphasis on five forces which significantly impact the firm’s
profitability. These are described as below:
Threat of new entrants
New entrants bring major innovation and the creative ways of doing things which puts a
high pressure on the GM which force it to lower its pricing strategy and provide new value
propositions to the customers.
Bargaining power of suppliers
Suppliers have the highest power which is the power of negotiation so that they can
extract higher prices from the firms. They have the power to decrease the margins which lowers
the profitability of the firm. For this, GM can build efficient supply with the various suppliers
and by developing new product designs so that the company can shift from one raw material to
another (Leslie, 2019).
Bargaining power of buyers
This power is also very high as the demands of the customers are increasing day by day
and the company needs to decrease the cost of its products. Less the customer base, more the
bargaining power as the customers seek for more discounts and offers (Porter’s Five Forces
Analysis of General Motors, 2017). This can be meet up by increasing the customer which also
helps in streamlining the production and sales process.
Threat from substitute products
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This power can play its role when the company provides value proposition which is
completely different from the industry’s present offerings. For this, the company must become
service oriented instead of becoming product oriented.
Rivalry among the existing competitors
If this power is high, it forces the company to reduce its prices which leads to decreased
profitability. Many companies give a tough competition to GM which affects its long term
profitability. The company can use this by building a sustainable differentiation and suitable
scale (Barabba, 2019).
Therefore, all the five forces can identify the game changing trends and it can swiftly respond to
exploit the emerging opportunities.
LO 4
P5. PESTEL Analysis
This is basically a framework or tool which is used to analyse the impact of macro-
environmental factors on the organisation. General motors (GM), being the largest manufacturers
of Automobile perform its operations worldwide needs to evaluate the impact which the external
factors have on the organisation. The impact of PESTEL factors on General motors is as follows:
Political: The governmental promotes the public transport and other alternatives which forces
people to use the buses, trains etc. which proves to be a threat for GM (Rahman and et.al., 2016).
Also the aggressive tax policies imposed by the government reduce the profits of the company.
On the other hand, political factors also benefit the company as the political stability provides
major growth opportunities to the company.
Economic: Various opportunities are provided by the high growth rate of the developing
markets. The major markets are also economically very stable which lead to very minimal issues
which can becomes a major opportunity for the company (Young, 2017). On the other hand, the
competition in the automobile is also increasing day by day which is becoming a threat for the
company.
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Social: The demand for electric vehicles is also increasing day by day which creates many
growth opportunities for the company in order to develop itself. Along with this, the demand for
self-driving vehicles is also able to promote the growth by selling maximum cars. On the
contrary, the demand for the vehicle-sharing and the programs of ride-hailing is increasing which
is becoming a threat for the company.
Technological: The importance and the value of technology is increasing which is observed
when the implementation of the self-driving vehicle is increasing. The company can use this
technology to gain the competitive advantage. The trend of rising fuel efficiency is also
increasing which can prove to be beneficial for GM as it can develop the advanced and
developed automobiles with competitive fuel-efficiency (Davies, 2017). The demand of the
electric vehicles is also increasing which is good for the company.
Environmental: The changes in the climate patterns are beneficial for GM as it can provide
various solutions regarding the transportation problems along with enhancing the hybrid or
electric automobiles by reducing the problems of negative air quality effects due to automotive
emissions. The interest of the environmental is in favour of sustainability which can be used by
GM to increase its brand image.
Legal: The government regulations regarding the safety of the automobiles is increasing rapidly
which can be proved as an opportunity for the company. The company can also bring
improvements in the products by focusing on the stricter regulations for emissions (Garcia and
et.al., 2017). The environmental regulations are also enhancing thereby providing many
opportunities for GM to boost its grand image.
P6. Interrelationship of internal and external factors analysis of General Motors and Ford
In order to do this. TOWS matrices of two similar organisation working in the same
industry will be made. TOWS matrix is derived from the basic SWOT analysis which describes
the Strengths, Weakness, Opportunities and Threats which the business is confronted with. This
helps to develop the strategic options by analysing the internal (Strengths & Weaknesses) and
external factors (Opportunities & Threats).
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TOWS matrix of General Motors
Strengths
1. Strong distribution network.
2. Low-cost structure which helps in
gaining competitive advantage.
3. Strong financial position along with
strong asset base.
4. Skilled, qualified, diversified and
innovative labour force (Tows matrix -
tow matrix general motors Group
Members Group, 2020).
5. Strong presence on social media.
Weaknesses
1. Rental charges.
2. Less investment on research
& development.
3. High turnover rate of
employee but less motivation
and morale.
4. Liquidity problems with
quick ratio low, cash flow
problems as assets<liabilities.
Opportunities
1. Increase in internet
users which results in
rapid growth of e-
commerce.
2. Increasing social
media users.
3.Increasing
consumer spending
due to high incomes.
4.Environmental
friendly products
growth which also
provides subsidies
(SWOT analysis and
TOWS matrix of
Toyota, 2015).
5. Low interest rates
SO strategies
 Increase in marketing activities to
attract customers. (S1, S3, O3).
 Using Social media marketing (S5,
O2, O3).
 Providing innovative and eco-
friendly products at low prices (S2,
S4, O4).
 Offer discounts by marketing
products ate low prices. Which will
help in increasing sales (S2, O3).
WO strategies
 Increase the owned
property rather than rent
by financing at low
interest rates (W1, O5).
 To improve the motivation
and morale of employees,
GM can provide more
incentive packages,
payrolls and various other
benefits (W3, O3).
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for large projects.
Threats
1. New entrants
threat.
2. Devalued exchange
rate.
3. Increased fuel price
making inputs
expensive.
4. Increasing
competition.
5. Availability of
substitute products.
ST strategies
 In order to reach to maximum
customers to lead the new entrants,
GM can use strong distribution
network (S1, T1).
 GM can use the strong financial
position in investing in the rights of
intellectual property (S3, T4).
 Costs can be reduced by using
innovative teams who can find
alternatives to expensive fuels (S4,
O3).
WT strategies
 Make more investments on
R&D which helps in
competing with
competitors (W2, T4).
 Provide a better work
environment by providing
incentives and increasing
the involvement to retain
the talent (W3, T4).
TOWS Matrix of Toyota Motors
Toyota is the tough competitors of General Motors which is also a multinational
automotive manufacturer headquartered in Japan but performs operations worldwide.
Strengths
1. Largest vehicle producer in the
world.
2. Durability, reliability and quality.
3. Best seller of hybrid cars in world.
4. Management philosophy is strong
(Toyota Motor Corporation, 2020).
5. Larger market share.
6. Multi-purpose vehicle innovation.
7. Production facilities are global.
Weaknesses
1. Termination of production
temporarily and globally recall
campaigns.
2. Hit by financial crisis.
3. Issues regarding large scale
re-call and quality (Baber,
2018).
4. Net loss of $4.2 billion.
Opportunities
1. French motoring in
SO strategies
 Providing cost-effective products
WO strategies
 In order to maintain image
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Joint ventures.
2. Decreased interest
rates for loans.
3. Change in the
preferences of
customers.
Diversification.
Economic growth.
Reduction in
automotive taxes.
7. Improved
economic conditions.
for increasing presence (O1, S1,
S2, S3).
 Adapt market penetration by
providing products which are
customer-oriented (O2, O3, O5,
O6, S1, S2, S3, S4, S5, S6).
 Offers new product range (O4, S1,
S2, S6).
in the market, offer
improved products (W1,
W3, O3).
 Focussing on local
markets (W1, O1, O3).
 Reducing the overall cost
(W2, O1, O3).
 Recover the revenue (W4,
O7).
Threats
1. Saturated market
and increasing
pressure due to
competition.
2. Significant
discounts.
3. Maintenance and
oil costs increased.
4. Fluctuations in the
currency of foreign.
5. Regulations of
environment.
ST strategies
 Offers cost-effective products (T1,
S1, S2, S3, S4).
 Make advantage of learning curve
(T2, S1, S4, S5).
 Produce the products which are
cost-effective (T3, S3, S4, S7).
 Increase the local production (T4,
S7).
WT strategies
 Offers discounts (T1, T2,
W1, W3).
 Facilitates the customers
by offering products which
are fuel-efficient (T3, W1,
W3).
 Increasing domestic
facilities and make short
term goals to recover from
crisis (T4, T5, W2, W4).
CONCLUSION
The above report focussed on different types, size and scope of organisations along with
their purpose and legal structures. Furthermore, it also described the inter-relationship between
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the functions and structure of the organisation i.e., General Motors. The report also analysed the
positive and negative impacts of macro environmental factors on GM by using the PESTEL
model. SWOT and Porters five force model was used to examine the internal and external factors
to identify strengths and weakness. Finally, interrelationship between the external and internal
factors was done in GM and Toyota by using the TOWS matrix.
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REFERENCES
Books and Journals
Avidar, R., 2017. Public relations and social businesses: The importance of enhancing
engagement. Public Relations Review, 43(5), pp.955-962.
Baber, H., 2018. Service quality perception of customers–a study of Toyota motors in
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Barabba, V., 2019. Assessing General Motors’ innovation strategy over three decades using the
“Three Box Solution”. Strategy & Leadership.
Bashir, M. and Verma, R., 2017. Why business model innovation is the new competitive
advantage. IUP Journal of Business Strategy, 14(1), p.7.
Čepel, M and et.al., 2018. Business environment quality index in the SME segment. Journal of
Competitiveness.
Davies, A., 2017. General motors is going all electric.
Garcia, E. and et.al., 2017. Assessment of the healthy worker survivor effect in cancer studies of
the United Autoworkers-General Motors cohort. Occupational and environmental
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Kaur, A. and Sharma, P.C., 2018. Sustainability as a strategy incorporated in decision-making at
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Leslie, A.J., 2019. Analysis of the Field Effectiveness of General Motors Production Active
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Shafiee, H., Razminia, E. and Zeymaran, N.K., 2016. Investigating the relationship between
organizational structure factors and personnel performance. International Journal of
Management, Accounting and Economics, 3(2), pp.160-165.
Online
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