The Global Car Industry - Research Paper Example

The Global Car Industry The global car industry has seen its shares of troubles after the recession hit the United States Economy. There were many scares regarding survival of some of the oldest brands in the United States car industry. To understand the different strategies adopted by manufacturers to avert their own crisis, one must first understand the nature of the impact the financial crisis had on the global automobile industry. The global automobile industry is actually closely linked to the availability of credit. Similar to real estate, most Americans make their automobile purchases using credit lines. Another important factor to notes is the market of American Auto industry. The biggest market is indeed the local market. Thus we can say that American auto makers have to develop their strategies with a focus on the local market. The Japanese industry for example has its major market share in countries outside Japan. Therefore the reliance of American auto purchasers on credit is a direct concern for Auto makers. The surge in demand during the period from 2001 to 2007 was basically due to large amounts of cheap credit available. Therefore the demand was very high as American consumers rely on credit to boost their extravagant life style. The unavailability of credit therefore resulted in high amounts of capital stuck in finished goods inventory and work in progress inventory. One of the most affected Detroit industries was General Motors. The Auto giant struggles to maintain its large workforce with diminishing demand for its goods. Another important factor which has resulted in a struggling GM is its high employee maintenance cost. The problems of the company however also results in the lack of integration between its marketing and management strategies. The large size of the company results in high inefficiencies, such as administrative cost. Moreover such a rigid structure results in lack of innovation. The relationship between innovation and customer service is very strong. The companies with tall rigid structures usually have employee empowerment issues. The focus thus is drawn away from the customer and towards internal issues. Thesis Statement General Motors has failed to address changing consumer trends due to its rigid structure and misdirected marketing communication. Argument The industry is changing rapidly. The changing trends in the industry are marked by changing consumer trends along with industry needs. The market was dominated a few years ago by power enthusiast who believed in driving powerful cars with high consumption rates. The number of hybrids on US roads has dramatically increased over the last few years. This shows that the market is more interested in efficiency. Regardless of the fact that this is due to increasing environmental concerns or a recession economy, GM has failed to address this issue. The company still has no effective plan to address this changing marketing trend. This is due to lack of innovation at the company’s center. The marketing and communication efforts are thus there but are not directed. In order to regain its lost position as the leading auto manufacturer in United States, General Motors will have to understand the changes in its marketing environment. The target market should be evaluated for each product of General Motors. The company should communicate its innovation and its will to adjust to its customers. This is because the company is still stuck in the age of standardization. To really attract a large customer base, General Motors will have to customize itself both as a brand and as a company. General Motors brands itself as one of the oldest and largest car manufacturers in the world. The reality of this fact is undeniable. However the consumer is more interested in understanding how this experience and economies of scales results in a cheaper and better vehicle. Thus the company needs to brand its products rather than the company itself. A very good example in this regard is marketing of different brands by Toyota such as Lexus, Corolla, Mark X etc. Thus the company fails to address the need to market products more as compared to the company. This also shows that there is lack of innovation at the center the company fails to understand the direction of its marketing needs. The strong branding of individual GM products would ensure that interest in the company is renewed. The lack of direction is thus as shown the main cause of failure. The problems with GM are not only limited to a bad marketing mix but also span to integral areas such as human resources and accounting. The quality of people working at GM cannot be questioned; some of the top talent from around the globe constitutes their mammoth work force. The benefits and packages given to employees however are the main point of concern. The company has currently agreements of paying large sums of money to retired and fired workforce. This results in an extra burden on the financial statements. Combined with reduced demands, the company cannot maintain its current workforce size or pay the benefits of laying them off. Conclusion The discussion shows that problems with General Motors stem from their bad management structure and misdirected marketing. The company needs to evaluate its target market and thus its marketing mix. To enable this shift a more horizontal structure should be adopted by the auto manufacturer. The best strategy at this point would be to divide GM into different segments. This strategy would ensure that the focus of the company is renewed and it targets its customer according to their individual needs. References "Company Profile". General Motors. 2010. (http://www.gm.com/corporate/about/company.jsp.) Strott, E. (2009). "Toyota Takes Sales Crown from GM". MSN Ferguson, R ( 2009). "From General to Government Motors". Toronto Star Kuhnhenn, J (, 2009). "Washington Wags Call GM 'Government Motors'". The Street. Ikenson, D, Wial, H ( 2009). "Will Government Motors Do Better than General Motors?". Los Angeles Times. Read More