General Motors Company (GM) has a generic strategy (Porter’s model) that ensures competitive advantage amid increasing competition in the global automotive industry. Michael Porter’s model indicates that competitive advantage is created through a generic strategy that the company effectively applies in relation to variables in the target market. In this case, General Motors’ generic competitive strategy emphasizes the benefits of economies of scale, which is one of the company’s strengths (Read: SWOT Analysis of General Motors Company). The firm also employs intensive growth strategies based on the business effects of such generic strategy. Each intensive strategy contributes to the growth of General Motors. However, these intensive growth strategies have different degrees of significance in the business. For example, General Motors benefits more from one intensive strategy compared to the other intensive strategies in terms of their effects on organizational growth and appropriateness to the target market for automobiles and related products.
The effectiveness of General Motors’ generic strategy has a direct link to the organization’s ability to address issues associated with competitive rivalry. Competition is a major external force that affects the company’s growth and development. The Porter’s Five Forces Analysis of General Motors Company shows the significance of competition in determining the performance of the automobile business. Thus, the generic competitive strategy must match the needs of the organization, while considering the external business environment. On the other hand, the effectiveness of General Motors’ intensive growth strategies influences how the business grows. The competitive advantage based on the generic strategy and the growth potential based on the intensive strategies contribute to the long-term success of General Motors.
General Motors Company’s Generic Strategy (Porter’s Model)
General Motors’ generic competitive strategy is cost leadership. Based on Porter’s model, this generic strategy creates competitive advantage based on the attractiveness of low costs and corresponding low prices of products. For example, General Motors’ automobiles are offered at prices that are lower than premium or luxury automobiles like Mercedes-Benz. The relatively lower prices attract customers, leading to GM’s competitive advantage. A strategic objective based on this generic strategy is to enhance manufacturing process efficiencies through automation and continuous improvement to support General Motors’ competitive advantage.
The differentiation generic strategy has a supporting role for General Motors’ competitive advantage. However, cost-leadership remains the company’s main generic competitive strategy. In differentiation, the strategic objective is to make products attractive on the basis of features, brand image, quality, and related variables. For example, the differentiation generic competitive strategy is applied through General Motors’ research and development efforts toward producing energy-efficient automobiles. The features of these products should also differentiate them from the competition, to ensure the company’s competitive advantage. This generic strategy supports the technological advancement and value emphases in General Motors’ mission statement and vision statement, respectively.
General Motors Company’s Intensive Strategies (Intensive Growth Strategies)
Market Penetration (Primary). General Motors uses market penetration as its primary intensive growth strategy. This intensive strategy contributes to the company’s growth by increasing sales in current markets. For example, General Motors expands its market reach by increasing the number of its dealerships. In this way, the distribution of GM automobiles increases, improving customers’ access to these products. General Motors’ cost-leadership generic strategy creates competitive advantage that facilitates the successful implementation of market penetration. Based on this intensive growth strategy, a strategic objective is to continue expanding the company’s distribution network to support business growth and development.
Product Development (Secondary). Product development serves as a secondary intensive growth strategy in the case of General Motors Company. This intensive strategy ensures growth through new product sales. For example, every new product or product line translates to a potential increase in GM’s revenues. This intensive growth strategy supports the differentiation generic competitive strategy by focusing on uniqueness in the design and features of new products. Thus, General Motors’ strategic objective based on product development is to achieve a high rate of innovation in new product development.
Market Development (Supporting). General Motors employs market development as a supporting intensive strategy for growth. In this intensive strategy, the company grows by entering new markets or market segments. For example, General Motors’ growth as a global automotive business has been significantly based on new market entry, such as when the company adds a country to its areas of operations and sales. However, considering the firm’s current worldwide operations, this intensive growth strategy now only serves a supporting role in business growth. Based on market development, a strategic objective is to enter new markets in Africa or develop novel products to enter new market segments for General Motors’ growth. The differentiation generic strategy can contribute competitive advantage needed to maximize the benefit of implementing the market development intensive growth strategy.
Diversification (Supporting). Diversification is another intensive strategy that has a supporting role in General Motors’ growth. The company has a low probability of using this strategy. Diversification supports business growth through new business. For example, General Motors could acquire a car rental services company in a domestic market to fuel business growth. This intensive growth strategy can contribute new business capabilities to support the differentiation generic competitive strategy. A strategic objective linked to this intensive strategy is to grow General Motors through new acquisitions of businesses outside the automotive industry.
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