Basic Empirical Facts
Recently, the increasing use of technology and gasoline prices have led to an increase in the demand for electric cars. In the early years, individuals were not interested in electric vehicles because of the lower prices of gasoline used in diesel engine vehicles (Poczter & Jankovic, 2014). The idea emerged in the early years, but the increased costs of manufacturing electric and hybrid vehicles discouraged manufacturers. The primary concern of General Motors has been to remain competitive in the business environment and has forced them to conduct meetings to find ways to ensure that they manufacture vehicles that are in demand. The primary competitors include Tesla, Nissan Motor Company, and other manufacturers in the United States and other continents. Given the higher cost of shutting down an automobile manufacturing plant, automobile manufacturers prefer to incur higher costs in technological advancements. Therefore, the primary concern of General Motors is whether to continue manufacturing standard automobiles, or whether to invest more in electric vehicles, acquire necessary technology to compete with other major players.
Several factors contributed to reducing the price and improving the quality of both electric and hybrid vehicles. Some of the factors included economies of scale, tax credits, as well as economies of scale throughout the 2000s. Some of the technological developments in electric cars include battery commoditization and lithium-ion battery alternatives. Automobile companies have also been faced with strict regulations regarding environmental pollution, and this has forced them to consider manufacturing vehicles that are environmentally friendly. Besides, consumers are becoming aware and interested in vehicles efficient and environment-friendly vehicles (Poczter & Jankovic, 2014). Thus, General Motors should consider taking a step that will improve its efficiency in production while at the same time meeting customers’ needs and preferences.
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Causes and Antecedents
The Great Depression Significantly impacted General Motor’s ability to penetrate and remain sustainable in the market. During this depression, consumer purchase declined, and GM was unable to generate higher revenues. Also, the firm lacked sufficient technological advancements for its production, and this led to increased costs of manufacturing vehicles. As a result, the company could not generate more profit (Poczter & Jankovic, 2014). The meeting by the company was because they had begun getting worried about the steps it would take to ensure efficient production and profit generation. The problem with the adoption of new technologies by General Motors was costly since the advancements required intensive capital. Thus, the causes of poor financial performance by General Motors can be attributed to lower consumer purchasing and lack of technology for efficient production.
Another issue that contributed to General Motor’s problem is that competitors have lowered their costs and at the same time, improved the range of their electric vehicles. However, the costs of production at GM continued to be high, and this significantly impacted their performance in the market. Given that there is an increased shareholder pressure, the company had a hard time making decisions on the direction of the company about the production of electric and hybrid vehicles (Poczter & Jankovic, 2014). Besides, GM has not been in a position to be up-to-date with changing consumer demands and preferences in the automobile industry. Mass production leads to economies of scale but significantly contributes to increased costs of production. Thus, the causes of the problems at General Motors are increasing strength of competitors and changing consumer tastes and preferences.
Missing Information
Apart from the United States, other countries such as China have prioritized the manufacture and sale of new energy vehicles in future development. Some of the steps that such nations have taken to increase the use of new energy are developing policies of industrial development and plans and demonstrating projects that promote this advancement (Yuan, Liu & Zuo, 2015). Industrial Chain and social factors and a small market share of new energy vehicles have become challenging to the growth of this sector despite preferential policies. Given the increasing demand of these automobiles, there is a need for faster construction of supporting facilities and infrastructure (Yuan, Liu & Zuo, 2015). Generally, policy guidance and planning have played a significant role in the growth of the new energy vehicle industry.
Warranted Actions
Some of the issues that have contributed to the strong growth of the hybrid and electric vehicle manufacturing industry in the past years include high oil prices and increasing environmental concerns. Other contributing factors are improved consumer confidence and rising consumer tax credits that leave consumers with high income. Given that there is an increase in booming populations in emerging economies, the future of electric and hybrid vehicles will continue becoming better. Besides, the global economy has continued stabilizing in the past years, and this means that oil prices will continue to be high (Poczter & Jankovic, 2014). With better economic conditions, there is an increased likelihood of increasing consumer purchase in the future, and General Motors should focus on this prediction rather than shutting down its operations. As a result, consumers demand vehicles that do not require higher costs to keep them running, and this leaves room for hybrid and electric vehicles (Onat, Kucukvar & Tatari, 2015). Thus, General Motors should consider investing in electric vehicles because, in the long-run, the benefits will exceed the costs.
Furthermore, there is an expectation that federal taxes and credits that relate to buying hybrid and electric vehicles will drop. The declining battery costs may also lead to a slight rise in the overall price of the cars to the consumer when it comes to buying a vehicle. Also, there have been positive public perceptions about the need for purchasing efficient and environmentally friendly vehicles, and this has made consumers switch to hybrid and electric vehicles. The primary purpose of consumers is to minimize fuel expenses, but at the same time being able to commute to their destinations effectively. Research and development (R&D) is necessary because it will allow an organization to learn about emerging trends in the business environment. General Motors should invest significantly in research and development to understand consumers’ changes in tastes and preferences. There is a need to design new alliances and cooperation to manage changes and increased impacts of high investment in research and development (Peters et al., 2014). Also, the company will learn about the new technologies used in the production process. In the end, research and development will allow General Motors to ensure the production of efficient and environment-friendly vehicles.
Another action that General Motors can take to address the problem it currently faces is assembling its vehicles at the consumers’ endpoint. The company should not concentrate significantly on mass production but on manufacturing different vehicle components. Additive and flexible manufacturing have become common in the automotive industry and ensure production on demand (Peters et al., 2014). The automotive industry has experienced higher degrees of automation, and this has led to the need for intelligence machines and maintenance solutions. These technological advancements lead to the attainment of “higher productivity, improved reliability, greater efficiency, and complete quality assurance” (Peters et al., 2014). There is a need for faster growth and advancement in the construction of supporting facilities and infrastructures (Yuan, Liu & Zuo, 2015). Thus, General Motors should consider the adoption of intelligence machines and maintenance solutions to lower its production costs and increase profitability in the long-run.
References
Onat, N. C., Kucukvar, M., & Tatari, O. (2015). Conventional, hybrid, plug-in hybrid or electric vehicles? State-based comparative carbon and energy footprint analysis in the United States. Applied Energy , 150 , 36-49.
Peters, S., Lanza, G., Jun, N., Xiaoning, J., Pei Yun, Y., & Colledani, M. (2014). Automotive manufacturing technologies–an international viewpoint.
Poczter, S. L., & Jankovic, L. M. (2014). General Motors: The Electric Revolution. Journal of Business Case Studies (JBCS) , 10 (2), 185-190.
Yuan, X., Liu, X., & Zuo, J. (2015). The development of new energy vehicles for a sustainable future: A review. Renewable and Sustainable Energy Reviews , 42 , 298-305.
