How Much Can the Internet Help GM ?

Essay by jmariano September 2006

download word file, 5 pages 3.0

1. Analyze GM using the competitive forces and value chain models.

GM is operating in a highly competitive environment. Since the 1970s, the company's auto sales have declined from about 60 percent of the U.S. vehicle market to 28 percent today. Its competitors, Ford, Daimler Chrysler, and the Japanese, have lower production costs and reputations for better styling and quality.

GM's original top-down control and decentralization model, as well as it being a vertically integrated corporation, hampered its ability to compete. GM's competitors could obtain parts at lower prices from outside vendors; GM could not update its selection and style as fast as its competitors; and GM's quality was not deemed to be as good as its competitors. GM's bureaucracy, production processes, and outdated information systems were causing the corporation to spend more time and money than its competitors to produce a car.

GM is using information technology to offer innovative products and services, as well as develop its e-business.

GM wants to "intensively weave Internet technology into all of its business processes."

2. Evaluate the current business strategy of GM in response to its competitive environment. What is the role of Internet technology in that strategy? How successful is that strategy?

GM realized that its top-down control and decentralized execution model was fast becoming an impediment to the corporation's success. So, in the face of stiff competition, GM is transforming itself into a customer-focused business and offering its customers many electronic services and vehicles.

GM has developed its e-business capabilities and now sells vehicles online, builds vehicles to order, provides online services, and streamlined its internal processes.

GM is "intensively weaving Internet technology into all of its business processes."

GM hoped its new strategy would enable the company to become smarter, leaner, faster, and more customer-focused. By eliminating...