Free Business Dissertations - Question 1 according To Johnson And Scholes (2002) Competitive Business
Question 1
According to Johnson and Scholes (2002) competitive business environment can be assessed from both macro and micro points of view. Based on this the use of the PESTEL framework which incorporates political, economic, social, technological, environmental and legal factors in such an analysis is a useful one in understanding the competitive position of GM in the auto industry. Firstly based on the details of this case study the most important force may be defined as technological trends within the auto industry in terms of Internet related information systems particularly. It is critical to be aware that the rapid development in computer based technologies along with the generation of an emerging demand for e-commerce along with globalisation pose problems for organisations such as GM. As then not only have customers become global competition has become intensive resulting in global capital flows and international sourcing of labour and resources in order for firms to achieve cost advantages.
Secondly it must be noted that customers have became more environmentally aware and concerned which means that environment friendly designs and products have increasingly important in considering competitive capabilities for automotive companies. Additionally legal requirements for environmentally friendly automotives and production processes create significant challenges for GM especially in its R&D process. Thirdly the rapid adoption of the Internet by people in terms of usage and numbers not only provides opportunities for GM in terms of online abilities to assist in satisfying customers better but also in terms of business opportunities for online shopping in terms of a ‘build to order’ customer service and in the provision of relevant information on products. Research has demonstrated that car buying falls into a high involvement category in understanding customer behaviour which suggests that consumers will spend more time on the information search process as well as comparing related and similar products, (Foxall, Goldsmith & Brown, 1998).
Furthermore developments such as NADA’s (National Auto Dealers Association) guidelines for the online selling of vehicles generated significant opportunities for GM in developing its web site based shopping model. Related issues have also been the impacts of changing lifestyles in turning to alternative modes of transport for example along with a decline in national economic performance (along with higher oil prices) which resulted in a growing demand for economical cars in terms of flexibility, reliability and efficiency. At this stage sophisticated design solutions and effective cost control became essential for GM in gaining and holding onto its competitive position in the industry.
Porter’s competitive five force model provides a useful angle in examining corporate competitive positions bearing in mind the industrial environment they are situated within, (Porter, 1980).
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