Case Study Description of General Motors Corp. (B): Financial Policies
The second in a four-part series, the case details the financial policies and practices at General Motors from 1990 to 1996. This part describes the stated financial policies of the firm, including its approach to capital structure, liability structure, equity structure, dividends, cash balances, and risk management.
Authors :: Peter Tufano, Markus F. Mullarkey, William J. Wildern
Swot Analysis of "General Motors Corp. (B): Financial Policies" written by Peter Tufano, Markus F. Mullarkey, William J. Wildern includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Policies Motors facing as an external strategic factors. Some of the topics covered in General Motors Corp. (B): Financial Policies case study are - Strategic Management Strategies, Costs, Financial markets, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the General Motors Corp. (B): Financial Policies casestudy better are - – increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, increasing commodity prices, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%,
talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of General Motors Corp. (B): Financial Policies
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in General Motors Corp. (B): Financial Policies case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Policies Motors, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Policies Motors operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of General Motors Corp. (B): Financial Policies can be done for the following purposes –
1. Strategic planning using facts provided in General Motors Corp. (B): Financial Policies case study
2. Improving business portfolio management of Policies Motors
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Policies Motors
Strengths General Motors Corp. (B): Financial Policies | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Policies Motors in General Motors Corp. (B): Financial Policies Harvard Business Review case study are -
Ability to recruit top talent
– Policies Motors is one of the leading recruiters in the industry. Managers in the General Motors Corp. (B): Financial Policies are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Policies Motors is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Policies Motors is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in General Motors Corp. (B): Financial Policies Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Policies Motors in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Policies Motors has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Finance & Accounting industry
– General Motors Corp. (B): Financial Policies firm has clearly differentiated products in the market place. This has enabled Policies Motors to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Policies Motors to invest into research and development (R&D) and innovation.
Training and development
– Policies Motors has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in General Motors Corp. (B): Financial Policies Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Operational resilience
– The operational resilience strategy in the General Motors Corp. (B): Financial Policies Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Diverse revenue streams
– Policies Motors is present in almost all the verticals within the industry. This has provided firm in General Motors Corp. (B): Financial Policies case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Low bargaining power of suppliers
– Suppliers of Policies Motors in the sector have low bargaining power. General Motors Corp. (B): Financial Policies has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Policies Motors to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Policies Motors has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Policies Motors to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Policies Motors has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Policies Motors has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Analytics focus
– Policies Motors is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Peter Tufano, Markus F. Mullarkey, William J. Wildern can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Weaknesses General Motors Corp. (B): Financial Policies | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of General Motors Corp. (B): Financial Policies are -
Lack of clear differentiation of Policies Motors products
– To increase the profitability and margins on the products, Policies Motors needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Policies Motors has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Products dominated business model
– Even though Policies Motors has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - General Motors Corp. (B): Financial Policies should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Policies Motors has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Capital Spending Reduction
– Even during the low interest decade, Policies Motors has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Policies Motors supply chain. Even after few cautionary changes mentioned in the HBR case study - General Motors Corp. (B): Financial Policies, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Policies Motors vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the General Motors Corp. (B): Financial Policies HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Policies Motors has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study General Motors Corp. (B): Financial Policies, it seems that the employees of Policies Motors don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Increasing silos among functional specialists
– The organizational structure of Policies Motors is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Policies Motors needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Policies Motors to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Policies Motors, firm in the HBR case study General Motors Corp. (B): Financial Policies needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Policies Motors has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Opportunities General Motors Corp. (B): Financial Policies | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study General Motors Corp. (B): Financial Policies are -
Better consumer reach
– The expansion of the 5G network will help Policies Motors to increase its market reach. Policies Motors will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Policies Motors to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Policies Motors to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Policies Motors can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Policies Motors is facing challenges because of the dominance of functional experts in the organization. General Motors Corp. (B): Financial Policies case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Policies Motors can use these opportunities to build new business models that can help the communities that Policies Motors operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Policies Motors can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Policies Motors has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Policies Motors can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Policies Motors can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Policies Motors can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Policies Motors in the consumer business. Now Policies Motors can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Policies Motors can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Creating value in data economy
– The success of analytics program of Policies Motors has opened avenues for new revenue streams for the organization in the industry. This can help Policies Motors to build a more holistic ecosystem as suggested in the General Motors Corp. (B): Financial Policies case study. Policies Motors can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats General Motors Corp. (B): Financial Policies External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study General Motors Corp. (B): Financial Policies are -
Environmental challenges
– Policies Motors needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Policies Motors can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Stagnating economy with rate increase
– Policies Motors can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing wage structure of Policies Motors
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Policies Motors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Policies Motors in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Policies Motors business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Policies Motors demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Policies Motors with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Policies Motors in the Finance & Accounting sector and impact the bottomline of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Policies Motors needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Policies Motors can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study General Motors Corp. (B): Financial Policies .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Policies Motors will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Regulatory challenges
– Policies Motors needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Shortening product life cycle
– it is one of the major threat that Policies Motors is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of General Motors Corp. (B): Financial Policies Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study General Motors Corp. (B): Financial Policies needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study General Motors Corp. (B): Financial Policies is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study General Motors Corp. (B): Financial Policies is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of General Motors Corp. (B): Financial Policies is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Policies Motors needs to make to build a sustainable competitive advantage.
