Published by MBA Skool Team, Last Updated: November 10, 2019
PESTLE Analysis of General Motors analyses the brand on its business tactics. General Motors PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand.
PESTLE analysis is a framework which is imperative for companies such as General Motors, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.
The political factors in the General Motors PESTLE Analysis can be explained as follows:
General Motors is a leading car brand having a worldwide presence. Automobile Industry is a highly standardized industry. The auto sector companies need to comply with the laws laid down by the different governments. Government investigations can lead to hefty penalties and recalls of the vehicles. The recalls can significantly increase the replacement costs and labor costs. Not only have the costs, this can also harm company’s brand image. General Motors sees China as a potential market in its road to future growth. But the increasing Trade War between U.S. and China seems to be a roadblock in their way. Although China has the world’s biggest population and can be the right place for General Motors to invest in, but the current economic slowdown is also a cause of worry for the company as this might lead to lesser sales and profits.
Below are the economic factors in the PESTLE Analysis of General Motors:
General Motors can seriously get affected from the increase in the prices of the raw materials required in making the product.
Increase in the prices of the raw materials can lead to increase in the cost price and hence decrease in the profits. General Motors depend upon its GM financial division to provide its dealers with the finances. Any problem caused from the factors like credit schemes, cost and source of financing etc. can seriously affect General Motors’ sales and tarnish the brand’s image. A significant portion of General Motors’ profits is generated from the sales of heavy automobiles i.e. SUV and trucks. So, any surge in the price of crude oil or a weaker economic growth of a nation can lead to decrease in the demand of the heavy automobiles.
Following are the social factors impacting General Motors PESTLE Analysis:
Since people are now getting sensitive towards the environment, the emergence of Electric Vehicles can significantly change people’s behaviors and purchasing patterns. So, General Motors should focus on the Electric Vehicles across its brands like Chevorlet, Buick, and GMC etc. The introduction of electric vehicles does not necessarily mean that the sales of fuel based automobiles will suffer. General Motors and its brands do not possess a strong market share in the Europe. A major portion of the market share is captured by Vauxhall. So, GM should do a proper analysis and come out with marketing strategies that attract the social demographic. In order to attract more customers and retain the existing customers, GM’s subsidiary Onstar provides its customers with advanced services related to automation, security etc.
The technological factors in the PESTLE Analysis of General Motors are mentioned below:
The automobile sector is witnessing rapid technological advancements, so, in order to have an edge over its competitors and sustain in the market, General Motors invests heavily in the new and emerging technologies. One of its projects is to reduce the usage of fuel based vehicles and hence forth Green House gases. GM has chosen the Hydrogen fuel cell technology to achieve its goal. GM also aims to work on the production of Electric Vehicles but the lithium required in the production of the electric batteries is quite expensive. Also, the development of sensors required in the self-driving vehicles requires high capital.
Not only the fact that autonomous vehicles require high capital; they are also prone to security glitches leading to cyber security crimes.
Following are the legal factors in the General Motors PESTLE Analysis:
General Motors has failed to keep itself away from legal complications and controversies. In the year 2017, the Supreme Court of U.S.A. gave a ruling stating that General Motors cannot escape from the lawsuits filed by sufferers from the Faulty Switches accident. The accident caused more than 120 deaths and around 75 injuries. In October 2017, General Motors had to pay $120 million for the settlement of the case. In the past, many a lawsuits have been filed against General Motors by its workers alleging Racial Abuse at work. A picture was floated on the internet in which the tagline “White’s only” was written on the wall on GM’s assembly line workspace.
In the General Motors PESTLE Analysis, the environmental elements affecting its business are as below:
General Motors in an aim to maintain its brand image by showing concern for the environment has planned to introduce land-fill free operations. Through this, GM will be able to reduce Green House gas emissions. By the end of 2018, GM had a sum total of 136 operations which were land-fill free. General Motors also aims to have 100% usage of renewable sources to perform its operational activities.
GM’s manufacturing setup at Texas currently uses 100% of renewable energy i.e. Wind Energy. GM also offers those persons an amount of $20,000 who provide effective water conservation and waste reduction solutions.
To conclude, the above General Motors PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
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