The Resource-Based View (RVB) model evaluates a company’s ability to effectively utilize its resources to gain a competitive advantage. The model classifies the resources as tangible and intangible, with the latter being the source of competitive advantage. Key assumptions during the evaluation process include heterogeneity and immobility of resources – that is, the skills, capabilities, and resources that improved the company’s use of resources to gain competitiveness. Besides employing resources to gain a competitive advantage, General Motors (GM) also has to evaluate their Value, Rarity, Imitability, and Organization (VRIO) framework to maintain competitiveness.
General Motors’ resources have, over the years, been its source of competitiveness – among the tangible resources include land including owned and rented spaces. The company has also been a leader in OEM for production and packaging purposes that have significantly improved its manufacturing capabilities. The company’s intangible resources include its brand reputation and heritage as a prominent vehicle manufacturer and intellectual property that safeguards its developments and ingenuity. It also has established goodwill, trade name and brand with a rich history, in addition to an unrivaled customer experience record and a vast dealership network supporting and enhancing this experience. Being the largest employer in Northern America, the company has benefited from import quotas and other government incentives. The company also owns numerous marketing rights and established customer relationships that improve its competitiveness considerably. GM has gained and sustained a competitive advantage with these resources for over a century, but with challenges.
General Motors has vast resources through which it has dominated the U.S. auto market. From the 1950s to 2008, the company belonged with the “big three” until it lost to Toyota (Wang et al., 2018, p. 668). The loss of market share points to its inability to use its resources to innovate and compete. A review of the company’s operations efficiency revealed a lack of currently available technology or innovativeness to address key strategic decisions (Meyer, 2017). It is also likely the GM has consistently failed to adopt its technologies, manufacturing abilities, and ingenuity to meet market demands. Consequently, the company’s quality of cars has been challenged even as it reduced its car’s warranty – a feature critical to a company’s competitiveness (Motabar et al., 2018). Despite its inability to use its resources to improve competitiveness, the current CEO can help by changing resource utilization and altering certain aspects of the company’s strategic planning.
GM will require to innovate and change its strategic approach to car production to remain competitive against competition from electric vehicle manufacturers. The current CEO should thus use the company’s intangible resources that include a vibrant research and development department and supply chain, to seek ways to produce quality electric cars cheaply. The CEO could also restructure the production to strengthen its core processes, which would largely affect its intangible resources. The CEO should also focus on GMs research and development, engineering, and marketing departments. Restructuring these areas could enhance its product portfolio and increase its capacity and resource utilization to meet its customer preferences. The CEO should also target the company’s production capacity by reorganizing the plants to suit regional market demands and close plants considered loss-making or expensive to remodel to meet future company needs.
The Resource-Based View model examines the efficiency of a company’s resources conversion to improve competitive advantage. An analysis of General Motors using the model reveals the company’s many tangible and intangible resources. Despite the abundance of these resources, the company has previously been unable to effectively leverage them to gain market leadership. However, the current CEO could restructure the company and improve resource utilization and regain the company’s market share. As the auto market dynamics and customer preferences change, GMs ability to effectively use its resources to gain leverage could determine its overall survival.
References
Meyer, P. (2017). General Motors’ operations management: 10 Decisions & Productivity. Panmore Institute. Web.
Motabar, P., Gonzalez, H. E., Rundle, P., & Pecht, M. (2018). How poor reliability affects warranties: An analysis of general Motors’ powertrain warranty reduction. IEEE Access, 6, 15065-15074. Web.
Wang, J., Dou, R., Muddada, R. R., & Zhang, W. (2018). Management of a holistic supply chain network for proactive resilience: Theory and case study. Computers & Industrial Engineering, 125, 668-677. Web.