Posted: November 29th, 2013
General Motors or GM is an international corporation having its host company in North America. General Motors deals in automotive manufacture, assembly and distribution. The headquarters are located in Detroit. As of 2011, General Motors was the largest vehicle manufacture globally. The number of direct employees at GM stands at slightly over 200,000 individuals and the firm has branches in over 157 countries. However, GM produces automobiles in only 31 states. The marketing and distribution of General Motors products is done through Cadillac, Chevrolet, Buick and other minor divisions. Apart from manufacturing automobiles, General Motors trades its shares on the NYSE.
Effect of market and legal systems on business operations in the USA
Within the United States, the market economy controls the business operations for most of the commercial ventures. The market economy works on the principles that the market follows the forces of supply and demand. Likewise, the determination of prices of goods and services is left to the free price system. General Motors as a company within this environment enjoys the advantages that accompany it and suffers the same fate that befalls the system. The laissez faire economy has enabled General Motors increase its presence across the globe. The open economic system allowed the unlimited expansion of General Motors into foreign territories that allowed the firm access to new markets. This resulted in the growth of the firm as well as increased profit margins (Freeland, 2002).
Conversely, the free economy meant that the state played a minimal role in coordinating economic activities. As a result, the global economic meltdown in 2008 rendered General Motors insolvent forcing the government to salvage them. After the bailout, General Motors underwent a reorganization that saw a decrease in the U.S Treasury presence on the shareholders list. The legal structure that General Motors operates under provides a tight safety net for domestic companies like itself while placing strict conditions for foreign companies that express an interest in operating in America. There are regulations that control the export and selling of goods to the USA that involve bioterrorism laws and consumer safety laws. Likewise, there are regulations that control the marketing procedure that foreign companies have to adopt. This strong domestic legal framework gives General Motors an edge over other automobile manufactures like Toyota (Wise, 2009).
Sources of political risk and recommendations
Within America and much of Europe, various countries have expressed their interest to have a control over the worlds’ largest carmaker. The recent bailout by the Obama government posed a political risk for General Motors in the following way. While Obama promised to detach the state from economic activities, the investment of $50 billion of taxpayer’s money forced the government to be more active in the economy. The problem lies with the level of state’s interference in the company after the huge loan was given out to General Motors. The influence of the state in the companies’ major decisions poses a political risk for the future of the company.
Abroad, the different locations where General Motors have their branches are prone to political instability. One of the causes of political unrest is botched elections that trigger civil wars. This state of unrest slows the production and marketing progress of General Motors. The influence of domestic political elite who may interfere in the operations of General Motors is another source of political risk. The election skirmishes in Kenya after the 2007 presidential elections slowed the business operations of General Motors in Kenya, Uganda and Burundi temporarily (Hoopes, 2011).
Stakeholders and the complications
In the wake of the bailout, the United States Treasury emerged as the dominant stakeholder that General Motors has to satisfy in the running of their operations. International companies that have branches in different continents find it difficult to satisfy all the shareholders due to the different logistics and environments. The regulations and conditions of the market in the USA are quite different from those in South Africa. Standardizing these different market outcomes in order to predict an expected outcome may be impossible due to the contingencies involved.
Company’s code of conduct
The GM code of conduct prescribes a dominant theme of “Winning with Integrity”. It describes the satisfaction of social expectations by engaging in dialogue with key stakeholders on the achievement of common values through cooperation. The actions of GM are also expected to be in tandem with the wellbeing and vivacity of other communities. The adherence of the business cod of ethics by GM in different locations across the globe will ensure standardization of the automobiles production and stability in the revenue returns (Spangler, 2009).
Social programs and investment indicators
GM has a foundation that was established in 1976 to assist communities through contributing to education, health and energy needs of those communities. In conserving the environment, GM has invested in renewable energy to assist in reducing air pollution and degradation of the atmosphere. GM is also involved in supplementing education among young children through the K-12 Education initiative. GM can benefit greatly from monitoring the inflation rates within their foreign subsidiaries, leading indicators such as average working hours, manufacturers orders, the stock index and interest rates. Lagging indicators that can also guide General Motors include the consumer price index and the change in labor cost per unit (Kerr, 2011).
Freeland, R. F. (2002). The struggle for control of the modern corporation: Organizational change at General Motors, 1924-1970. Cambridge, UK: Cambridge University Press.
Hoopes, J. (2011). Corporate dreams: Big business in American democracy from the Great Depression to the great recession. New Brunswick, N.J: Rutgers University Press.
Kerr, J. E. (2011). The Financial Meltdown of 2008 and the Government’s Intervention: Much Needed Relief or Major Erosion of American Corporate Law? The Continuing Story of Bank of America, Citigroup, and General Motors. Saint Johns Law Review, 85, 1, 49-114.
Spangler T. (2009) GM rescue fraught with political risks for Obama. Detroit Free Press. Web. Retrieved from http://www.freep.com/article/20090602/NEWS15/906020442/GM-rescue-fraught-political-risks-Obama
Wise A. N. (2009). Doing business in the USA: A bullet point guide for foreign business people. Gallet Dreyer & Berkey, LLP. Web. Retrieved from http://www.gdblaw.com/images/doc/BusinessUSA_Eng.pdf
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