Business, irrespective of its sizes and forms, is always an aggressive environment, where, in most cases, only the best survives and prospers. In other words, to compete with various market players, a company has to continuously develop and integrate new relevant decisions, technologies, and strategies that are in line with the current challenges and consumers’ wishes. Boeing and General Motors (GM) are two examples of companies that, due to their progressive commercial approaches, have grown into giant global corporations yet face considerable and constant pressure from their major rivals. Thus, this paper aims at discussing the decisions that the management of Boeing and GM could have implemented to prevent adverse results of the relative cases and maximize their profits.
General Motors’s Case
The history of General Motors is complicated and controversial, but one undeniable point is that, after accepting and following Sloan’s repositioning strategy, the company has reached its summit regarding both production and incomes. According to this strategy, GM should focus on the differentiation of price by reducing the cost of the lower-price product significantly, and slightly changing the cost of the higher-price product. This enabled the company to avoid overlap in the price levels and enter the product with higher quality but lower price into the corresponding marketplaces, which encourages poorer consumers to buy their products.
Nevertheless, since the 1950s, GM, in fact, stopped followed this practice because the costs of the lower-priced car and the higher-priced cars began to differ insignificantly. For example, division Chevrolet with the price range from 11,965 to 40,370 relatively overlaps the division Pontiac, Saturn, Buick, and partly Cadillac, despite that these divisions significantly vary in classes. This situation has allowed its competitors, especially Toyota, to enter the auto markets, filling the GM’s market share with similar products. Therefore, in this case, General Motors should increase gaps between prices of its divisions to satisfy consumers of different statuses and stimulate the clients from the lower class to buy more expensive automobiles. For instance, by making the prices of Chevrolet and Pontiac different but reasonably close, GM motivates its poor consumers to give preference for Pontiac in the future, thereby earning profits. These changes would also allow GM to compete with its primary rivals, such as Toyota and Honda, in the market with poor consumers.
In addition, the price of luxury automobiles such as Buick and Cadillac should be increased to clearly shows the difference in classes of divisions. In this regard, such a decision would enable the company to resist the tension from its Europen competitors, especially German concern Volkswagen. Altogether, such corrections in price policy would have provided an apparent competitive advantage for General Motors that the initial idea of the repositioning strategy implies.
Boeing’s Case
The Boeing Company is an international US manufacture of aviation, space, and military equipment, which has a long history and has been eventually created by a merger of several aircraft companies. Until the 1990s, Boeing was the largest aerospace company that had no equal in terms of profits and production, holding 84% of the total market share. However, because of changes that occurred at the turn of the 80-90s of the last century and the rapid development of the European Corporation Airbus, Boeing has lost a significant part of the market. In essence, since the late 1990s, Airbus and Boeing have apportioned the global passenger aircraft market in all three market sectors – narrow-body, wide-body, and VLA-class aircraft. Moreover, although Boeing had a more substantial operating profit, the growth of the volume of Airbus orders is still higher.
To achieve Boeing, Airbus made several vital decisions affecting the financial position of the company at present. First, a risky decision was made to begin the development and production of A380 aircraft, for which new materials and technologies were applied. This has allowed for reducing fuel costs, increasing aircraft capacity, and facilitating the management of the plane. Second, Airbus began selling aircraft at a loss or with minimal profit to increase market share. As a result, some reliable customers have switched from Boeing to Airbus since the later supplies the plane with similar, in some cases, equal quality but with lower prices. In this situation, Boeing should focus on the production of aircraft that consists of new composite materials and use up-to-date technology in the management of the plane. Besides, strong consideration should be placed on the decreasing fuel costs as, currently, many consumers are concerned with fluctuations in the price of fuel, mainly, sharp changes in oil cost. Finally, since the vast majority of Boeing’s aircraft are sold in dollars, Boeing is recommended to alter its approach regarding currency and be more flexible to facilitate the selling of planes.
Conclusion
In summary, this paper has considered the cases of the negative results of Boeing and General Motors. In the first case, GM should have adhered to the central idea of Sloan’s repositioning strategy, namely, differentiating the price of its divisions, such as Chevrolet and Pontiac and Cadillac. This would have attracted more consumers from various sectors of the market, thus providing a competitive advantage. In the second case, Boeing is recommended to pay special attention to the development of advanced technologies and introduce some corrections in its currency policy. Overall, Boeing and General Motors are still mighty and have significant potential for the progress, and the rivalry from the side of their primary competitor will urge these companies to implement definite and practical decisions.