Environmental Analysis Essay Example | Topics and Well Written Essays - 3000 words

Environmental Analysis - Essay Example The Company has been appearing as the sales leader among global automakers in China over the last four years. In 2008, the estimated market shares of the GM in China were 12.1percent of the total GM Sales (GMChina). In this report, the environment analysis of GM China has been done. Through PESTLE analysis, Porter’s Five Forces Analysis, SWOT Analysis and other theoretical models, the current situation of GM in China has been analysed. External Analysis PESTLE Analysis Political Two factors are contributing to the growth and development of automobile industry of China: first, the suitable domestic policies and market openings: second, supply of vehicles and parts throughout the country in the logistic and commercial aspects (Kamiya & Ramirez, 2004). Chinese government authorities including local and central government do not only issue the automobile industry development plans but they are also involved in the operations of the companies to maintain such developments (Bungsche , 2007). Government of China has eliminated most of the fixed fees imposed on vehicles such as road maintenance fees of around $210 per year (Brogan, 2009). In 2010, Chinese government has introduced policies that could support new-energy auto industry. In the new policy, government is paying a subsidiary of up to 50,000 Yuan to any individual who buys a hybrid vehicle and 60,000 Yuan to any individual who buys battery electric vehicle or all-electric vehicle (Xinhua, 2010). The Chinese government is planning to pursue a new policy which could encourage industry consolidation thereby, promoting the development of Chinese-brand passenger cars and it has been estimated that by 2015 domestic sedans will be 40% of nation’s car market (Chinacartimes, 2010). This example shows that Chinese government aims to promote domestic car industry. Chinese government has imposed 10% sales tax on small cars which is effective from Januray 1, 2011. Analysts argue that small cars comprise of 60 percent of all passengers cars in China therefore, this policy of government will stop the growth of small cars thereby, increasing the demand of foreign companies especially the U.S. companies which have comparative advantage in manufacturing large cars (Hsu, 2010). The government inclination towards local companies is also evident from subsidies in China. According to an auto analyst, Zhang Zhiyong, the subsidies in China only promote local protection and they do not consider the model lines and technological improvements brought by foreign companies. Zhang Zhiyong argues that Chinese government should use subsidies to promote domestic automobiles which do not always mean foreign or local companies, rather it includes the companies which have significant ties with the city (Chinaenvironmentallaw, 2010). Economic Gross domestic product (GDP) has increased from 7.6 percent year-of-year in 1999 to 11.9 percent on 2007 (World Bank, 2008). In 2010, the GDP has grown by 10 percent (Chi natoday, 2011). Consumer price index (CPI) has increased from 98.6 percent year-of-year in 1999 to 104.8 percent in 2007 (World Bank