Question

General Motors exports cars to Spain, but the strong dollar against the euro hurts sales of GM cars in Spain. In the Spanish market, GM faces competition from the Italian and French carmakers, such as Fiat and Renault, whose operating currencies are the euro. What kind of measures would you recommend so that GM can maintain its market share in Spain?

Answer 1

GM can maintain its market share in Spain by focusing on product differentiation, cost-saving measures, aggressive marketing, local manufacturing, and currency hedging contracts, which can offset the competitive pressures from European carmakers.

Step-by-step explanation:

General Motors (GM) can maintain its market share in Spain despite the strong dollar by employing strategic measures aimed at offsetting the competitive advantage of European carmakers like Fiat and Renault. One approach GM could take is to focus on product differentiation, creating unique features or services that distinguish its cars from those of its competitors. Another tactic is to explore cost-saving measures such as forming partnerships or sourcing from cost-effective suppliers to reduce production costs and thereby offer more competitive pricing. Additionally, engaging in aggressive marketing strategies that emphasize the quality and innovation of GM vehicles could also help in attracting and retaining Spanish customers.

Furthermore, GM could consider local manufacturing, setting up assembly plants within the Eurozone to sidestep currency exchange issues, allowing GM to sell their cars at a more competitive price point. Lastly, GM might explore financial options like entering into hedging contracts to mitigate the impact of currency fluctuations, ensuring more stable pricing. These measures, combined with an emphasis on innovation and responsiveness to consumer demands, can help GM maintain and possibly increase its market share in the competitive Spanish auto market.