This detailed case analysis explains how General Motors established themselves and chartered its way back to profit.

1. Institute: IIT Guwahati
Member: Prabal Jain
Contact: 8472058086/
prabaljain676@gmail.com
Unleashing the Innovation: Delivering more than just a car

2. 1.
2.
3.
4.
What will it take for Chevy Volt to be successful : 3-8
Risk of this venture: 9
Cost of failure: 10-11
Cost of not pursuing this project: 12-14
Index

3. Status Quo GoalIssues RECOMMENDATION
General Motors need to
follow a 3 phase
strategy:
• GM suffers
repeated loss in
2007 and 2008 for
about $14 billion.
Forced to beg
public funds from
govt.
• Potential gamble
on "Chevy Volt".
Project launched in
2007 with an
aggressive goal of
market introduction
in
2010.
• GM had already
incurred one
failure of EV1.
Besides, it had
already invested
billions in
developing fuel
cells.
Rigid Planning
procedure followed by
the reluctant Board
Company suddenly
did not want to switch
gears and move to
Lithium ion batteries.
• Success of the car
which means high
profit, happy
customer and
increase of the
market cap. by
increase in market
share.
1.
2.
3.
Product Innovation
Cost effectiveness
Aggressive Go to
market strategy &
marketing plan
•
•
Executive Summary

4. The stage wise implementation of product innovation followed by cost effectiveness
and then aggressive go to market strategy and marketing plan forms the basis of the
strategic success for the "Chevy Volt".
• Phase I
‘Make product so
innovative that audience
cannot resist buying’
Systematic
Product
Innovation
methodology
• Phase II
‘Try to minimize
Cost
Effectivenes
s
the cost so
as to increase market share’
Go to
market strategy
and marketing
plan
• Phase III
‘Robust marketing &
advertising plan to penetrate
market effectively’
3 Phase Strategy

5. Phase I
What does innovation mean? Advantages
• Innovate to enhance/update
• Innovate to restructure
• Innovate to renovate
• Delivering upto customer's
needs and ensured success
• Increased savings & reduced
inventory costs
Improved capital utilization &
automated control
•
• The primary power source is a large lithium ion battery. The battery can be charged by plugging it into a wall
socket for six hours; when fully charged, it should fuel the car for more than 40 miles and should make up for most
people’s daily commute.
• In case of exhaustion, a gasoline engine kicks in, providing both drive power and recharging the lithium ion battery.
GM estimates fuel economy will be over 100 miles per gallon which is way too much better than SUV (12
miles/gallon) or its competitors.
Lithium ion battery cum reserve gasoline powered engine
Product Innovation Methodology

6. • Global Warming is becoming an increasing concern, and it seems possible that tighter regulations designed
to limit carbon emissions would be introduced in the future. Automobiles powered by internal combustion engines
could hardly escape this trend.
Chevy Volt is designed in such a way so as to have the major power consumption from Lithium ion battery thus
minimizing the combustion to total downside and preserving the ecosystem.
•
•
•
•
•
•
Federal tax credit of $7500 to customers' becuase the car is "environment friendly" is a major breakthrough.
Cost of charging car overnight from power outlet < cost of filling it up with gas at $4/ gallon (surging prices).
Groundbreaking surge in fuel economy from 12 miles/gallon to 100 miles/gallon.
Cost of manufacturing of Lithium ion battery was decreasing leading to more good prospects for GM.
Prius had fuel cell technology which was different from Lithium cell. Hence, "Chevy Volt" will be first of its kind.
Bottomline:
For "Chevy Volt" to be successful, it should deliver all as promised or better considering
the unleash of the innovation undertaken by GM in form of above mentioned points.
Analyzing the trends
Environment friendly car

7. Phase II
• Lean Approach
Cutting costs and delivering value for money to consumers without
reduced quality with minimal waste generation
Tools for Lean Methodology Target
• JIT (Just in Time)
• TPM (Total Productive Maintenance)
• TQM (Total Quality Management)
• VSM(Value Stream Mapping)
• Delivery of a car with minimum waste
and maximum utility
• GM should try to minimize the cost of goods and services
(COGS) so as to increse their net profit.
• Tax credit from the Federal Dept. adds to this and hence is an
important point since the cost comes down to $
22,500-$ 32,500.
High
Pre-Lean
Core Styles
Lean
Low
Poor Good
Cost Effectiveness

8. Phase III
• GM should definitely consider the fact that the "Tesla Motors" is also on their way for the creation of
the "lithium sports car". Hence, GM's strategy should ensure that it launches "Chevy Volt" before
Tesla does so.
• Proper segmentation and analysis should be performed by GM. They should also ensure in depth
penetration of target market for huge profits and hence success of "Chevy Volt".
• At the pinnacle lies the boom of internet, hence onlined pre-launch order booking should be
ever necessary feature which should be definitely incorporated in plan.
• Promotional means should be leveraged and squeezed to take advantage of each and every
opportunity such as:
a
•
•
•
•
•
Detroit Auto Show
Ads and campaigns
Newspapers, magazines, radio etc.
Free test drive campaigns
Social Media Marketing
Go to Market Strategy & Marketing Plan

9. • This venture is very RISKY. Consider the following points to know why it is so:
GM's existent loss: Market conditions that'll affect:
•
•
•
•
$14 Billion loss in 2007 & 2008
Has to repay public fund debt.
Invested billions in fuel cell
• Global financial crisis leading to
devaluation and dropping of sales etc.
Oil prices declined. People will be willing•
Still struggling with loss of EV1 to drive non-electric car.
Reaching Bankruptcy: Competitive threat/risk:
• Tesla manufacuting the
same lithium sports car.
• Toyota has grabbed a
good market share with
Prius.
Management:
• GM is reluctant• Thi
s
project is the to switch
riskiest project because
the outcome of failure is
direct bankruptcy
considering GM's
financial position now.
stream from fuel to Lithium.
• Reluctant board
persuade.
difficult to
How risky this("Chevy Volt") venture is ?

10. Considering the fact that this venture is very risky, the cost of failure can be disastrous
and terrifying which may even lead to bankruptcy of General Motors. Let us have a
detailed analysis by looking at the financials of the GM, currently:
Liabilities
Assets
•
•
•
•
$14 billion
Fuel cell technology RnD
Public fund debt from Govt.
EV1 loss's liability
•
•
•
Liquid cash
Inventory
(very less)
Property (Warehouses,
plants, offices etc.)
• Intangible assets (Patents
Trademark)
• Treasury stocks (if any)
&
Shareholder's Equity
• Common Stock (downside)
• No retained earnings
• No dividends
Costs of failure

11. A thorough analysis of above balance sheet depicts that GM is already in deep
loss and also has a very serious market condition. Also the liabilites are very
stretched and long term indicating:
• GM may take good amount of time to recover
• Poor market situation reveals the non-eligibiltiy of any fund approval from equity market in
future. Also, if "Chevy Volt" is a failure, it will lead to the withdrawl of shares and GM may
dissolve.
• Hence, the anticipated cause of failure might be
• Bankruptcy
• Disastrous financial status of GM
Costs of failure

12. If company chooses not to pursue this project (2007) then the anticipated
situation might be descirbed as follows:
Current Loss:
• Bad financial condition in 2007 &
2008 leading to loss of $14 Billion.
• Invested billions in fuel cells
• Loss due to failure of EV1
Global Financial Crisis:
• GM cannot expect to raise money
through stock markets.
• Oil prices decreased
• Sales also decreased
Considering the current situation,
source of revenue(significant) is:
now that the GM has declined the project, its only
• Sale of existent products: There will be low sales of existent products (SUV etc.) due to
financial crisis. Again, since there is a decrease in oil prices, people will prefer to buy oil
driven cars, but the sales will remain low due to poor market conditions.
Costs of not pursuing this project

13. Now, since the company will work towards fuel cell, there may be 3 cases
depending on whether the company is successful in innovating a product with
fuel cells or not:
• Success: If GM is successful in innovating a product with fuel cell technology then it
may charter its way back to profit and hence may become stable with the passage
of time. But still,
• GM will face tough competition from its competitor "Prius" which
has significantly occupied a very good market share.
• Recovery will be too slow for GM considering the financial crisis and
very weak profits.
• Failure: This may lead to fatal conditions such as:
•
•
•
Heavy loss for the GM
Stringent market conditions which may lead to collapse of GM. Can
lead to bankruptcy
Costs of not pursuing this project

14. • Slow Death: A third situation in which GM may take too long to respond
in case of
•
•
•
•
•
fuel cells and within this period, following may happen:
Exhaustion of funds
Decline of market price of share due to poor performance
Withdrawl of potential employees
Increasing loss of market share becuase of competitors
A SLOW & PAINFUL DEATH of GM.
Thi
s
too
particular situation often occurs when company does not innovate or takes
long to innovate which may eventually lead to bankruptcy. As it is said by
Steve Jobs,
"Innovation is the only way to win"
Costs of not pursuing this project

15. Thank you!