strategic managment

1. Assignment On
“Case Studies: Planning for Chevy
Volt.”

2. Jagannath University
Strategic Management (6304)
Presentation on
“Case Studies: Planning for Chevy Volt.”
Submitted to: Farzana Nasreen
Lecturer
Jagannath University
Submitted By: Group 13
Name ID
Meherun Nessa M 19180203744
Md. Billal Hossain M 19180203747
Md. Shohag M 19180203757
Date of submission: 31th October, 2020

3. Strategic Management
Strategy is a plan of action designed to achieve a long-term or overall aim.
Strategic management is the management of an organization’s resources to achieve its goals
and objectives. Strategic management involves setting objectives, analyzing the competitive
environment, analyzing the internal organization, evaluating strategies, and ensuring that
management rolls out the strategies across the organization.
Strategic leadership refers to a manager’s potential to express a strategic vision for the
organization, or a part of the organization, and to motivate and persuade others to acquire that
vision. It is the potential to influence organizational members and to execute organizational
change. Strategic leaders create organizational structure, allocate resources and express strategic
vision. Strategic leaders work in an ambiguous environment on very difficult issues that
influence and are influenced by occasions and organizations external to their own.
Strategy formulation is an analytical process of selection of the best suitable course of action to
meet the organizational objectives and vision. It is one of the steps of the strategic management
process. The strategic plan allows an organization to examine its resources, provides a financial
plan and establishes the most appropriate action plan for increasing profits.
Strategy Implementation refers to the execution of the plans and strategies, so as to accomplish
the long-term goals of the organization. It converts the opted strategy into the moves and actions
of the organization to achieve the objectives.
Difference between Company and Industry
Company is a business entity that is a body made up of individuals that are together to further the
aims and objectives of the company. A company can take many forms. It is a legal entity that can
take many forms such as a corporation, partnership, association, private limited or public limited
company depending upon its registration and also its structure. A company is treated as an
individual by the law which goes on in perpetuity irrespective of the death or insolvency of the
owner. A company comes into existence after registration under the Companies Act, and once
incorporated, has to pay taxes just an individual would on his income.
Industry refers to a particular sector of economy that is either involved in manufacture of goods
or providing services. An industry is the sum total of all the companies that are involved in one
particular activity or a group of activities. For example, Revlon may be a cosmetic company
making beauty products, but it is only a part of a huge cosmetic industry which has hundreds of
companies manufacturing similar beauty products. Thus any industry is always bigger than a
company or a group of companies.

4. Company vs. Industry
• A company is a legal entity that gets incorporated under the Companies Act and is involved in
manufacture and sale of products or services.
• A company is always a part of an industry which comprises many other companies that are
involved in manufacture of similar products and services.
• Company is part whereas industry is whole.
• Industry is always bigger than a company.
The name General Motors, what is the image that comes to your mind? Of course, the
automobiles made by General Motors as they have become so popular all over the country. Now
automobiles are made by many other organizations also as General Motors is a part of an
industry that is involved in the manufacture of automobiles. It is clear then that it is a part and
whole relationship. General Motors is a company that is a part of the automobile industry.
However, some people still confuse between the Terms Company and industry. For such people,
here is a brief explanation of the two terms.
Level of Strategic Management

5. Corporate Level
Corporate level strategy defines the business areas in which your firm will operate. It deals with
aligning the resource deployments across a diverse set of business areas, related or unrelated.
Strategy formulation at this level involves integrating and managing the diverse businesses and
realizing synergy at the corporate level. The top management team is responsible for formulating
the corporate strategy. The corporate strategy reflects the path toward attaining the vision of your
organization. For example, your firm may have four distinct lines of business operations,
namely, automobiles, steel, tea, and telecom. The corporate level strategy will outline whether
the organization should compete in or withdraw from each of these lines of businesses, and in
which business unit, investments should be increased, in line with the vision of your firm.
Business Level
Business level strategies are formulated for specific strategic business units and relate to a
distinct product-market area. It involves defining the competitive position of a strategic business
unit. The business level strategy formulation is based upon the generic strategies of overall cost
leadership, differentiation, and focus. For example, your firm may choose overall cost leadership
as a strategy to be pursued in its steel business, differentiation in its tea business, and focus in its
automobile business. The business level strategies are decided upon by the heads of strategic
business units and their teams in light of the specific nature of the industry in which they operate.
Functional Level
Functional level strategies relate to the different functional areas which a strategic business unit
has, such as marketing, production and operations, finance, and human resources. These
strategies are formulated by the functional heads along with their teams and are aligned with the
business level strategies. The strategies at the functional level involve setting up short-term
functional objectives, the attainment of which will lead to the realization of the business level
strategy.
For example, the marketing strategy for a tea business which is following the differentiation
strategy may translate into launching and selling a wide variety of tea variants through company-
owned retail outlets. This may result in the distribution objective of opening 25 retail outlets in a
city; and producing 15 varieties of tea may be the objective for the production department. The
realization of the functional strategies in the form of quantifiable and measurable objectives will
result in the achievement of business level strategies as well.

6. Strategic marketing process
A strategic marketing process is just as it sounds – it’s a plan that lays out all of the elements
connected with and impacted by your business’s marketing initiatives. We’ll go into more detail
in just a bit, but a marketing process should cover things like:
 Your company’s mission, goals and objectives (and these things are not one and the same
– learn more about defining your goals and objectives and the differences between them).
 The strengths, weaknesses, opportunities and threats that affect your brand’s marketing.
 Your target audience and the specific needs of this group.
 The required resources and distributed channels you’ll use to carry out your plans and
support marketing initiatives.
 Actionable, measurable metrics that provide a clear picture of where efforts stand
according to the process, and how successful outreach and interactions with customers
have become.
Here are a few important steps that are critical to any effective marketing process:
 Step one: Plan your mission, goals and objectives
Before doing anything else, your marketing leaders and stakeholders must sit down and define
your business’s mission, and the goals and objectives that will propel your strategic marketing.
If your company already has an established mission statement, congrats! You’re ahead of the
game.
Your mission statement should touch and be incorporated into every move you make as a
company, and that definitely includes your marketing. If you don’t yet have a mission statement,
now’s the time to create one. It should explain why your organization exists, why it does
business and how it supports and benefits its customers. Some mission statements are
aspirational and motivating, some are more formal in their approach. Be sure that your mission
statement matches the intent and culture of your company.
Next, you should map out the goals and objectives that will become the spokes in the wheel that
is your marketing process. As you’re planning these elements, remember, be SMART about it:
That is to say, your goals should be:
 Specific.
 Measureable.
 Aspirational.
 Realistic.
 Time-bound.

7.  Step two: Analyze industry positioning
With your mission statement, goals and objectives mapped out, it’s time to turn an eye outward
to see where your company lies in terms of the overall industry, as well as how it’s positioned
with current customers. This step includes two essential strategies: SWOT analysis, and a look
into market positioning.
SWOT stands for:
 Strengths, or the things your company does well in comparison to its competitors.
 Weaknesses, or the factors that may hold your organization back from market success.
 Opportunities, including the external elements like trends that could create the potential
for new business or revenue streams.
 Threats, or the external factors (economic, political, technological, etc.) that might create
obstacles for your company.
Where SWOT focuses on internal factors and external market elements, positioning seeks to
better define the ways in which the brand is perceived in comparison to its competitors through
the lens of the customer. As Brafton’s own Dominick Sorrentino explained, brand positioning
focuses on creating a compelling brand identity that establishes a memorable impression for
customers.
A high-end car dealership that wants to position itself as a seller of luxury vehicles, for example,
will look to use certain words and imagery in its marketing in order to craft a specific brand feel
among its target audience. It’s important to consider how your current and potential customers
perceive your company, and if there are any changes you should make in order to create your
ideal brand image.
 Step three: Establish marketing tactics
Put in the effort ahead of time to plan out your mission, goals and objectives, as well as your
place in the market and the ways in which you’re perceived by customers. This will put you on
the right track to establish the actual tactics and campaigns you’ll use to propel your brand
marketing.
During this stage, your marketing team should be sure to keep in mind your marketing mix,
based on the 4 Ps of marketing from E. J. McCarthy. While these were first created back in 1960,
they’re still very relevant today. They include:
 Product: The items or services your brand offers in response to customer wants and
needs.
 Price: The cost of the product and the value provided to the customer.
 Promotion: The marketing efforts you use to support the product, including messaging
specific to your target audience.

8.  Place: Here’s where your distributed channels come into play. This P refers to the
physical and digital distributed channels that provide access to your promotional
materials, marketing messaging and enable sales.
Considering your distributed channels is an imperative step, particularly within the current
marketing landscape. Your situational analysis and positioning inform your product and
messaging, and your marketing team should also ensure that they select the right channel for
distribution according to:
 Your brand image,
 Target audience needs, and
 The specific marketing tactic being carried out as part of the current campaign.
 Step four: Put your process to work
With all the necessary planning in place, it’s time to put your tactics and process in action. This
step will see you and your marketing team:
1. Obtaining resources, including the required financial backing and subject matter
experts, when necessary.
2. Developing schedules for each tactic and campaign. Be as specific as possible with these
tasks to ensure they can be accomplished effectively.
3. Executing the process.
4. You did your due diligence, now it’s time to roll up your sleeves and get to work!
 Step five: Evaluate, modify, repeat
This phase is where many organizations make a critical misstep. It’s important to keep in mind
that your strategic marketing process will be an ongoing effort – you should continually look for
places to improve and enhance the plan. Once you’ve executed your marketing strategies and
tactics, it’s time to take a look back at your defined goals and objectives, and the metrics you
created along with those according to your SMART planning. These will be crucial in helping
you gauge the overall success of your efforts according to your mission statement and goals.
The US Auto Industry: Porters
Five Forces to Consider
 Introduction to the Auto Industry
The automobile industry resulted from the development of new sources of energy, such as steam
and gasoline, which could be used to propel engines. Since then, the industry has undergone
constant innovations and cut-throat competition as new models of vehicles are produced each

9. day. Today, engineers are working on perfecting self-driven cars and other simpler models that
do not rely on petrol and diesel fuels. In the American market, there are 13 vehicle
manufacturers, but only three companies dominate the production of vehicles commanding
approximately 46 percent of the light weight vehicles sales, and they include; General Motors,
Chrysler, and Ford Motor Company. America also forms a substantial market for Japanese cars,
such as Honda and Toyota.
Strategic management in the automobile industry helps organizations to create long-term
corporate outcome goals, such as adding new market segments, cost controls, and diversification
(Goyal, Netessine & Randall, 2012). Further, these businesses review their internal and external
progress to ascertain whether they achieve their strategic goals. Therefore, the strategic analysis
provides a review of an organization’s competitiveness in the industry. Consumers, however,
have shifted their preferences to fuel-efficient vehicles although the industry continues to
contribute significantly to the economy’s gross domestic product. The outlook for the American
automobile industry is favorable, which shows that more people would prefer cars from the
American manufacturer.
 Industry Definition
The American automobile industry relies largely on consumer tastes and trends and can be
defined as the collective group of manufacturers who make, market, and sell vehicles and
automobile parts within the United States. In the last decade from 2008, the industry underwent a
pricing pressure due to changes in consumer buying preferences and increases in material costs.
The automotive industry has seen more than 18 million vehicles in annual sales, which is an
improvement from the previous years since the economy recession of 2008. However, the
industry is experiencing external competition from the public transport sector as consumers shift
to the use of personal private vehicles.
The trends that shape the industry include a preference for sport utility vehicles as well as pick-
up trucks, which means companies have to cut down on the production of passenger cars. Since
the unemployment rate is below 5 percent, more people will demand reliable and technologically
better vehicles.
 Industry Profile
The American auto industry entails the size and growth as well as consolidations to increase
competitiveness. The companies have also invested internationally, which has seen the three big
corporations grow as they acquire other motor companies outside the United States. However,
the industry has to deal with challenges, such as the pressure to produce viable electric and
hybrid vehicles that are pocket-friendly, high operation costs and oil prices, and increased
globalization. Such come with shifts in employment procedures as competition for talent
intensifies across the job market. The sales pattern for the auto sales involves a high between
April and June while the low season occurs during the months of November through January
(Middle brook, 2016).
The industry is currently dominated by General Motors, Ford, and Chrysler although there is
competition from international companies, for example, Toyota, Hyundai, and Nissan who
command 15.6 percent, 11.4 percent, and 8.1 percent respectively . The automakers are also
moving towards better models as consumers prefer smaller, fuel-efficient, and hybrid vehicles

10. which emit low levels of Carbon Dioxide. The global auto industry, on the other hand, is highly
labor and capital intensive with historical legacy costs, such as advertising, materials, and labor
hindering the penetration of United States car makers to the emerging markets.
 Industry Market Structure
The American auto industry employs more than a million employees in manufacturing,
assembly, and sales. The structure of the market has undergone tremendous changes due to the
changes in consumer preferences and economic cycles, which has led to retrenchments and
offshoring of jobs to cut costs. The market has also been characterized with manufacturing of
parts by foreign companies in other countries and then imported into the United States.
The American auto industry is an oligopolistic market since it is dominated by a small number of
manufacturers, whose activities directly influence each other’s profits. Only eight firms make up
86 percent of the motor vehicle market in the United States. Since the market is an oligopoly, the
fate of all the firms is mutually interdependent as seen during the economic crisis of 2008
whereby the big firms had to be bailed out. The market also has a few elements of monopolistic
competition. Auto companies compete along cost and brand lines. The competition in the market
is usually cut-throat due to the class uniformity in production, which makes marketing and
advertising to different market segments extremely critical. Further, the industry is partially
protected by high barriers to entry due to the high costs of advertising and marketing, vehicle
development, and production.
 Future Outlook
Looking at the market trends and innovations the companies are making, one can conclude that
the US automotive industry’s future outlook is good. Since 2010, the sales figures for the
automakers have increased significantly with the big companies cleaning their balance sheets and
restructuring costs, and thus the sales figures are expected to hit the 20 million mark by 2018.
The future of companies, such as Ford seems bright as it has shifted focus to hybrid, fuel
efficient, and gas alternative models. There is an immense potential for the companies as they
embrace new technologies, such as digitization and wireless networks to improve navigation,
entertainment, and safety. The companies are also looking to exploit opportunities in the
emerging economies, such as China, India, and Brazil to outdo competition from the Japanese
automakers.
The industry players are set to benefit from offshoring as they will get to cut costs as a result of
the cheap labor. Further, the target markets are also experiencing a sharp growth in the middle
class, which would further increase the demand for light vehicles. The companies will also
benefit from reductions in logistical costs of shipping trucks and cars as production would take
place in their franchisees’ premises. Companies, such as Honda, Ford, and General Motors are
expected to record better sales due to their robust product plans. However, the industry will face
competition from ride-sharing platforms, such as Uber and Lyft.

11. Porter's FiveForces Strategy Analysis
Companies use Porter’s Five-Force strategy analysis to determine their competitiveness in their
industries and thus establish any threat of diminishing profitability. The forces include; buyer
bargaining power, competitor rivalry, threats of new entry by competitors, substitutes or
complementary products’ pricing pressure, as well as supplier bargaining power. The analysis of
the Porter Five Force would provide a strategic view of the competitive environmental facing the
American automobile industry. Therefore, by conducting the analysis, companies would be
better placed to determine how their strengths and competitive forces impact on the realization of
the objectives and goals in the industry.
The Porter’s Five Forces analysis evaluates a firm’s competitive forces in the industry whereby
the ability of the factors to increase profitability determines the attractiveness of the industry.
These forces give an analysis of the current state of the industry and estimate the viability of
entering or continuing to operate in the global auto industry. All the activities involved in the
automobile industry are interconnected, for example, production and distribution, research and
development, labor, technologies, raw materials, and transportation, which ultimately depend on
the power of suppliers, buyers, and competitors.
1. Bargaining Powerof Automotive Buyers
The bargaining power of buyers is the ability of the purchaser to influence the activities of the
manufacturer as well as the price of a commodity or service. The bargaining power of buyers is,
however, different in different industries. Standardization of vehicles has increased the number
of substitute product lines in the market thereby increasing the buyers’ power. Additionally, the
buyer can switch to a competitor’s product since the transactional costs are relatively zero.
It is critical for the American automaker to establish a strong relationship with the buyer since
the ability to grow sales is determined by the bargaining power of the buyers. The consumers are,
however, determined to keep their vehicles for longer thereby forcing automakers to get more
innovative with their production and marketing. The ability of the buyer to influence the market
for vehicles has led to shifts in focus to fuel efficient and pocket-friendly models.
The buyers have moderate power in this industry due to the relatively standardized nature of the
automotive commodity. Further, the frequent switching costs related to purchasing a car model
from the industry’s competing brands shows that consumers possess enormous power in the
industry. However, the industry trends indicate that the American carmaker industry will remain
marginally powerful due to the large consumer to producer ratio.
However, the dissatisfaction of the consumers with what the American market is offering will
mean that they will try foreign vehicles. The industry is also characterized by price-sensitive
consumers with limited purchasing power since they do not buy huge volumes of cars. However,
the bargaining power of the buyer is somehow limited since the public mode of transport is
limited to the urban areas thereby making private vehicles a necessity for most Americans.
Further, the purchasing options of the consumers are restricted by the oligopolistic nature of the
market, whereby eight firms control over 85 percent of the market.
This seems to have weighed heavily towards buyers - with industry players needing to be more
vigilant regarding consumer preferences. Because of the current global economic conditions,
there is a smaller number of buyers at both US and global levels. This is most evident in Europe
currently with Ford having to close plants, cutting 6,200 employees, or 13% of the European

12. workforce to stem losses exceeding US$1.5 billion (Barr, October 25, 2012). Consumers are also
keeping their automobiles for longer, and being more prudent and judicious when buying new.
Strategically, the opportunity is for the industry to focus on fuel efficiency and price sensitive
strategies more fully to shift from profit and production models previously centered on trucks and
SUV’s.
2. Bargaining Powerof Automotive Suppliers
The bargaining power of the supplier is the suppliers’ power to influence prices in the industry.
The suppliers in this industry involve the firms that make and supply vehicle component parts,
such as windows, electronics, and tires. The suppliers are, however, small compared to the
automakers, which makes them have little influence over the prices in the market. Since the
bargaining power of the suppliers is low, dealerships are under pressure to maintain good
relationships with automakers.
The suppliers in the American automobile industry hold little power since they rely on one or
two automakers to purchase most of their products, which makes them vulnerable to demand and
the manufacturers’ requirements. As such, the automobile supply business can be seen as
fragmented due to the number of firms involved. Switching suppliers would devastate the
business of the previous supplier. The automakers hold high bargaining abilities which mean that
they can comfortably dictate the terms towards the suppliers. Automotive parts are standardized
commodities which can only be used in vehicles, and it is only automakers that can determine
their demand.
The supply of spare parts is influenced by the lifespan of the vehicle since the longer the
operational time for a car, the more it will need replacing spare parts. However, manufacturers
are making longer lasting parts thereby spoiling the business for parts makers. Since the
suppliers provide only a small percentage of the market, they command very little ability to
negotiate prices. However, unions, as labor suppliers to the auto industry, held an enormous
bargaining power, but the economic recession of 2008 reduced their capacity to negotiate wage
rates. By reducing the bargaining power of the labor unions, automakers are able to make more
profits.
3. Rivalry Among Established Industry
Rivalry in the US automotive industry is intense despite the number of big players in the market.
Further, foreign firms are venturing into the US market and gaining a considerable amount of
market share. The diversity of the rivalry from foreign firms has led to a reduction in the market
share as companies fiercely fight to gain and thus avert losses in market share substantially. The
rivalry has thus increased the amount spent on advertising and promotion. The high fixed costs
associated with manufacturing vehicles as well as the low switching costs of consumers have
heightened the degree of rivalry in the industry.
The auto industry is an oligopoly, which helps minimize the price-based competitive effects
since such competition does not lead to increases in the market share size. As such, the
competition involves providing rebates, long-term warranties, and preferred financing to get
customers interested. Competition is high in the industry because now and then automakers
update their models. However, the changes in models can result in delays, which increase the
costs and slow the growth of revenue, which is risky.

13. The competition is high because most foreign companies operate within the US market, which
has increased the competitive rivalry in the automobile industry. The companies that are taking
the market share of US companies include Toyota, Nissan, and Honda, who sell more than 3
million light-duty vehicles annually in the United States. Data shows that foreign automakers
might command more than 25 percent of the US market share in the next decade.
Looking from a 10-year perspective, the trend has shifted from the big three enjoying a 60%
domestic market share to the reverse, with international competitors now holding the 60% share.
If the trend continues for another 10 years, the market share would shift to 73% international,
and 25% domestic. The future strategy seems clear – take a new look at what the Japanese and
other ascendant market players are doing and copy and improve upon them. The lesson also
evident from the trend and the chart is that the domestic manufacturers are clearly not vigilant
enough regarding this threat. The maximizing of plant efficiency with regards to costs is
important in order to maximize capacity utilization. Moves to 24 hour shifts and more agile
manufacturing processes such as Toyota’s lean production plants methods are needed to be able
to switch model production to meet changing market demands.
4. Risk of Entry by PotentialCompetitors
Establishing a motor vehicle company requires very high capital, which increases the barriers to
entry. The industry is characterized by specialized manufacturing facilities which are difficult to
revive. However, companies are venturing into the industry through strategic partnerships,
buyouts, and mergers. The foreign companies have globalized, which means they are entering
the US market with a diversified degree of success, for example, Toyota and Honda, who have
specialized in manufacturing and selling light-duty vehicles in the American market. These
companies have come up with improved technologies as evidenced by Toyota Prius, which
undermines the market share of the big three companies.
The threat of entry into the automobile industry is relatively low due to the entry barriers. A large
amount of capital, technological know-how, management, and marketing skill are needed, which
threatens the domestic market as bigger companies venture into the US market. From the data on
annual sales of the US companies and their competitors, the US companies need to identify the
global opportunities as well as study their competitors’ market entry and incursion strategies.
Companies, such as KIA have entered the US market using the low-cost strategy and producing
high-quality cars which are reliable to endure great mileages.
The industry is also characterized by low returns due to the costs of competition, which demands
that local firms should adapt to the market trends to remain competitive. Companies, such as
Tata and KIA may take a great chunk of the American motor industry due to the strategies they
use to entice consumers, which means that US automakers should leverage customer switching
costs through car owners’ club brand loyalty and social networks.
World Motor Vehicle Production, 2010 -
1. TOYOTA 8,557,351
2. G.M. 8,476,192
3. VOLKSWAGEN 7,341,065
4. HYUNDAI 5,764,918
5. FORD 4,988,031
6. NISSAN 3,982,162

14. 7. HONDA 3,643,057
8. PSA 3,605,524
9. SUZUKI 2,892,945
10. RENAULT 2,716,286
11. FIAT 2,410,021
12. DAIMLER AG 1,940,465
13. CHRYSLER 1,578,488
14. B.M.W. 1,481,253
15. MAZDA 1,307,540
16. MITSUBISHI 1,174,383
17. CHANA AUTOMOBILE, 1,102,683
18. TATA 1,011,343
Strategically, domestic competitors need to identify further global opportunities and look at
competitors and their strategies for market incursion and entrance. An example of the threat is
Korean automaker Kia, which has entered the American market through low-cost, high quality
cars with enough reliability to offer a 100,000 mile 10-year warranty. New entrants such as Kia
can now more easily leverage existing capabilities and cash flow to further shake up market
share rankings.
5. Threat of Substitutes
Substitutes are the comparable products that provide the same purpose as the product in question.
The threats of substitutes in the American automobile industry have been fairly high since there
are other readily available modes of transportation. However, these modes do not provide the
kind of convenience and utility value presented by the road transport. Further, the switching
costs linked to transportation modes, such as rail and air are high in terms of the personal time
consumed. The substitutes in the urban setting include bicycles, walking, and mass transit which
is cheaper compared to the fuel costs characteristic of personal vehicles. Motor vehicle
ownership is subject to factors, such as race, geography, religion, and class.
Other substitutes include ride-sharing platforms, such as Uber and Lyft. Further, substitutes do
not have to be new vehicles as old, and used vehicles provide a source of competition in the
industry. The threat of substitutes increases the buyer bargaining power as a consumer who
wants to purchase a certain vehicle model may use information on the price and specifications of
a foreign competitor to lower the purchase price. Additionally, the higher the price of operating a
vehicle means that consumers are likely to take alternative transportation options. For example,
the sales for sports utility might go down if the price of fuel goes up as they guzzle more gas
compared to smaller vehicles. Porter argues that the availability of substitutes is also determined
by factors, such as personal preferences, money, and time as well as convenience in the travel
industry.
More subtle structural threats include the larger shift towards a knowledge economy from an
industrial base with its urban, commuter culture. A shift towards a knowledge economy and rise
of online modalities reduce the need for a two or more vehicle household. The Center for
Automotive research estimates that currently the number of cars at 2.1/household has reached its
peak, and will either level out or drop to 2.07/household or less by 2025 (CAR, 3). The Center
notes that while the motor vehicle will remain the dominant transportation mode for most US

15. households for the new millennia’s first 25 years, market opportunities will shift from domestic
needs to emerging economies going through industrialization and creation of a middle class (i.e.
China, India, and Brazil). Domestic US opportunities lie in the supply of alternative/hybrid
transport options and segmenting into these markets with low cost vehicles.
The American automobile industry is characterized by only three big firms commanding more
that 60 percent of the market share. An analysis of the Porter Five-Force strategy provides an
attractive framework that enables firms in the industry to survive competition in the marketplace.
However, American firms should address the threat of foreign firms and substitute products,
such as ride-sharing platforms, for example, Uber and Lyft, trains, and bicycle riding to cement
their market share in the region. This analysis thus provides insight into understanding the
strategic approaches needed to overcome the challenges. The industry players must address the
issue of supplier and buyer bargaining power while at the same time looking at the issue of
competitive rivalry.
Once the industry players address the current issues according to Porter analysis, the industry
will properly manage its operations and thus end up securing additional market share and
clientele base. The companies must devise strategies to address and confront competition as
consumers strive to keep the market viable and dynamic. From the analysis, the industry looks
unpromising although the short run appears as favorable while the long-run profitability appears
shaky. The profitability seems to shrink with time as the industry is characterized by high threats
of entry, threats of the buyer bargaining power, and moderate to a high competitive rivalry.
“Case Studies: Planning for Chevy Volt.”
Q 1. What does the Chevy Volt case tell you about the nature of strategic
decision making at a large complex organization like General Motors?
Ans.: Strategic decision making is often met with cognitive biases that are formed around prior
victories or defeats. From the Chevy Volt case, we can see that GM is a large complex
organization and has a lot of processes to make any decision in changing their strategic plan.
Moreover, they stick to the past failure that they had experienced. Therefore, they moved too
slow and missed the opportunity to change or adapt themselves to the external trend or a better
opportunity. The nature of strategy made was based on the following factors -
 Increase in oil price
 Limit carbonemission go green
 The cost ofmanufacturing lithium ion batteries was falling.

16. Q 2. What trends in the external environment favored the pursuit of
the Chevy Volt project?
Ans.: Trends included increases in oil prices -
 Gas price was increasing sharply because of growing demand in developed countries
including China and India.
 Global Warming become a significant concern so people trend to use the car
which produce less Carbon Dioxide.
 The cost of Manufacturing lithium ion batteries was falling and new technology make
them more powerful, competitive use of battery technology for fuel efficiency.
 Demand for fuel efficient car like Prius (Toyota) that utilize new battery technology
shows the customer demand for fuel efficient cars.
Q 3. What impediments to pursuing this project do you think existedwithin GM?
Ans.: Cost is one of the most important hurdles in pursuing with Chevy Volt -
 GM already spent a huge investment in developing fuel cells. The presence of GM senior
management cognitive biases stemming from prior investments of fuel cells.
 Many decision makers in GM didn’t want to suddenly switch gears and focus on lithium
ion batteries instead.
 Technology in a large lithium ion battery production was difficult.
 Failure in the past was the experience that GM still remembered and was afraid to invest
in new project.
 The volatility in oil prices should remain a concern as GM continues pursuing the project.
Q 4. The plan for the Chevy Volt seems to be based partly on the assumption that oil prices
would remain high, and yet in late 2008, oil prices collapsed in the wake of a sharp global
economic slowdown
a. What does this tell you about the nature of strategic plans?
b. What do falling oil prices mean for the potential success of the Chevy Volt?
c. Do you think oil prices will remain low?
Ans.: a) Strategic plans are often met with uncertainty and should be addressed through scenario
planning. The strategy was based on analyzing the existing marketing situation and trends.
The nature of strategic plan is effective to the current situation but when the external
environment or trend change, strategic plan should be changed and adapt to the external factor as
well
b) Falling oil prices would potentially mean the elimination of consumer need for increased fuel
efficiency. Also, electricity would not have the potential to cost more than a gallon of gas and the
government may question the need for a tax credit. Experts agree that gas prices will stay
volatile. Supply is limited, and when the world economy recovers, demand will rise. That
means a possible return to $4-a-gallon gasoline.
c) Oil prices will ever be at the ancient $1 per gallon because the market has already adapted.

17. Q 5. What will it take for the Chevy Volt to be a successful car? In light of your analysis,
how risky do you think this venture is for GM? What are the costs of failure? What are the
costs of not pursuing the project?
Ans.: I think it wills success for the following factors -
•Its new models have cutting-edge designs that sell well, and its quality rankings and fuel
economy rise.
•Ifevery new model has dramatically better gas mileage in government testing than its predecessor
•Properadvertising is done like GM products are appearing in hit movies, music videos, and TV shows
and other media. Falling short if
•GMwill fall short if the mileage ofits new cars is the same oronly a mile ortwo per gallon better than the
models they replaced
• New product designs flop in the showroom
Launching Chevy Volt is very risky as GM need to spend good amount of money and the return
will show only after couple of years Cost of failure is high due to the above mentioned reason
Cost of not pursuing the project is low as it look from the case presented that GM is looking
forward for this new development First of all environmental conditions that prompted the entry
of the Chevy Volt would need to remain present. With GM’s history of slow reaction and presence in the
market, this could once again be a very risky approach. However, GM must prove that its resources,
strengths, and capabilities, can product a consumer desired product and any project adaptable is
more beneficial than their status quo approach. Their major cost of failure will be, once again,
huge investment loss, further declines in consumer perception, greater control by the
competition, and questionable future stability in the automobile industry.