Closing Case: Planning for the Chevy Volt
1. What does the Chevy Volt case tell you about the nature of strategic decision making at a large complex organization like GM? 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 sticked 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.
2. What trends in the external environment favored the pursuit of the Chevy Volt project? 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 Demand for fuel efficient car like Prius (Toyota) that utilize new battery technology
3. What impediments to pursuing this project do you think existed within GM? GM already spent a huge investment in developing 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
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?
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. What do falling oil prices mean for the potential success of the Chevy Volt? If the gas price fall, the Chevy Volt which use lithium battery might not be sold as much as when the gas price is high.
c. Do you think oil prices will remain low? No, I think oil price will keep increasing because people in every country consume more energy which use oil to produce energy while the world has limitation of resources including oil. Therefore, when demand is greater than supply, the price will be impossible or difficult to decrease.
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? The external factors which let the Chevy Volt to be a successful car is increasing gas price, trend of global warming, falling cost of lithium ion battery manufacturing and higher demand for fuel efficient car. However, if GM invests in the Chevy Volt project, the risk surely occurs if the project isn’t successful as expected. For example; they move slower than their competitors or the competitors can offer the better benefit or performance to the customer perception and preference. While the cost which occurs when GM doesn’t pursue this project will be the opportunity cost that they will miss the opportunity to overcome their competitors as well as being the leading of new venture car.