The Chevy Volt case indicates that strategic decision making at a large company like General Motors often does not take time to consider all the angles or facts that may influence the decision. In a large corporation, many different sets of information are held by different departments. Perhaps some information from the engineering department may suggest that the Volt is not a wise investment, as the previous fuel cell model, which is also an alternative energy vehicle, was not a success.
However, all the facts surrounding the failure of the EV1 may not be available to those making the decision. It was also determined that making a large Lithium Ion battery was difficult, though nobody said it was impossible. Perhaps that statement was one department manager or engineer’s opinion, not the general consensus.
There are a number of trends from external environment that encourage the Chevy volt project to occur.
Sharply increasing of oil prices driven by growing demand in developed countries forces people to find cheaper alternative fuel or more fuel efficient cars. With increasing concern on global warming, people are interested in cleaner energy that can substitute the traditional fuel, which is the cause of greenhouses gases. The improvement in technology allowed the lithium ion batteries to be affordable by consumers and being more efficiency.
Finally, electric cars or hybrids are already on the market and some of them were proved to gain attention from consumers such as Totota Prius.
Impediments that existed at GM, which may prevent the Chevy Volt project from being pursued, are lack of vision and lack of knowledge in Lithium Ion technology used to power a vehicle. So far, GM had only developed fuel cells, but not yet on lithium ion batteries. To acquire and retain this new technology, it means another huge investment that cannot be guaranteed success.
This may not worth considering current financial situation of GM. Another impediment for GM might also be fear of failure and its related costs, with the failure of one alternative energy vehicle already failing. The risk involved may be considered too great. In addition, the approach or intent in making the vehicle may not be favorable for American consumers.
This case tells me that a set of static carefully thought-out strategic plans will not allow the organization to survive along this uncertainty, complexity, and ambiguity world. Only a small-occurred event can have a large and unpredictable impact on outcomes.
The organization must be able to respond quickly to changing circumstances and to alter the strategic plan accordingly. In this case, one reason that brought attention of consumers to alternative fuel car was the increasing in oil prices. With falling down of oil prices due to economic slowdown in 2008, the organization might need an emergent strategic plan aside from its normal plans to maintain the sales and revenue.
With falling in prices, consumers can pay the same amount for more amount of fuel for the car. This collapsing of oil prices will relieve the tense in fuel consumption of consumers. They may turn back to gas guzzling car type and slow down the demand for electric cars and small cars. Consequently, the succeed sales of Chevy Volt, an electric car, might be affected by this incident.
I think that oil prices will remain low for a while. When the global economic starts to recovery, demand for oil consumption will rise again. This increasing in oil demand results in higher oil prices. Beside the demand side, oil prices are also being determined by its supply. If capacity of oil production is reduced by any reasons, this will drive the oil prices up in no time.
For Chevy Volt to be a successful car, it must provide the same benefits as those alternative energy cars already on the market, such as the Toyota Prius. It must offer the same standard features, with similar quality. In addition, it must be priced as an affordable alternative.
Plan of Chevy Volt’s market introduction in 2010 seems to be lagged behind its competitors a lot. Moreover the price tag of Chevy Volt, $30,000 – 40,000, is very expensive comparing to already available models from competitors in the market. In my opinion, risky of this venture for GM is quite high and the cost of this project’s failure can be implied as a bankruptcy situation of GM.
However, if GM does not seize the opportunity to produce a similar vehicle, the cost of not pursuing this is to lose a large portion of market share in the automobile industry, as more consumers show interest in this type of vehicle. Other companies such as Toyota and Ford Motor Company have already introduced their versions of alternative energy vehicles. The cost of failure then may mean losing substantial market share in the automobile industry.
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