ASSIGNMENT

Case study: Planning for the Chevy Volt

Case Discussion

Question 1. What does the Chevy Volt case tell you about the nature of strategic decision making at
a large complex organization like GM?

Ans: 1. What does the Chevy Volt case tell you about the nature of strategic decision-making at a
large complex organization like GM?

The Chevy Volt case shows the process of strategic decision making at a large complex organization
like GM. Even though the Volt was the "brainchild of ...GM's vice chairman and ....the head of R & D
and strategic planning" the car was not automatically brought to market. Instead, market conditions
were needed to present a need for the concept, in this case, higher priced gasoline and tighter
regulations to limit carbon emissions. Plus, manufacturing conditions were favorable for the
concept; in this case the cost of manufacturing lithium ion batteries was falling. Finally, competitors
were making changes in their product (Toyota/Prius) showing a need for a change in strategy. In
addition to these factors, it was important to convince other management members and adjust prior
strategy conditions (having already invested billions in developing fuel cells). Furthermore, the
company was concerned about a large public failure. It was actually the above factors tipped by a
start-up company that finally incited GM to act upon building the Volt. Within a large, complex
organization there are many departments to consider as well as a history of activity and a concern
for future, continued success. This can at times cause slower progress.

Question 2. What trends in the external environment favoured the pursuit of the Chevy Volt project?

Ans: The trends in the external environment that favoured the pursuit of the Chevy Volt project are
surging oil prices, Telsa Motors introducing their lithium ion sports car to the market, increasing
concern for global warming which may lead to tighter regulations designed to limit carbon
emissions, the costs of manufacturing lithium ion batteries was falling, and Toyota’s best selling
hybrid called the Prius.

The rise of oil prices leads to increased gas prices and as a result consumers demand for fuel efficient
cars increased which was proven by the number of Prius’ sold by Toyota. 3. What impediments to
pursuing this project do you think existed within GM? The impediments to pursuing this project that
existed within GM are the costs needed to fund this project, the difficulty in obtaining the
technology to produce a large lithium ion battery for the car, and the fear of failing again at
producing another electric car.

Question 3. What impediments to pursuing this project do you think existed within GM?

Ans: The impediments to pursuing this project that existed within GM are the costs needed to fund
this project, the difficulty in obtaining the technology to produce a large lithium ion battery for the
car, and the fear of failing again at producing another electric car. Their first failure was the EV1
electric car introduced in 1990s

Question 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?
 Ans: The nature of the strategic plans are effective and it was based on analyzing the existing
marketing situation and trends.

b. What do falling oil prices mean for the potential success of the Chevy Volt?

Ans: In long-term, since oil is a limited resource and a demand in developing countries such as
China and India is increasing; oil price will resume to the same level when the economy is
recovered. Falling oil prices would hamper Chevy volt's success in promoting their electric cars
since their cars are much more expensive than buying regular cars powered by fuel oil, people
would most likely resort to buying those oil powered cars than electric powered cars, and since
oil prices are much lower then, it is much easier for people to buy fuel oil.

c. Do you think oil prices will remain low?

Ans: No. As it is a limited resource but the demand is increasing due to growing in the economy
of developing nations. Since there has been an issue about global warming caused by the
increased use of fossil fuels being burned, oil prices would probably go higher as a way of
controlling the people's reliance on fossil fuel, thus encouraging the people to use fuel
alternatives instead of relying on fuel oil

Question 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: In order for Chevy Volt to be successful, the company must develop an effective marketing
strategy. Not only it is formulated but tested as well. Marketing aspects should also consider the
internal and external forces that affect the products within the industry and against its rival for
competitive advantage. Thus, Chevy Volt must focus on innovating its product. In terms of their
advertisement, they must feature something where they can reach people.

This venture is very risky for GM especially, that their strategic planning and decision making is
stifled by strong resistance from its managers. This may be due to the complexity of the organization
and resulting problems associated with strategic decision making. In addition, a huge opportunistic
cost is at stake.

Lastly, the cost of not pursuing this project will bring a huge problem to GM because failing in
making this project a success will either lead to pulling out of investments from their stakeholders,
degrading of brand image and identity, and eventually, bankruptcy.