Case Solution

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 tells us that the nature of strategic decision making for a large complex
organization like GM must think, develop, and create a powerful strategy in order to be new and
known to the market. As years come, the management should think properly and change their
strategy for them to attain their specific goals. Because nowadays, people tend to find something
fresh or new and whether it cost a lot of money but, as long as they can get a lot of benefit from it,
they’ll certainly pay for it.
2. What trends in the external environment favored the pursuit of the Chevy Volt project?
A number of trends were coming together to make this scenario likely. First, oil prices, and by
extension, gas prices were increasing sharply. Second, global warming was becoming an
increasing concern and it seemed possible that tighter regulative designed to limit carbon emissions
would be introduced in the future. Finally, GM's major competitor, Toyota, with its bestselling
hybrid, the Prius, had demonstrated that there was demand for fuel efficient cars that utilized new
battery technology.
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. Their first failure was the EV1
electric car introduced in 1990s.
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 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?
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?
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.
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?
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.