Chevy Volt Case

● 1. What does the Chevy Volt case tell you about the nature of strategic decision making

at a large complex organization like GM?

Ans - 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?

Ans- 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? 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.

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?

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.