GM’s E-Business Strategy

Abstract

The case gives a detailed account of e-business strategy of General Motors (GM), the world’s largest automobile manufacturer. It further explores the need and rationale for GM to adopt e-business in its operations. The case examines the e-business initiatives of GM introduced in its supply chain and demand chain and analyses their impact. Finally, it discusses the drawbacks of GM’s e-business strategy and debates on its future prospects. The case attempts to highlight the impact of e-business on the operations of an old economy automobile manufacturer.

"The company that links design, procurement and sales - and puts it all together electronically - wins."

- Ralph Szygenda, Chief Information Officer, GM.

"There are many skeptics who believe that GM will not be able to successfully reinvent itself."

- Nitin Nohria, Professor, Harvard Business School.

US-based General Motors (GM) , the largest automobile company in the world, was in trouble in the late 1990s. The company's market share in the US automobile market had been steadily declining from a high of 50% in the late 1960s to a low of 28% by 1999.Analysts pointed out that GM had been in the grip of a vicious circle.

GM's labor costs are fixed, meaning they remain the same regardless of what the volume of sales is. GM wanted to keep factories open as much as possible. There was some value in that strategy, but I think they overdid it." Analysts added that the reason for the decline in GM's US market share was that it had failed to introduce new models that customers wanted in quick time. To address this challenge, GM made e-business a strategic priority. It wanted to reinvent itself by embracing e-business across its value chain.

In August 1999, after a year of research in collaboration with Forrester Research , GM launched a business division called e-GM that was responsible for all of the company's websites and its OnStar communication system . Through this initiative, the company planned to reduce costs, improve quality and boost demand for its products.

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        Case Code   ITSY049
   Case Length    14 Pages
              Period    1998-2005
 Organization     GM
        Pub Date     2005
Teaching Note    Not Available
     Countries    US
      Industry    Automobile

Issues

• E-Business strategy implementation across an organization’s value chain.

• Rationale and benefits associated with e-commerce initiatives an automobile company.

• Channel conflict arising from e-business initiatives.

GM,E-Business Strategy, Internet Services, In-vehicle Communication Products, Covisint, TradeXchange, E-Supply Chain, SupplyPower Portal, GMAC BuyerPower, OnStar Communication System, E-Business in Automobile Industry.

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.