GM's E-Business Strategy

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Case Details:

Case Code : ITSY049
Case Length : 15 Pages
Period : 1998-2005
Pub Date : 2005
Teaching Note :Not Available
Organization : GM
Industry : Automobiles
Countries : US

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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.

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Strategic Management Formulation, Implementation, & Control, 12e

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"The company that links design, procurement and sales - and puts it all together electronically - wins."¹

- Ralph Szygenda, Chief Information Officer, GM.

"There are many skeptics who believe that GM will not be able to successfully reinvent itself."²

- Nitin Nohria, Professor, Harvard Business School.

Introduction

US-based General Motors (GM)³, 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. The company faced low demand for its automobiles as they were not developed in line with the changing customer needs and preferences. However, GM continued producing automobiles which did not met customer requirements, leading to excess inventories at its factories and dealers.

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1] Julia King and Lee Copeland, "GM Retools for E-Commerce That Goes Well Beyond Cars," Computerworld, April 17, 2000.

2] Nitin Nohria, Davis Dyer and Frederick Dalzell, "Reinventing the Industrial Giant," HBS Working Knowledge, June 10, 2002.

3] In 2005, GM had manufacturing operations in 32 countries. For the fiscal year 2004, the company generated revenues of $193.5 billion and a net profit of $2.8 billion. Its products were sold in more than 200 countries. GM's popular cars and trucks included the Chevrolet, Pontiac, Buick, Oldsmobile, Cadillac, GMC, Saturn, Hummer, Saab, Opel, Vauxhall and Holden. The company had two major business segments: automotive & other operations and financing & insurance operations. The automotive operations were further grouped into GM North America (GMNA), GM Europe (GME), GM Latin America/Africa/Mideast (GMLAAM), GM Asia Pacific (GMAP). The financing operations included GM Acceptance Corp. (GMAC) and Onstar functioned as an independent unit.

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