Planning for the Chevy Volt
What does the Chevy Volt case tell you about the nature of strategic decision making at a large complex organization like GM?
Answer:
As stated in the case, Vice Chairman-Lutz and the Head of R&D-Burns first proposed making the Volt in 2003; however other managers at GM beat them down. The reason is that GM had already invested billions in developing fuel cells and many in the company did not want to suddenly switch gears. Besides, it would be difficult to produce a large lithium ion battery and also GM had already had one failure with a fuel cell car, EV1. Nevertheless, Chevy Volt was officially launched in early 2007 with the goal of market introduction in 2010.
The case shows me that the strategic decision making at a large complex organization is encompassed many steps and relevant persons. As a result, it takes a lot of time to finalize the decision that may cause the delayed opportunity response. In addition, the decision is mainly made based on the prior circumstance/defeat which led to bias, in other words, the other senior managers stuck to the failure of EV1 and fuel cells developing, so the proposal of Chevy Volt was turned down firstly. The other senior managers should consider the potential opportunity for green car and think forward to gain competitive advantage.
What trends in the external environment favored the pursuit of the Chevy Volt project?
Answer:
A number of trends in the external environment which favored the pursuit of the Chevy Volt Project are as follows;-
The increase in oil prices due to growing demand in developed nations and limited new supplies.
The increase in global warming concern and it seemed possible that tighter regulations designed to limit carbon emissions would be introduced in the future. Therefore, automobiles which powered by internal combustion engines could hardly escape this trend.
The cost of manufacturing lithium ion batteries was falling and new technology was promising to make them more powerful.
The use of battery technology by competitor, Toyota, with its best-selling hybrid, the Prius, had demonstrated that there was demand for fuel-efficient cars.
What impediments to pursuing this project do you think existed within GM?
Answer:
The impediments was the reluctance of GM senior management to pursuing this project because they stuck to the failure of the fuel cell car-EV1, the previous investments of fuel cell and the difficulty in producing a large lithium ion battery.