GM once the most successful and profitable enterprise in the world saw its demise and bankruptcy and remerging being owned part by governments in both U.S.A and Canada.
Where did GM go wrong? Is there something they could have done differently?
Well if I can answer this question so could have the management at GM. They could have revisited the strategy followed by Alfred Sloan when he took over as the president in the 20's. GM was a mess back then too. The product was all over the map.
Chevrolet: $795 to $2,075
Oakland: $1,395 to $2,065 (Later Pontiac)
Oldsmobile: $1,445 to $3,300
Scripps-Booth: $1,545 to $2,295
Sheridan: $1,685
Buick: $1,795 to $3,295
Cadillac: $3,790 to $5, 690
The economy was entering a recession then too. Instead of following the usual management rhetoric to cutting staff, selling off assets and cutting prices or offering money back guarantees, Sloan developed a single focus strategy or what was latter known as the ‘ladder of success’ strategy. Sloan developed a pricing strategy where there were no overlaps. No division competed directly against each other (Yes, Starbucks is making the same mistake with VIA). The customer could climb up the ladder but could be still part of the GM family (“A car for every purse and purpose.”) The revamped line looked like this:
Chevrolet: $450 to 600
Pontiac: $600 to $900
Oldsmobile: $900 to $1200
Buick: $ 1200 to $1700
Cadillac: $1700 to $2500
GM followed a multistep focus strategy, forming a coordinated enterprise. These changed did not bring overnight changes. It takes time for a focus to take hold and in 1931 GM passed Ford in market share and becoming the top car seller in U.S.A.
The ‘Focus’ strategy continued to increase GM’s market share but lack of tight control and a clear strategy led GM into the mess again and thus the downfall. GM could still emerge as a leader, revisiting the same focus strategy followed by Sloan, tight control at the top and not trying to be just in the money making business.
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