of the 1920s Alfred P. Sloan put it, GM makes “a car ‘for every purse and purpose’.” The company’s strategy proved to be successful for most of the 20 th century, as it was the largest car maker in the world from 1931 up until 2008 (“GM Corp.”). And with 13 brands, countless car models, plants in 34 countries and sales to 140 countries, it’s no wonder the giant reigned supreme for so long (“About GM”)(Bensinger). “GM’s strategy of just a year ago” Bill Vlasic of The New York Times explains, “was waging a spirited battle with Toyota for the title of world’s largest automaker (Vlasic).” This strategy, which brought the company great success for a major part of its existence, is no longer working for the Detroit automaker. With increased foreign competition, the disregard for changing consumer trends, and a portfolio spread too thinly, GM’s vision to be the world’s largest car producer is no longer a viable goal. The main problem in GM’s decisions over the years was its overly extensive lineup. With such a large and diverse portfolio, GM couldn’t give each brand the attention it needed. As New York Times writer Micheline Maynard explains: The more brands a carmaker has, the more it must spread money around to develop vehicles and market them. As a result, “every brand suffers,” said A. Andrew Shapiro, a managing partner with the Casesa Shapiro Group. “No particular brand or brands can achieve the share of voice that they need” (Maynard). Page | 11
Historically, GM had used its brands as a competitive advantage over Ford, the company whose opening lineup featured a monochromatic mix of all black vehicles. And in part, this was GM’s solution to a lot of its competitor’s advances. Rather than fix what wasn’t working, GM simply added more brands. To compete with foreign entrants Toyota and Honda in the 90s, GM introduced Saturn, a decision which cost them $5 billion. But according to BusinessWeek , upon building its Saturn brand, GM consequently put Oldsmobile on the back burner (Welch). And as priorities shifted again, rather than nurture its new Saturn brand which may have had a fighting chance, GM started focusing on its other lines instead, waiting five years before adding new cars to Saturn’s mix (Maynard). Its game of favorites lasted for years: invest in Oldsmobile, disregard Saturn; build up Cadillac and Buick, forget about Pontiac and Saab (Welch). The company’s strategy to juggle its brands clearly proved to be an unsuccessful means of portfolio management. Whether the company would have changed its ways if it weren’t for the insistence of the Obama administration is hard to say. Regardless, the company appears to be moving in the right direction. GM’s North American Vice President Mark LaNeve explains that “‘over time, the strategy is to focus [GM’s] resources on the core brands…It's clear that we can't afford the kind of product and marketing investment that eight brands need.’ (Welch)." Understanding the threats that affect General Motors provides a clearer picture of the company’s failed strategy.
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