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What does the Chevy Volt case tell you about the nature of strategic decision making at a large complex organization like General Motors? Strategic decision making is often met with cognitive biases that are formed around prior victories or defeats. From the Chevy Volt case, we can see that GM is a large complex organization and has a lot of processes to make any decision in changing their strategic plan. Moreover, they sticked to the past failure that they had experienced. Therefore, they moved too slow and missed the opportunity to change or adapt themselves to the external trend or a better opportunity. The nature of strategy made was based on the following factors Increase in oil price Limit carbon emission go green The cost of manufacturing lithium ion batteries was falling


What trends in the external environment favoured the pursuit of the Chevy Volt project? Trends included increases in oil prices :-Gas price was increasing sharply because of growing demand in developed countries including China and India -Global Warming become a significant concern so people trend to use the car which produce less Carbon Dioxide. -The cost of Manufacturing lithium ion batteries was falling and new technology make them more powerful, competitive use of battery technology for fuel efficiency. -Demand for fuel efficient car like Prius (Toyota) that utilize new battery technology shows the customer demand for fuel efficient cars


What impediments to pursuing this project do you think existed within GM? Cost is one of the most important hurdles in pursuing with Chevy Volt -GM already spent a huge investment in developing fuel cells. The presence of GM senior management cognitive biases stemming from prior investments of fuel cells -Many decision makers in GM didnt want to suddenly switch gears and focus on lithium ion batteries instead -Technology in a large lithium ion battery production was difficult -Failure in the past was the experience that GM still remembered and was afraid to invest in new project -The volatility in oil prices should remain a concern as GM continues pursuing the project.

4. he plan for the Chevy Volt seems to be based partly on the assumption that oil prices would remain high, and yet in late 2008, oil prices collapsed in the wake of a sharp global economic slowdown a. What does this tell you about the nature of strategic plans? Strategic plans are often met with uncertainty and should be addressed through scenario planning. The strategy was based on analyzing the existing marketing situation and trends. The nature of

strategic plan is effective to the current situation but when the external environment or trend change, strategic plan should be changed and adapt to the external factor as well b. What do falling oil prices mean for the potential success of the Chevy Volt? Falling oil prices would potentially mean the elimination of consumer need for increased fuel efficiency. Also, electricity would not have the potential to cost more than a gallon of gas and the government may question the need for a tax credit. Experts agree that gas prices will stay volatile. Supply is limited, and when the world economy recovers, demand will rise. That means a possible return to $4-a-gallon gasoline c. Do you think oil prices will remain low? Answers will vary to this question but it is unlikely that oil prices will ever be at the ancient $1 per gallon because the market has already adapted. 5. What will it take for the Chevy Volt to be a successful car ? in light of your analysis, how risky do you think this venture is for GM? What are the costs of failure? What are the costs of not pursuing the project? I think it wills success for the following factors Its new models have cutting-edge designs that sell well, and its quality rankings and fuel economy rise. If every new model has dramatically better gas mileage in government testing than its predecessor Proper advertising is done like GM products are appearing in hit movies, music videos, TV shows and other media. Falling short if GM will fall short if the mileage of its new cars is the same or only a mile or two per gallon better than the models they replaced New product designs flop in the showroom Launching Chevy Volt is very risky as GM need to spend good amount of money and the return will show only after couple of years Cost of failure is high due to the above mentioned reason Cost of not pursuing the project is low as it look from the case presented that GM is looking forward for this new development First of all environmental conditions that prompted the entry of the Chevy Volt would need to remain present. With GMs history of slow reaction and presence in the market, this could once again be a very risky approach. However, GM must prove that its resources, strengths, and capabilities, can product a consumer desired product and any project adaptable is more beneficial than their status quo approach. Their major cost of failure will be, once again, huge investment loss, further declines in consumer perception, greater control by the competition, and questionable future stability in the automobile industry.