GM's E-Business Strategy|IT and Systems|Case Study|Case Studies

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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Introduction Contd...

The building up of inventory at the dealers made the company even more desperate, and most often it resorted to higher dealer incentives which reduced the company's profits significantly.

This again forced GM to produce more cars to compensate for the eroded profit margins.

Commenting on the dilemma GM faced in the late 1990s, John Paul MacDuffie, Professor, Wharton Business School, explained, "That belief in volume, and doing whatever it takes to keep volume, has driven a lot of their decisions. GM's labor costs are fixed, meaning they remain the same regardless of what the volume of sales is.

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GM wanted to keep factories open as much as possible. There was some value in that strategy, but I think they overdid it."4

Analysts added that the reason for the decline in GM's US market share was that it had failed to introduce new models that customers wanted in quick time.

To address this challenge, GM made e-business a strategic priority. It wanted to reinvent itself by embracing e-business across its value chain.

In August 1999, after a year of research in collaboration with Forrester Research5, GM launched a business division called e-GM that was responsible for all of the company's websites and its OnStar communication system6...

 Excerpts >>

4] John Paul MacDuffie, "Is General Motors Running Out of Gas?," Knowledge@Wharton, June 2005.

5] Headquartered in Cambridge, US, Forrester Research is an independent technology research company that provides advice about technology's impact on business.

6] Originally introduced in 1996, OnStar provided a human interface to bring the customers closer to the company. GM could interact with the customers and keep in touch with them on a daily basis unlike the earlier situation where only the dealer interacted with customers.

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