Case Study
AEREN FOUNDATION’S Maharashtra Govt. Reg. No.: F-11724
SUBJECT:-E-COMMERCE MANAGEMENT
COURSE : Total Marks : 80
Attempt all the cases
Case 01 GM’s E-Business Strategy
INTRODUCTION
US-based General Motors (GM), the largest automobile company in the world, was in trouble in the late 1990s. The company’s market share in the US automobile market had been steadily declining from a high of 50% in the late
1960s to a low of 28% by 1999.Analysts pointed out that GM had been in the grip of a vicious circle.
The company faced low demand for its automobiles as they were not developed in line with the changing customer needs and preferences. However, GM continued producing automobiles which did not met customer requirements, leading to excess inventories at its factories and dealers.
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. GM wanted to keep factories open as much as possible.
There was some value in that strategy, but I think they overdid it.” Analysts added that the reason for the decline in GM’s US market share was that it had
AN ISO 9001 : 2008 CERTIFIED INTERNATIONAL B-SCHOOL 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
Research, GM launched a business
SUBJECT:-E-COMMERCE MANAGEMENT
COURSE : Total Marks : 80
Attempt all the cases
Case 01 GM’s E-Business Strategy
INTRODUCTION
US-based General Motors (GM), the largest automobile company in the world, was in trouble in the late 1990s. The company’s market share in the US automobile market had been steadily declining from a high of 50% in the late
1960s to a low of 28% by 1999.Analysts pointed out that GM had been in the grip of a vicious circle.
The company faced low demand for its automobiles as they were not developed in line with the changing customer needs and preferences. However, GM continued producing automobiles which did not met customer requirements, leading to excess inventories at its factories and dealers.
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. GM wanted to keep factories open as much as possible.
There was some value in that strategy, but I think they overdid it.” Analysts added that the reason for the decline in GM’s US market share was that it had
AN ISO 9001 : 2008 CERTIFIED INTERNATIONAL B-SCHOOL 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
Research, GM launched a business