Chevy Volt Case Study free essay sample

The Chevy Volt case tells me the nature of the strategic decision making at a large complex organization like GM can be difficult and challenging due to having to convince other managers to agree with the ideas for new strategies. In the case it states that the two persons, GM’s vice chairman and the head of RDamp;D had already proposed to make the Volt in 2003 but were turned down by the other managers. However, in 2007 with the changes in the external environment the other managers agreed to back the project for the Chevy Volt. 2. The trends in the external environment that favored the pursuit of the Chevy Volt project are surging oil prices, Telsa Motors introducing their lithium ion sports car to the market, increasing concern for global warming which may lead to tighter regulations designed to limit carbon emissions, the costs of manufacturing lithium ion batteries was falling, and Toyota’s best selling hybrid called the Prius. We will write a custom essay sample on Chevy Volt Case Study or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The rise of oil prices leads to increased gas prices and as a result consumers demand for fuel efficient cars increased which was proven by the number of Prius’ sold by Toyota. . The impediments to pursuing this project that existed within GM are the costs needed to fund this project, the difficulty in obtaining the technology to produce a large lithium ion battery for the car, and the fear of failing again at producing another electric car. Their first failure was the EV1 electric car introduced in 1990s. 4. The 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. This tells me that the nature of strategic plans was based on the current market situation and anticipated trends. Falling oil prices may potentially affect the success of the Chevy Volt because if oil prices are falling then the price of gas is falling as well. The rising price of gas is a primary reason that created demand for fuel-efficient cars. Therefore if the price of gas decreases to what consumers were normally paying before then the demand for fuel-efficient cars will decrease. If demand decreases then the number of Chevy Volts sold will decrease, thus the success of the Chevy Volt will decline. I personally do not think oil prices will remain low due to the growing demand in developed nations and the limited new supplies for oil. When supply is low and demand is high, the price increases for a product. 5. For Chevy Volt to become a successful car it must be comparable to its competitor’s version of fuel-efficient cars in the following ways: the miles per gallon, the quality, the modern design, technology, performance, and affordability. Additionally, the availability to have a place to charge the battery for the car when driving more than 40 miles and GM must have a successful marketing strategy. GM will need to be able to sell the Chevy Volt at a profit which means the cost to produce must be lower than the selling price but the selling price must be comparable to it’s competitors which is about $30,000-$40,000. This is a very risky venture for GM. They already failed once and consumers may not put their trust back in GM and decide to go with a competitor like Toyota. GM would have to use a lot of capital for this venture. The costs of failure for this project would be large due to the capital needed to fund this venture. GM could go bankrupt. GM risks building thousands of cars in mass production and not being able to sell them. The costs of not pursing the project are GM missing out a new profitable market for which there has been an increased demand. If successful, the Chevy Volt could get GM back on track to becoming profitable again. Not pursing the project would be a great loss for GM.