CASE TITLE:

PLANNING FOR CHEVY

VOLT
TOPICS:
LEADERSHIP, STRATEGY & COMPETITIVE
ADVANTAGE
PRESENTED BY:
CASE OVERVIEW
• General Motors is in deep trouble
– Car sales in North America collapsed in 2008
– Losses estimated at $14 billion
– Beg for public funds to the government
• Government wanted a plan charting its way back to profitability
• Chevy Volt
– To be launched in 2010 was a huge gamble
– Volt was a electric car with a reserve gasoline-powered engine
– Power source is a large lithium ion battery
– Car cost will be around $30000 to $40000
– Buyers will be able to take $7,500 tax credit
– A full charge battery(6 hours) can fuel car for 40 miles
• Oil/Gas prices were rising sharply
CASE OVERVIEW
• GM’s Planning suggested
– increasing demand & shortage of supply
– Future possible regulations to limit carbon emissions
– Cost of Lithium Ion Batteries were falling
– Toyota required new battery technology for Prius
• Bob Lutz (VP, GM) & Larry Burns (Head, R&D & SP, GM) proposed Volt in
2003, but failed
– GM had invested billions in fuel cells
– Difficult to produce Lithium Ion Battery
– Electric Car EV1 (1990) had failed
• By 2006, oil prices surged & Tesla Motors introduced Lithium Ion Sports Car
• Toyota was gaining benefits from Prius
• Lutz & Burns persuaded other senior managers & launched Volt in 2007
GALLUP POLL IN 2011
COMPETITIVE ANALYSIS
COMPETITIVE ANALYSIS
CHEVORLET VOLT NISSAN LEAF

•Hybrid •Fully Electrical

•Seats 4 people •Seats 5 people

•Sold 6200 units (in 2011) •Sold 8720 units (in 2011)

•Gas – Run Generator •No Gas – Run Generator

•Charges in 6 Hours •Long Charging Hours

COMPETITIVE ANALYSIS
CHEVORLET VOLT
• Hybrid
• Seats 4 people
• Sold 6200 units (in 2011)
• 35 miles on Electric power
• Charges in 6 Hours
TOYOTA PRIUS
• Less Hybrid capabilities
• Seats 5 people
• Sold more than a million units (in
2000)
• 15 miles on Electric power
• Charges in 3 Hours
Q.1. WHAT DOES THE CHEVY VOLT CASE TELL YOU
ABOUT THE NATURE OF STRATEGIC DECISION MAKING
AT A LARGE COMPLEX ORGANIZATION LIKE GM?
• Senior Managers stuck to the failure of EV1
– Proposal of Chevy Volt was turned down
– Should have considered the opportunity for green car
– SWOT Analysis
– Competitive Analysis

• Strategic decision making at a large complex organization encompasses

many steps and relevant persons
– Takes a lot of time to finalize the decision
– Delays response to any opportunity

• Management should think properly and change their strategy for them to
attain their specific goals
Q.2. WHAT TRENDS IN THE EXTERNAL
ENVIRONMENT FAVORED THE PURSUIT OF THE
CHEVY VOLT PROJECT?
• A number of trends were coming together to make this scenario likely.
• First, oil prices, and by extension, gas prices were increasing sharply.
• Second, global warming was becoming an increasing concern and it
seemed possible that tighter regulative designed to limit carbon emissions
would be introduced in the future.
• Finally, GM's major competitor, Toyota, with its bestselling hybrid, the
Prius, had demonstrated that there was demand for fuel efficient cars that
utilized new battery technology.
Q.3. WHAT IMPEDIMENTS TO PURSUING THIS
PROJECT DO YOU THINK EXISTED WITHIN GM?

• 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)
SWOT ANALYSIS
Q.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.

• What does this tell you about the nature of strategic plans?
• What do falling oil prices mean for the potential success of the Chevy
Volt?
• Do you think oil prices will remain low?
Q.4.A. WHAT DOES THIS TELL YOU ABOUT
THE NATURE OF STRATEGIC PLANS?
• Planning lead to rigidity
The concept was revolving around the oil prices
• Planning did not work in dynamic environment
Changes are constant
• Planning does not guarantee success
Sticking to a rigid plan might lead to failure
Q.4.B. WHAT DO FALLING OIL PRICES MEAN FOR
THE POTENTIAL SUCCESS OF THE CHEVY VOLT?

• Slowdown in the market

70,000 vehicles were expected to be sold but less than 6200 were sold
• But slow gain in the market
Eco friendly car
$7500 tax credit
Oil a limited resource
Q.4.C. DO YOU THINK OIL PRICES WILL REMAIN
LOW?

• Oil prices would probably go high

• As oil prices (Keeps fluctuating) : dependent on various events around the
world
• Oil is a limited resource and demand keeps increasing due to growing
economies
• Hence, people should use fuel alternatives instead of relying on fuel oil.
Outlook Survey Report
Q.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?
Comparison of Chevy volt with other brand
Chevrolet Volt Nissan LEAF Toyota Prius Ford Fusion
Hybrid Hybrid41

Price $41,000 $35,000 $32,000 $28,700

Fuel Economy 40 mpg 99 mpg 45 mpg 37.3 mpg

6L/100 km 2.4 L/100 km 5.2 L/100 km 6.5 L/100 km
Top Speed 160 Km/hr 150 km/hr 100 to 137 km/hr
Cost per $0.038 $0.035 $0.086 $0.119
mile
Govt Tax Credit *$7,500 *$7,500

Safety 5-star safety rating. 5-star safety rating. - -

Chevy Volt’s analysis
Advantages Disadvantages

a. Dual electric-gas feature a. High Price

b. Warranty on the battery b. Limited number of charging stations
c. $350 per month payment plan c. Uncomfortable back seats
d. Average $1.50 a day to charge
e. Zero to 60 in about nine seconds
f. Quiet Engine
Strategy for Chevy volt
Innovation with Impact
• Developing passionate brand "ambassadors
• Effective marketing strategy formulated and tested as well based on past
products
• Innovative marketing of its innovative product as green car.
Transforming the brand
• Positioning that would educate consumers and quickly stimulate demand.
• Close connection with people
Consumer analysis
• Target married couples between the ages of 40 and 55
• 69 percent more likely to buy cars brand-new
• 69 percent more likely to keep up on the latest advances in auto
technology
• 40 percent more likely to prefer driving luxury vehicles
Brand analysis
• Comparison was done with other competitors' in market
• 71 percent have owned a vehicle produced by GM
Media usage analysis
Volt first aired during the 2008 Summer Olympics
GM partnered with Google Maps and Microsoft Kinect for the Xbox 360 to
promote the Volt
Environmental friendly
IN LIGHT OF YOUR ANALYSIS, HOW RISKY DO
YOU THINK THIS VENTURE IS FOR GM?

• Very risky - as their strategic planning and decision making is stifled by

strong resistance from its managers
• A huge opportunistic cost is at stake.
WHAT ARE THE COSTS OF FAILURE?

• Pulling out of investments from their stakeholders

• Degrading of brand image
• Bankruptcy
References
1. Boston Overdrive : 2011 Chevrolet volt: electric versatility posted by Clifford Atiyeh may 6,
2011 05:17 pm
2. Chevy Volt Case Study “A Disruptive Innovation Bridge to Electrified Transportation”
3. Adroit campaign model chevy volt.pdf
4. Book - Strategic Management by Charles Hill, Gareth Jones, and Melissa Schilling
5. Outlook Magazine
6. Gallup Poll 2011
THANK YOU