Planning Case

1. What does the Chevy Volt case tell you about the nature of strategic decision making at a large complex organization like GM?

Decision making did not rest solely on Lutz, GM’s vice chairman. The entire company was at stake and so the rest of the managers’ inputs had weight as well. In large organizations such as GM, the number of stakeholders makes it difficult to weigh decisions and consider all concerns of every member.

2. What trends in the external environment favored the pursuit of the Chevy Volt project?

First, oil and gas prices were sharply increasing. Second, global warming was becoming a major concern that perhaps in the future, there would tighter regulations on carbon emissions. Third, the cost of manufacturing lithium ion batteries is getting cheaper. Lastly, GM’s competitor, Toyota, had clearly demonstrated that there is demand for fuel efficient cars.

3. What impediments to pursuing this project do you think existed within GM?

There were also criticisms towards the production of large lithium ion batteries. GM had already invested in developing fuel cells and to suddenly shift the manufacturing focus to lithium ion batteries would be a waste of that investment. There is also the history of an electronic car introduced by GM in the 1990s which was not a success.

4. The plan for the Chevy Volt seems to be based partly on the assumption that oil prices would remain high, and yet in the 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 prone to changes due to the unpredictability and ambiguity of the business world. It may be subject to unforeseen factors that renders the strategic plans as futile.