The Chevy volt case tells more when it comes to strategic planning for large organizations. First, what should come to consideration was the vision of the company and the situation that the company of the organization is faced with now. In this case, General Motors was faced with unending losses and it was high time that they brought something new to the market to save their depreciating stocks.
For one, the company, through its previous products that they had designed as far as locomotives are concerned, they were becoming irrelevant in the industry. Their revival was largely dependent on the turning point that they would take so that they would remain relevant for a relatively longer time. At least to waive the debts and start making profits for the growth of the company (Hill and Jones, 2011).
When it comes to strategic planning and decision making for a large organization like General Motors, a lesson that one could grasp from the same is that for a proper strategy and decision making there should be a plan for the same. The plan should be geared towards achieving organizational goals. In the planning of the strategy, there should be proper work distribution. A team preferably should be put up to carry out the task. Everybody should be in charge of something for a proper strategic plan. In this case, study, we can see that Bob Lutz and Larry Burns were the individuals behind this strategy. They were the vice chair and head of research department respectively. Also in the planning process, the time needed to execute the strategy is very important. For one, the General Motors group that was in charge of coming up with the new Chevy volt first proposed the idea in 2003 before implementing the idea six years later (Hill and Jones, 2012). The resources required for the success of the strategy were discussed and laid out well. For this case study, the Chevy volt needed to have a source for the Lithium ion rechargeable batteries.
A clear mandate and the scope of work was set up before coming up with the strategy and implementing the strategy for coming up with the new Chevy volt. One thing for sure, that the team needed was a large sum of money because the company previously had invested billions in building the fuel cells. A greater cost of conversion was required for them to realize the dream. For Larry Burns and his team to decide to come up with the plan they had considered that the company was almost settling because they lacked funds and now they were soliciting funds from the government for them to cut down on the losses. Coming up with the Chevy volt was a good idea to save the company from collapsing. This was an issue that was supposed to be addressed by the strategy (Hill and Jones, 2012).
The strategy also considered and analyzed the internal and external environment. These factors were meant to be a great impediment towards achieving the organizational goals. The internal factors that this plan considered first of all was the cost of conversion from first producing the fuel cells that they had invested billions of dollars in the same. A switch to producing lithium ion rechargeable cells meant that they would lose but in the long run they gained as the Chevy volt got /like and was popular when the first concept model was put to the show rooms for scrutiny
For the external analysis the team was to work on coming up with a model that met the standards that meant to make the world more habitable by producing cars that do more good than harm to the environment.
The external environment was one of the major influences that motivated Larry Burns and his team to consider designing and implementing the Chevy volt car. Their main argument was that now that combustible fuel was no longer cheaper and it was getting expensive by the days, another alternative was needed now more than ever. Also since most of their vehicles that received global recognition were mainly considered to consume more fuel they were soon to be considered to be a burden. As it is recorded that the price of fuel went up from one dollar to four dollars per gallon, this was a whole lot expensive. Coming up with the Chevy volt was a good idea. It was perceived to be a good and cost effective vehicle and at the same time very effective.
Another trend in the external factors that motivated the team to come up with the Chevy volt was that concept model had received ‘positive remarks and any fortuneteller could tell that one released the car would attract global attention and sales. Toyota also had a model with the same concept as the Chevy volt the Prius had shown without a shadow of a doubt that the world needed hybrid vehicles that at the same were cost effective and were very efficient. Another thing was that the cost for producing Lithium ion batteries was relatively cheaper. In addition, the cost of conversion will be a little expensive but it will be a good idea considering the future predictions and the fate of the company at the moment.
General Motors was already battling for its existence in the market and being written off by the regulatory bodies for producing cars that were not environmental friendly would be a big blow for the company. Regulations were set to ensure that cars produced were meant to be producing a reduced amount of carbon IV oxide gases and other greenhouse gases.
Pursuing the project successfully had some impediments some within General Motors and others outside general motors. One impediment that was evident throughout the case study is the cost of conversion form producing the fuel cell cars to producing lithium ion cells cars. The company states that it did spend a lot of money in the same. Also according to many critics in the company itself, the lithium ion cell could only drive the car for only forty miles and then gasoline would take over. There is not much that one could do with a car that could only go forty miles on electric charge and later gasoline is used. The whole idea of coming up with a cost effective cars would not apply. Another internal impediment was that the company had not yet come up with a way of producing large lithium Ion cells that would be able to power the car for longer desirable distances that every consumer would want.
Judging from the previous electric car that the company had produced an electric car in the 1990s, it did not do well at all. The EV1 failed in the 1990s and General Motors was skeptical that the Chevy volt was bound to be a failure too (Hill and Jones, 2011). Now that it combined both fuel and electricity and has the same concept as the EV1 that did not do well in its launch.
One noticeable issue with the strategic plan for coming up with the Chevy volt is the assumption that fuel prices globally was increasing and that coming up with a car that would reduce the consumption of fuel will be the selling point for the Chevy volt. This shows that strategic plans are based on forecasting and hypothesis. Nothing on the strategic plan is permanent and factual. A strategy plan is based on assumptions and predictions. With these assumptions and predictions is what the planners use and look for loopholes to plan for their new venture and make it successful.
However, strategic plans are meant to be flexible and have a plan B that looks at both sides of the coin. A good strategic plan should be able to ask questions that focus on both sides of the coin (Hill and Jones, 2012). For our case study of the Chevy Volt, the strategic plan for coming up with car would considered what if the fuel prices don not rise or remain the same? Will the Chevy volt be the same car that delivered the same level of efficiency it was aimed at delivering?
In the same vein, falling of oil prices can be a barrier towards the success and at the same time a blessing in disguise. I would analyze the situation as so because first of all one of the main aims of coming up with the idea of the Chevy volt was that it would be a car that cuts down on the costs of fuel that was assumed to be on the rise. This would mean that the car is no longer relevant (Hill and Jones, 2011).
On the contrary, falling prices of fuel would also mean that the car would make the cost of maintaining it way cheaper and cost effective. Yes, the car would have achieved its aim but it will be not much of a success as it was it was if the fuel prices remained high.
The oil prices from the look of things oil prices will not decline simply because the population of the world is not decreasing at the same rate at which the oil wells are drying. The opposite is actually true the population is increasing and the oil wells are drying up. This means that there is a huge demand for oil. As economics, states the demand curves insinuate for higher prices whenever there is a shortage of supply or a rise in the demand of a commodity. This means that the oil prices will be increasing (Corley and Tinker, 2007).
For the Chevy to be a success, the oil prices should continue to be high to create the need for cost effective electric cars that reduce oil consumptions. Also tighter regulations on the implementation of environmental conservation will mean that cars that emit little greenhouse gases are preferred. The venture of the Chevy project is a great idea that will make General Motors relevant and meet the expectations of the industry, which is to produce cheap and easier to maintain cars that are environment friendly.
If the project fails the company risk losing its value and this, will lead to more debts and eventually closure. The car may end up not liked by the consumers this based on the cost of fuel prices and the efficiency of the car. Not pursuing this project means that the company is risking closure and resisting change. In this case, according to my analysis this looks as the change for the better that will save the company.
Corley, R., & Tinker, P. B. H. (2007). The Oil Palm. Oxford: John Wiley & Sons.
Hill, C. W. L., & Jones, G. R. (2012). Essentials of strategic management. Australia: South-Western/Cengage Learning.
Hill, C. W. L., & Jones, G. R. (2010). Strategic management theory: An integrated approach. Boston, MA: Houghton Mifflin.