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... to effect can also change the way a company operates. For example, new pollution laws that have come into effect over the past years have made some manufacturers change the way their product is produced and how excess materials are stored and disposed. One thing some companies have chosen to do is solicit the use of a lobbyist to ensure the demands placed on their companies arent overly extreme.
Another thing companies can do to take advantage of the legal environment is become active with special interest groups that their target consumers are involved in. This could include groups that support the rights of women, minorities or the elderly. Special interest groups are an excellent way of identifying with consumers and letting them know your company shares in their concern. SWOT ANALYSIS Strengths and Weaknesses Although General Motors has made the decision to discontinue the Oldsmobile product line, there are many strengths that enabled this division to remain in operation for over 103 years.
Oldsmobile was the first American caretaker to advertise (Halliday, 2001). Oldsmobile was the first mass-producer of gasoline cars back in 1901. The initiation of mass-production is often incorrectly credited to Ford. Also, Olds was the first to use chrome around the radiator, the first production line car with a fully automatic transmission, and produced the first mass-produced U. S.
car with front-wheel drive the 1966 Toronto (Chevron, 2001). As a matter of record, the Olds line had to be the one out with many firsts in order to remain a viable business for over 100 years. At a time when the lack of a broader product mix was needed, the new Bravada was added to the product line. It will make its debut in 2002. This new SUV will update outdated models and give this division a competitive chance in the automobile industry's hottest segment. Although this can be seen as a strength, it was an untimely late move.
It will be challenging for Oldsmobile to promote this new vehicle at a time when an announcement has been made that this line will cease to exist. The Olds division is using an area of promotion for this new SUV that has been successful in the past. The pace car for the next Indy 500 will not be a car, but a SUV the new Olds Bravada. This year will mark the eleventh time an Oldsmobile has paced the Indy 500 (Fitzgerald, 2001). Oldsmobile, in the recent past, introduced the Alero, Aurora, and Intrigue. These were excellent examples of what could be produced when the goal of the developers was to design sharp cars.
These models elicited praise from the automotive press for their distinctive styling and carried the kind of mystique that lends itself to innovative marketing programs such as appearances in the hit sci-fi show, The X-files. Again, this was too little, too late (Welch, 2001). Oldsmobile is now engaged in some cleaver marketing ploys. If these had been tried earlier, could it have saved the product line? Well, we will never know. However, after the plan to kill the line was announced, some of the ploys proved to be successful.
For comparison, Saturn posted a 3. 7 percent sales increase in the first quarter of 2001, compared to last year, but Oldsmobile was General Motors second most successful make. Olds sales were down 0. 3 percent in the first quarter, compared with dips of 4. 6 percent for Chevrolet, 8. 6 percent for GMC, 1. 4 percent for Pontiac, 16. 4 percent for Buick and 25. 8 percent for Cadillac (Then, 2001). So what was it that Oldsmobile is doing that is so different? They are offering a $ 1500 loyalty bonus to owners who stick with the Oldsmobile, higher rebates are offered than on corresponding GM vehicles and longer warranty periods are offered. What actually went wrong with the Oldsmobile product line? Obviously their weaknesses outweighed their strengths, but what were the weak points?
The decline of the Oldsmobile is more likely tied to a product line thats been devoid of innovation coupled with poor management. In addition, the parent company, GM, has a sliding market share as a whole. The multitude of me-too products offered under all of GMs brands is one reason for this decrease. According to David Davis Jr. , founder of Automobile Magazine and a former creative director at Campbell Ewald where he worked on GM and Chevrolet, GM convinced itself that if we build cars that are simply good enough, we will be able to return some real shareholder value.
Sure, but what does that do for constantly sliding market share? Theyre sized for a market of 35 or 40 %, said Mike Davis, managing director of investment banking at First of Michigan and their market share is only 28 % (Sharfman, 2001). With a sliding market share, GM had become to unfocused and all divisions are suffering. So how many brands does an automaker GMs size need?
Right now, with not much more that a quarter of the market, GM is juggling twelve different brands (Chevrolet, Saturn, Pontiac, Oldsmobile, Buick, GMC, Cadillac, Saab, Isuzu, Suzuki and soon, Alfa-Romeo), each having several different models. GM needs to reconsider it entire product mix. Perhaps realignment is in order at this time. Another problem with Oldsmobile was that by the time trendy new Olds cars were introduced, it was already too late. Oldsmobile did not have clear positioning on its target market.
The Aurora was introduced without any Oldsmobile identification, which made it clear that the powers that be could already see a problem with the prior promotional campaigns of Oldsmobile. GM has brand managed so much, that they have lost sight of their target market. This can be seen by the way that Oldsmobile has tried to distance its own product from the divisional brand ads. The slogan, not your fathers Oldsmobile was a marketing signature that disenfranchised both younger and older buyers alike over time (Sharfman, 2001). The younger buyers were more familiar with the Oldsmobile being an automobile for mature individuals.
When the newer, trendier Olds were introduced, they were promoted not with the Olds brand name on it, but rather as stand-alone models. The mature customers rejected the Olds because prior to the introduction of the newer models, Olds were touted as the brand for old folks. Even mature customers do not like to be marketed to as old. Others in the industry feel that the GM executives are the reason for the insight loss of their target market. Columnist Jerry Flint explained his beliefs as, You have a management team that doesnt know much about the American car business. He singled out Chairman Jack Smith as the former treasurer who had no American car experience.
Rick Wagoner as someone (who) lost market share every year running North American automotive operations and was promoted to CEO. Flint also included Ron Zarrella, president of GM North America, as someone who was selling eye wash five years ago (Buss, 2001). Personally, we feel that management can either come into an organization without a focus or lose focus in their position over time, if they forget to evaluate or re-evaluate their target market and abide by the mission statement of the organization. Olds abandoned its goal of being innovative; innovation was one of its values.
Abandoning a value will alter the brand forever. Opportunities and Threats Although few opportunities exist with a soon to be defunct product line, dealerships and consumers may be able to reap some rewards. Dealerships have been promised $ 3100 for each unit sold in a year for the strongest year over the next three. Consumers will benefit with extended warranties of 5 years, 60, 000 miles. These extended warranties are also coupled with rebate incentives of $ 2000 to $ 4500 on various models in the Olds product line. GM reports that it wants to keep strong and loyal dealerships in the family when the brand line is killed.
However, few franchises are available in an already saturated market. Olds dealers that sell the brand alone amount to 61 and 271 dealerships rely on the product line for over 50 % of sales. Overall there are 2801 Oldsmobile stores. Complicating the issue are agreements that were signed by one third of Olds dealers to carry GM product lines exclusively.
Consideration is now underway to allow for leeway in the agreement. Some of GMs overseas affiliates such as Saab and Subaru are being passed along information about worthy dealerships. But, these overseas affiliates indicate that they have no p...
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