General Motors and the Chevy Cobalt Ignition Switch Crisis SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of General Motors and the Chevy Cobalt Ignition Switch Crisis
It was Saturday, March 29, 2014, and Mary Barra, Chief Executive Officer (CEO) of General Motors (GM), was reading a letter of invitation from the families of Chevy Cobalt crash victims to meet with her the following week. The timing could not have been worse. Barra was scheduled to testify before the U.S. Congress on Tuesday, April 1st regarding the recalls of 2005-2007 model year Chevrolet Cobalts. Just the day before, on Friday, March 28th, GM had announced a third Chevy Cobalt recall. In total, 4.8 million vehicles worldwide had been recalled in connection with an ignition switch defect. There had been fatalities. It was Barra's 10th week on the job as GM's CEO. On February 7, 2014, just days before Barra had become CEO, GM had informed the National Highway Traffic Safety Administration (NHTSA) that a problem existed with the 2005-2007 model year Chevy Cobalt. GM stated in its report to the NHTSA that the problem appeared to be centered on the vehicles' ignition switch. The ignition switch's "torque performance" on these vehicles had not met GM's engineering specifications. The switches were easily jostled, and when jostled, the switches would sometimes move out of the "Run" position, causing the vehicle to stall. GM further explained that, depending on the timing of the switch moving out of the "Run" position, the airbags would not deploy. A vehicle stall, combined with the vehicle's airbags not deploying, had been a lethal combination. Following the first Cobalt recall in January 2014 and the NHTSA report in February, events had escalated rapidly. Lawyers across the U.S. had organized a class action lawsuit against GM. The U.S. Justice Department and the NHTSA had launched investigations. The media response had been hostile. Barra had been summoned to appear before the U.S. Congress. Beyond the public fallout was a large question: How could GM have ignored such a basic safety issue for such a long period of time? Such a situation suggested that there might be fundamental organizational issues within the company that needed repair as well. How was Mary Barra, CEO of GM, going to manage this crisis? The first decision would be whether to meet with the families of Chevy Cobalt crash victims.
Swot Analysis of "General Motors and the Chevy Cobalt Ignition Switch Crisis" written by Randall D. Harris, Walter S. Sherman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cobalt Gm facing as an external strategic factors. Some of the topics covered in General Motors and the Chevy Cobalt Ignition Switch Crisis case study are - Strategic Management Strategies, Crisis management, Ethics and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the General Motors and the Chevy Cobalt Ignition Switch Crisis casestudy better are - – central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, increasing commodity prices,
banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of General Motors and the Chevy Cobalt Ignition Switch Crisis
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in General Motors and the Chevy Cobalt Ignition Switch Crisis case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cobalt Gm, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cobalt Gm operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of General Motors and the Chevy Cobalt Ignition Switch Crisis can be done for the following purposes –
1. Strategic planning using facts provided in General Motors and the Chevy Cobalt Ignition Switch Crisis case study
2. Improving business portfolio management of Cobalt Gm
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cobalt Gm
Strengths General Motors and the Chevy Cobalt Ignition Switch Crisis | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cobalt Gm in General Motors and the Chevy Cobalt Ignition Switch Crisis Harvard Business Review case study are -
Strong track record of project management
– Cobalt Gm is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Cobalt Gm digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cobalt Gm has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Cross disciplinary teams
– Horizontal connected teams at the Cobalt Gm are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Sustainable margins compare to other players in Leadership & Managing People industry
– General Motors and the Chevy Cobalt Ignition Switch Crisis firm has clearly differentiated products in the market place. This has enabled Cobalt Gm to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Cobalt Gm to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Cobalt Gm has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cobalt Gm has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Training and development
– Cobalt Gm has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in General Motors and the Chevy Cobalt Ignition Switch Crisis Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Highly skilled collaborators
– Cobalt Gm has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in General Motors and the Chevy Cobalt Ignition Switch Crisis HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Cobalt Gm in the sector have low bargaining power. General Motors and the Chevy Cobalt Ignition Switch Crisis has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cobalt Gm to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Cobalt Gm is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Cobalt Gm is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in General Motors and the Chevy Cobalt Ignition Switch Crisis Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Cobalt Gm has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Cobalt Gm has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study General Motors and the Chevy Cobalt Ignition Switch Crisis - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Leadership & Managing People field
– Cobalt Gm is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Cobalt Gm in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses General Motors and the Chevy Cobalt Ignition Switch Crisis | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of General Motors and the Chevy Cobalt Ignition Switch Crisis are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Cobalt Gm supply chain. Even after few cautionary changes mentioned in the HBR case study - General Motors and the Chevy Cobalt Ignition Switch Crisis, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cobalt Gm vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Cobalt Gm products
– To increase the profitability and margins on the products, Cobalt Gm needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Cobalt Gm is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Cobalt Gm needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cobalt Gm to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Cobalt Gm has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study General Motors and the Chevy Cobalt Ignition Switch Crisis, is just above the industry average. Cobalt Gm needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow decision making process
– As mentioned earlier in the report, Cobalt Gm has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Cobalt Gm even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Skills based hiring
– The stress on hiring functional specialists at Cobalt Gm has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Interest costs
– Compare to the competition, Cobalt Gm has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Products dominated business model
– Even though Cobalt Gm has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - General Motors and the Chevy Cobalt Ignition Switch Crisis should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Cobalt Gm needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Low market penetration in new markets
– Outside its home market of Cobalt Gm, firm in the HBR case study General Motors and the Chevy Cobalt Ignition Switch Crisis needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities General Motors and the Chevy Cobalt Ignition Switch Crisis | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study General Motors and the Chevy Cobalt Ignition Switch Crisis are -
Using analytics as competitive advantage
– Cobalt Gm has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study General Motors and the Chevy Cobalt Ignition Switch Crisis - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cobalt Gm to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Cobalt Gm has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cobalt Gm can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, General Motors and the Chevy Cobalt Ignition Switch Crisis, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Cobalt Gm can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Cobalt Gm to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Cobalt Gm can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cobalt Gm is facing challenges because of the dominance of functional experts in the organization. General Motors and the Chevy Cobalt Ignition Switch Crisis case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Building a culture of innovation
– managers at Cobalt Gm can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Manufacturing automation
– Cobalt Gm can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Buying journey improvements
– Cobalt Gm can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. General Motors and the Chevy Cobalt Ignition Switch Crisis suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Cobalt Gm can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Cobalt Gm can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Cobalt Gm in the consumer business. Now Cobalt Gm can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Cobalt Gm can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats General Motors and the Chevy Cobalt Ignition Switch Crisis External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study General Motors and the Chevy Cobalt Ignition Switch Crisis are -
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Cobalt Gm needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Cobalt Gm can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cobalt Gm in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Shortening product life cycle
– it is one of the major threat that Cobalt Gm is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Cobalt Gm will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cobalt Gm with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Cobalt Gm can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Cobalt Gm demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Cobalt Gm business can come under increasing regulations regarding data privacy, data security, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Cobalt Gm.
Regulatory challenges
– Cobalt Gm needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cobalt Gm can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study General Motors and the Chevy Cobalt Ignition Switch Crisis .
Increasing wage structure of Cobalt Gm
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Cobalt Gm.
Weighted SWOT Analysis of General Motors and the Chevy Cobalt Ignition Switch Crisis Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study General Motors and the Chevy Cobalt Ignition Switch Crisis needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study General Motors and the Chevy Cobalt Ignition Switch Crisis is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study General Motors and the Chevy Cobalt Ignition Switch Crisis is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of General Motors and the Chevy Cobalt Ignition Switch Crisis is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Cobalt Gm needs to make to build a sustainable competitive advantage.
