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 - – increasing household debt because of falling income levels, increasing transportation and logistics costs, central banks are concerned over increasing inflation, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, increasing commodity prices,
talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, 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 -
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.
Organizational Resilience of Cobalt Gm
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cobalt Gm does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Diverse revenue streams
– Cobalt Gm is present in almost all the verticals within the industry. This has provided firm in General Motors and the Chevy Cobalt Ignition Switch Crisis case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
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.
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.
Operational resilience
– The operational resilience strategy in the General Motors and the Chevy Cobalt Ignition Switch Crisis Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Analytics focus
– Cobalt Gm is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Randall D. Harris, Walter S. Sherman can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
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.
Innovation driven organization
– Cobalt Gm is one of the most innovative firm in sector. Manager in General Motors and the Chevy Cobalt Ignition Switch Crisis Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Ability to recruit top talent
– Cobalt Gm is one of the leading recruiters in the industry. Managers in the General Motors and the Chevy Cobalt Ignition Switch Crisis are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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 -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study General Motors and the Chevy Cobalt Ignition Switch Crisis, it seems that the employees of Cobalt Gm don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Need for greater diversity
– Cobalt Gm has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
No frontier risks strategy
– After analyzing the HBR case study General Motors and the Chevy Cobalt Ignition Switch Crisis, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study General Motors and the Chevy Cobalt Ignition Switch Crisis has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Cobalt Gm 's lucrative customers.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study General Motors and the Chevy Cobalt Ignition Switch Crisis, in the dynamic environment Cobalt Gm has struggled to respond to the nimble upstart competition. Cobalt Gm has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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.
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.
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.
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 -
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.
Learning at scale
– Online learning technologies has now opened space for Cobalt Gm to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Cobalt Gm to increase its market reach. Cobalt Gm will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cobalt Gm can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cobalt Gm can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
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 -
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.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Cobalt Gm in the Leadership & Managing People sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Cobalt Gm has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Cobalt Gm needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Environmental challenges
– Cobalt Gm needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Cobalt Gm can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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 .
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.
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.
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.
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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study General Motors and the Chevy Cobalt Ignition Switch Crisis, Cobalt Gm may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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.