General Motors itself is not a brand name for a car and yet, it is one of the largest auto manufacturers in the world. How did this come to pass? The Deal Maker expands how William C. Durant built GM in the early 1900s through both horizontal and vertical mergers, often associated with individuals whose names remain as their legacy, such as Ransom Olds (Oldsmobile), David Dunbar Buick, Louie Chevrolet, and Albert Champion (Champion spark plugs). Thus, Durant kept the different models of the merged companies to appeal to different markets. Such product differentiation became the key to GM’s success, especially in the mid 1920s.
The irony is that Durant never successfully integrated the firm to achieve cost savings. He bought up competitors simply to gain a dominant market share and thus realize high profits through pricing closer to monopoly price than competitive price. This lack of efficiency allowed their main competitor, Ford, to move ahead.
Ford Motor Company, under Henry Ford, emerged and stayed independent at this time, dominating the market from around 1917-1926. Ford’s Model T, basically its only model, was sold at a much lower price than any of GMs’ cars due to low costs yet relatively high quality.
Found this post interesting? Then take HIUS 341 US Business History!
By Jim Baltz, Wooi Yang Chang, and Brian Gavron
2 comments:
I think a lot of the success of the Japanese brands has been their focus on a good medium between quality and product line. Because they have focused on their own respective brands rather than acquiring others, they have been able to achieve reliability and quality that is unmatched by American cars. They do this on their models across the board, with little drift. At the same time, they have kept costs low with an efficient business strategy and a minimal range of cars.
General Motors produces a line of GMC vehicles - Denali, Yukon, Canyon...mostly along the lines of pick-ups and SUVs. We feel that a lot of the transition in consumer tastes towards Japanese cars has been a result of higher reliability and performance. As Jura discussed, advertising a POS product may lead to temporary profits, but can't compare in the long run to those that are both affordable and reliable. Additionally, diversifying the products without trying to cut advertising or produce cost savings has not helped.
-Seon Hwang, Kristy Choi, Minsoo Park, Chris Liu
Post a Comment