ASSIGNMENTS 1 (CASE STUDY) 1. This assignment aims to evaluate your critical thinking skills and analysis on a comprehensive business case study. 2. This is an individual assignment. The marks allocated for this assignment is 30%. Answer ALL Four (5) questions. General Motors Corporation & Electric Car In 2003, top management at General Motors (GM) decided to discontinue further work on its EV1 electric automobile. Working versions of the car had been leased to a limited number of people, but never sold. GM required every EV1 to be returned to the company. Environmentalists protested that GM stopped making the car just to send a message to government policy makers that an electric car was bad business. Management responded by stating that the car would never have made a profit. In an April 2005 meeting of GMs top management team, Vice Chairman Robert Lutz suggested that it might be time to build another electric car. He noted that Toyotas Prius hybrid had made Toyota look environmentally sensitive, whereas GM was viewed as making gas hogs. The response was negative. Lutz recalled one executive saying, We lost $1 billion on the last one. Do you want to lose $1 billion on the next one? Even though worldwide car ownership was growing 5% annually, rising fuel prices in 2005 reduced sales of GMs profitable SUVs, resulting in a loss of US$11 billion. Board members began signaling that it was time for management to take some riskier bets to get the company out of financial trouble. In February 2006, management reluctantly approved developmental work on another electric car. At the time, no one in GM knew if batteries could be made small enough to power a car, but they knew that choices were limited. According to Larry Burns, Vice President of R&D and Strategic Planning, This industry is 98% dependent on petroleum. GM has concluded that thats not sustainable. In the meantime, Tesla Motors had been founded and was planning an all-battery powered model to be released in 2008. GM Chairman and CEO Richard Wagoner Jr. surprised the world at the January 2007 Detroit Auto Show with a vow to start developing an electric car called the Chevrolet Volt. It would plug into a regular electric outlet, leapfrog the established competition, and be on sale in 2010. Management created a new team dedicated to getting hybrid and electric cars to market. The R&D budget was increased from US$6.6 billion in 2006 to US$8.1 billion in 2007. Several new models were cancelled to free up resources. The battery lab was under pressure to design batteries that could propel the Volt 40 miles before a small gasoline engine would recharge the battery and extend the range to 600 miles. Douglas Drauch, battery lab manager, said. Fifty years from now, people will remember the Volt, like they remember a 53 Corvette. The Volt was released with much fanfare in October, 2010, and by 2012 GM was selling 2500 a month at just over US$40,000 per car. The company was still struggling to match manufacturing with sales and still make a profit. In the meantime, Nissan, Ford, and Toyota were making significant moves in the battery-powered car business. Nissan released the Leaf, Ford released the electric Focus, and Toyota offered the Plug-in Prius and the all-electric ASSIGNMENT_MSM606 STRATEGIC MANAGEMENT_ASSIGNMENT 1_JAN23 Page 3 RAV4, which claimed to get 103 MPG. Overarching all of the established car company efforts was Tesla. In 2012 they launched the Model S that was 100% electric and could travel 265 miles per charge. By 2016, Tesla had 50,000 vehicles on the road and was seen as the leader in electric car technology. The Volt remained a hybrid vehicle and sales limped along. By mid-2015 the Volt was selling less than 9,000 units a year and the Leaf was only a bit better selling roughly 15,000 units a year. So, in late 2016, Chevy planned to release the Chevy Bolt. The Bolt is an all-electric vehicle with a range of 200 miles and a price tag in the $38,000 range. It has yet to be seen if the electric car can gain a significant foothold on the U.S. market.

QUESTION 1 (CLO 1) 1. Describe briefly, what are the 4 car model manufactured by General Motors mentioned in this case study? (10 marks) QUESTION 2 (CLO2) 2. Identify and justify among the 4 car model by General Motors which is the most profitable car? (10 marks) QUESTION 3 (CLO 3) 3. Critically compare and discuss General Motors and Tesla with Blue Ocean strategy (BOS) versus Red Ocean strategy and critically explain which strategy are they