OnStar: Not Your Father’s General Motors Harvard Case Solution & Analysis

Introduction 

Two years have passed and the performance was below expectations. The senior management at GM has taken a step of introducing mobile telecommunications service to the portfolio of GM. On Star recognized that without a significant modification in its strategy, backing for the venture would dwindle.Chet Huber is facing one of the worst decisions of his career.He has to decide whether to press GM executives to approve a plan to factory install On Star hardware on every vehicle it manufactures which would call for a new scheme calling for a striking growth in the corporation's commitment to the struggling technology venture.Another choice will be to stick with its current scheme of selling On Star as an aftermarket product at GM franchises.GM sells over five million new vehicles a year.Installing On Star on every vehicle will open doors for exponentially increasing the subscriber base however, it will cost hundreds of millions of dollars and will reach numerous changes within On Star and at GM factories.

Criteria for Addressing Options

General Motors enjoys the position of being a market leader in automobile industry. GM does not hesitate to enter any other product line which does not come under the same industry. The organization is always willing to take chances with other businesses by investing in their operations or even starting a whole new business under their umbrella.

The criterion for choosing the best alternative for the challenge at hand should focus on some specific elements. The decision should lead towards growing the subscriber base as fast as possible resulting in satisfied customers. A strong customer base leads to a stronger long-term service relationship. Creating and maintaining this relationship is also mandatory. The decision should allocate the resources of General Motors in the right direction, utilize and defend the market status of the company. The decision must highlight and fulfil the core benefits expected by the customers. The focus should be on providing the audience with safety and security for a higher level of satisfaction. The company is known globally and has been as a star manufacturer in the local market. It should not just focus on its newly introduced services for a specific city but provide a coverage that covers the whole country resulting in an increased volume of potential subscribers.

Alternative #1

Approve Factory Installation:

OnStar would be installed in the factory by the company itself. The vehicles lifecycle would start with the installation of the hardware. The hardware would consist of easy interface for the customers to operate. Time management would be required by the company as they are starting of their first installation process with another car manufacturer. The hardware would be installed in the vehicles by default and the customer will have to subscribe for the service. This will not require the dealers to educate the drivers regarding the usage of On Star. The company will educate the drivers about the necessary information regarding the hardware.

Alternative#2

Dealer Installations:

General Motors sells over 5 million new vehicles in a year. These vehicles reach the consumers through the dealerships and the queries like car health are tackled by the dealers. The hardware would be installed by the dealers after the car has been sold. If the customer is willing to subscribe for the service only then the dealer will install On Star in the car. The company would only be responsible for delivering the vehicles and the On Star hardware to the dealers. GM would not have any concerns with the installation of the hardware or any other knowledge required by the customer.OnStar Not Your Father’s General Motors Case Solution

Recommendations for Action on Best Option:

Approve Factory Installation

The economics for On Star are not working yet. The business is not growing fast enough to make OnStar a success. The company should prefer to install the hardware in the factories as it would highly effect its growth in the services department. As it successfully initiated installing OnStar in the company, it saw huge potentials for growth. The buying decision of the consumers was heavily affected by the installation of OnStar. This is an opportunity that the company can capitalize on. The company started to install On Star and it saw a drastic increase in the subscription by the consumers. On Star acquired over one million subscribers in two years, which is ten times more compared to the installations being done by the dealers.......................

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