STRAGETIC MANAGEMENT

Strategic Management

Strategic Management

Case Overview

In 1997, MMC faced fundamental strategic decisions with respect to OnStar and the market for telematics (the provision of communications services to cars). MMC had to decide whether to view OnStar as a car feature or as a service, and choose between an evolutionary and a revolutionary strategy.

The MMC/OnStar researchers developed a multi-method modelling approach to evaluate strategic alternatives. The project team took a four stages process to reach agreement on decision, and built a simulation model as the fore tool to including six parts; customer acquisition, customer choice, alliances, customer service, financial dynamics, and dealer behaviour.

MMC was in trouble in the late 1990s. The company's market share in the US automobile market has been steadily declining. The profit margin of automobile of the best company -- Toyota is only 7%. Most of automobile factories have the margin of only 3%. MMC wants to do better. MMC viewed that OnStar and MMC automobiles have a mutual beneficial relationship. OnStar as a car feature can increase their sales of cars and as a service it can create stable subscription monthly fee revenue for MMC.

The Car Industry is changing its structure quickly. While Toyota earned some 124 billion SEK last year, GM lost about 65 billion SEK. Many mergers have happened and more changes are bound to happen. Write an essay pointing out the PEST-factors you find having a strong impact and causing these changes in the car industry. Also, reflect on the changes you think will happen in the years to come.

Analysis

PEST analysis is a process of checking and analyzing information relating to the environment. The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business as a business measurement tool. It involves monitoring the changes taking place in the environment and forecasting the future position. The PEST analysis could be a framework reviewing a strategy or position, direction of a company, a marketing proposition, or idea. It helps the firm to formulate its corporate strategy in line with the opportunities emerging in the environment. Strategic response to environmental changes is the end purpose of PEST analysis. PEST is made up of the first letters of the four key factors: political, economic, social, and technological factors. It assists in identifying the key environmental influences, predict the changes in environment, and understand the interconnections between influences pertaining to macro environmental factors and environmental factors specific to the industry. Most industry firms would carry out a PEST analysis to assess the prospects of their business and viability of their investment.

Specifically, these four PEST factors cover all aspects of external environmental analysis. Political factors changes involve government rules such as on planning. Economic factors changes include the health of the economy, how likely people are to be able to afford property, and changes such as the rate of interest rates, currency exchange rate. Social factors changes include changing lifestyles and attitudes in population ...