The article I have chosen to review discusses how changes in the external environment have impacted the SUV market but despite the facts GM has managed to make this segment profitable. With the economy still recovering and an increase in gasoline prices, consumers are moving to more economical vehicles with high mileage per gallon. In 2001 when gasoline was $1.28 a gallon the SUV market was 4.7 percent of the auto vehicle market, now with the price at around $4 a gallon the SUV market has dropped to 1.9 percent. Astonishingly GM’s average transaction price of the SUV has risen 37 percent since 2002.
The strategy GM employed was to gain as much market share in the declining segment as possible. GM’s key success factor was knowing what the customer wanted and was willing to pay for; with strong market awareness in the SUV segment GM gained competitive advantage. GM identified a niche of people unaffected or concerned by the external threats poised to the SUV market, this enabled GM to continue making large SUV’s at a premium price. GM unlike the competitor are not downscaling SUV size to dramatically improve millage per gallon, instead they are making marginal changes to improve efficiency while innovating in areas that are imperative to consumers. By providing to consumer needs GM grew market share and, due to the niche segment they are positioned in, make healthy margins.
This article demonstrates that when aware of the external threats one can win strategically; GM