Page 100 - Accelerating out of the Great Recession

EVEN IN THE WORST OF TIMES

Prior to the Great Depression, the automobile market had
been split three ways. GM and Ford Motor Company each
enjoyed a one-third market share. Several smaller companies
shared the final third. GM and Chrysler grew their market
shares by a staggering 15 and 19 percentage points, respectively.
In contrast, inaction combined with some poor choices signifi-
cantly hurt Ford’s position and permanently damaged the
smaller competitors.
What differentiated GM and Chrysler from their competi-
tion was their superior understanding of how to adjust to the
new realities presented by the Great Depression and their abil-
ity to look for advantage. In other words, they employed the
strategic basics of both defense and offense.

■ GENERAL MOTORS: A QUICK, DECISIVE, ■
AND COMPREHENSIVE RESPONSE

It is not that GM anticipated the Great Depression better than
any of its competitors. According to Alfred P. Sloan, president
and later chairman of GM from 1923 to 1956, “It would be
unfair to claim any particular prescience on our part; no more
than anyone else did we see the depression coming. . . . [W]e
simply learned how to react quickly. This was perhaps the great-
est payoff of our system of financial and operating controls.” 1
That system enabled GM to quickly mount a defense to the
changing economic conditions in the 1930s. The company
acted decisively to cut costs: mothballing plants, laying off
workers, rapidly scaling back production in its middle-market
and high-end brands, and reducing the breakeven point on its
lower-end Chevrolet brand by a third. To reduce inventories,

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