Why GM failed: 3. Ignoring competition

Why did General Motors (GM) fail? A third reason is ignoring the competition. GM has been ignoring competition -- with a brief interruption -- for about 50 years. In the 1960s, GM controlled half of the North American vehicle market. Last year, that figure had tumbled to 19 percent. Toyota and its peers took over that market share.

The brief interruption? In the 1980s under former CEO Roger Smith, GM actually did something right -- developing its Saturn line which for a few years offered a vehicle ownership experience that beat Toyota Motors Co.s' (TM) on measures of owner and dealer satisfaction. Unfortunately for GM, when Roger Smith left the CEO role, his successors failed to sustain what Smith had started.

In retrospect, if Roger Smith's successors had infused the rest of GM with the Saturn culture of giving the consumer a better car buying and ownership experience than that offered by its competitors, GM probably would not be on the verge of bankruptcy today.

For all five reasons why I think GM failed, click here.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book isYou Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.

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