Wednesday, August 05, 2009
GM: Is Market Share the Goal?
I read with some consternation the comments in today's Wall Street Journal from GM's new Board Chairman, Edward Whitacre. He explains that he wants GM to aim for being #1 in market share in the US. He clearly acknowledges that profitability is also a key goal, but I worry about the tension between those two objectives. Market share and profitability are not necessarily fully compatible. In the end, the company's goal should be to return to profitability, even if it may mean ceding the #1 market share position in the US. Too many firms become obsessed with market share, and their efforts to maximize share lead to suboptimal profits. GM needs to be wary of this trap.