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.

3 comments:

Michael Ling said...

Michael,

Absolutely true. Market share and revenues are two entirely different things. Usually, we either opt one or the other when setting a firm's strategic objectives.

I think what he is really saying is he wants to see positive growth in both market share and revenues. Again, market analysts are going to rate a firm predominantly based on these two variables, and quarterly. This means a lot to a firm who needs to come out quickly from the shadow of bankruptcy.

The way I see it is Whitacre wants to give a strong dose of confidence to the market about his firm... again, I could be stepping on the wrong toe.

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Dyanadevis
Online Marketing of your brand

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