Question

In 2001 General Motors Corp. finalized its plans to eliminate its Oldsmobile division. GM had owned the brand since 1908 when it acquired the line from the Olds Motor Vehicle Company, which had been established in 1897. Oldsmobiles are sold by GM through 2,800 independent dealers, some of whom have been selling the Oldsmobile brand for over half a century. Needless to say, many of these dealers were outraged with GM’s decision to get rid of the division because in many cases it drastically affected their livelihoods, especially for those dealers where the Oldsmobile brand accounted for all or a significant portion of their total sales. Many of the dealers’ employees would also be losing their jobs. Furthermore, the dealers had invested millions of dollars in building their businesses and nurturing loyal Oldsmobile customers. GM worked out arrangements to allow for a transition into other GM car lines and to help defray transition costs, but many of the dealers still believe GM has made a huge mistake by killing off the Oldsmobile line.

What do you think was the underlying cause of this conflict between GM and the Oldsmobile dealers? Do you think this conflict will affect the relationship in the future for those dealers who decide to sell other GM brands in place of the Oldsmobile?

Answer 1

Answer GM Motors took decision without considering other dealers who did huge investment for building their business and nurturing loyal customers. This will create conflict between dealers and GM Motors which will create non coordination environment and then every dealer will be taking their own decisions without thinking of company and that would ruin their bond and will breach trust between them.

In future also it will affect relationship in future for those dealers who will sell other GM brands then Oldsmobile because dealers incurred financial loss on investment due to wrong decision took by GM Motors. Then dealers will seek new brands seeking more trust then existing one as once trust is breached dealers will be negatively influenced and hence revoke dealership with GM Motors and seek new brands.