The General Motors hedges its bets with an investment in ride

This is a paper that focuses on the general motors hedges its bets with an investment in ride. The paper also provides questions in addition to the case study below.

The General Motors hedges its bets with an investment in ride

In an era in which rapid changes in technologies are reshaping the long-standing business models of most companies, senior managers find themselves having to gaze into the future to anticipate rather than simply react to market changes. The automotive industry is no exception. Those that will survive long-term must make educated guesses about what lies ahead in terms of how people will chose private versus public modes of transportation. While the latter has long represented an alternative in areas of high population density, new trends are emerging that represent both a threat and an opportunity to the traditional passenger vehicle.

Among the economic and social developments likely to impact the mode of transportation in high density affluent areas is the advent of autonomous (or self-driving) cars and ride-hailing services (like Uber and Lyft).[1] Consequently, firms both within the car manufacturing industry and major technology companies are seeking ways to exploit changes in the giant automotive transportation market.  Ride hailing companies using autonomous driving car technology have the potential to substantially erode consumers’ desire to own motor vehicles. Particularly in urban areas, and in turn to reduce auto makers’ sales and profits.

The General Motors hedges its bets with an investment in ride

Automotive executives are keenly aware of the potential for ride-hailing services to reduce the demand for owning or leasing cars in urban areas. However, opportunities for automakers do exist. Even if the industry’s passenger car sales decline, the number of miles driven by cars can actually increase as cars remain the preferred mode of transportation nationwide.  Car companies see the potential to offer paid services to take advantage of all the miles driven by the current fleet of cars. In the U.S. exceeds 100 million vehicles.  Such paid services could provide a significant source of future income in addition to the more traditional sale of cars and replacement parts.

[1] Firms like Uber and Lyft often referred to themselves as ride sharing services. Others prefer to use the term ride hailing services.. In most instances, you are not actually sharing a ride with other paying customers. Consequently, in this case study, firms like Uber and Lyft are referred to as ride hailing services. CONTINUATION IN THE ATTACHMENT BELOw


1.                  Firstly, what alternatives to a partnership with Lyft did GM have? Why was a partnership selected as the means of implementing the firm’s strategy to enter the ride-hailing business?
2.                  Secondly, who do you believe benefitted most from the partnership (GM or Lyft) and why?
3.                  Thirdly, in addition to risk sharing, what other motivations existed for GM and Lyft to partner? Do you have better ones?

4.                  Fourthly, speculate as to why GM invested in Lyft rather than other ride hailing services such as Uber? Was this a good move, why?

5.                  Of the risk factors mentioned in the case study. Which do you believe is the most likely to prevent the realization of the partnership’s vision of achieving a car hailing network of autonomous driving cars? Explain your answer.

6.                  Lastly, in your opinion where does automobile companies and ride sharing go from here and into the future and why?

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