An Important Lesson in Portfolio Management Learned from GM’s Failure With Saab


Saab

Another GM Casualty?

Koenigsegg Group AB, a Scandinavian maker of exotic sports cars, said it ended negotiations over Saab, citing delays in closing the deal that led to “risks and uncertainties.” The company said “time always played a critical factor in our strategy for reviving the company.”

This is a valuable lesson-learned, unfortunately at the expense of GM.  When you’re thinking about additions to your line-up of products, whether you’re a large multinational like GM, or a small early-stage firm, you have to ask the following strategic questions:

  • does this new product fit in with my overall brand/corporate positioning?
  • will it complement the other products? Will it deliver incremental sales or just cannibalize existing units?
  • will I be able to affored to invest in this new product in a way that will give it lasting power over time?

In this case, I don’t think that there was a strategic plan of attack for Saab, which has led to its demise.  What is Saab’s positioning?  Who is Saab’s core customer?  Are there any synergies between Saab and other GM brands?  One would have a difficult time answering any of these questions.  I do recall Saab’s most recent ad campaign which featured the tagline “Born From Jets”, which is a major departure from Saab’s safety heritage that many people associate the brand with. 

The Saab acquisition, despite what I’m sure were the best-laid plans provided by investment bankers and external consultants during due diligence, was really no more than a short-sighted effort by GM to realize some incremental volume amidst GM’s ongoing share declines.  This is harsh criticism, but can we assume any more than this based on the actual execution we’ve seen in the markeplace?

GM Plan to Sell Its Saab Unit Collapses – WSJ.com.

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