Lessons from the auto industry
The recent resurgence of the American auto industry offers some valuable lessons for American businesses.
In the not-very-distant-past, General Motors and Chrysler faced almost certain doom. Consumer confidence was at an all-time low, and fewer and fewer people were interested in purchasing a vehicle in a depressed market.
Instead of going into panic mode and holding a fire sale—diminishing overall value, reducing profits and making it harder to raise prices tomorrow—these manufacturers (including Ford) were brave enough to believe in their products.
They didn’t hunker down, or discount their product offering while waiting for the economic storm to pass. Instead they got busy, wisely repositioning their offerings to meet customer need.
At a time when many other businesses were quiet, they continued to advertise through the worst economy in years—creating greater demand, awareness and excitement for their products.
Rather than allowing the market to dictate their sales, GM, Chrysler and Ford adjusted vehicle manufacturing to strike the right balance of supply and demand. By controlling supply and increasing demand, the industry revitalized their businesses. The good news is that the entire industry is now enjoying healthier sales and profits. General Motors is repaying its loans and has had its best profit in years; other American automakers are similarly on a better path.
What can you learn from this approach? Perhaps if you believe it’s not an option to fail, you can find opportunity in scarcity.