International Business Strategy - innovation and alliances for market share - lessons from the history of American Motors Corporation

The automobile industry has had a turbulent business history. Managing for cost containment, innovation, and survival have been on top of the agenda for industry decision-makers. With a constant battle for market share,... [ view full abstract ]

The automobile industry has had a turbulent business history. Managing for cost containment, innovation, and survival have been on top of the agenda for industry decision-makers. With a constant battle for market share, various alliances have been a strategic option for many automakers. The focus of this paper is on an organization that was born as a result of a strategic vision that merged two independent automakers, Nash-Kelvinator and Hudson Motors. The actions taken over the years by the managers (or management) at American Motors Corporation (AMC) are presented. This company only had a small market share compared to its much larger competitors, but AMC introduced innovative vehicles, developed new market segments, and expanded its international ventures even under tough environments. This paper outlines and details the decisions that AMC managers made as the company responded to internal and external environmental factors from 1954 to 1987. The history of AMC reveals patterns of management decision-making and shows that history repeats itself. Even with a carefully crafted strategic vision, AMC’s history illustrates that strategic planning is not a linear function. Knowledge of such prior experiences may provide current decision-makers with greater insight into developing business strategies to make a difference and change the future. Studying the history of this company enhances awareness of some of the decision-making problems within the competitive environment in the auto industry. This review may serve to provide some lessons for decision-makers in using innovative approaches, as well as the reasons of some of the results gained from forming joint ventures and other alliances.