January 3, 2000
E-business drives automaker's quest to boost market share
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The unit's focus is simply to get more customers. "We want to bring into GM customers who might not have considered GM before," says Mark Hogan, a GM veteran who was VP of small-car operations. He was named president of eGM when it was launched this past summer.
To attract new customers, eGM aims to increase visits to GM's 100 Web sites tenfold, to 40 million hits per month, Hogan says. To do that, eGM will have to gain a bigger presence on the Internet via partnerships with companies such as America Online, CarsDirect, Consumer Reports, Go, Kelly Edmond, and Yahoo, Hogan says.
GM's market share has plummeted in recent years. In November, the company reported that its U.S. market share dropped to 27%, the lowest level since the 1920s. By comparison, in the early 1990s, GM had more than 36% of the U.S. market. Every point of market share is equal to 160,000 car sales, worth about $3 billion in revenue, Hogan says.
On the Net, GM has an 18% share, meaning that 18% of the people who use the Internet to research cars before they purchase are GM customers. Only 0.5% of all cars are purchased over the Web, but the industry's goal is to have that grow to 10% in the next three years.
To be included in the expected upward trend in Internet sales, the parent company is depending on eGM to be a catalyst for change, acting as a central technology repository to "drive Internet projects and watch them until execution," Hogan says.
While eGM's ambitions are great, its resources are relatively sparse: It has about 60 employees and that number is likely to stay at less than 100, Hogan says. This compares with GM's 500,000 employees worldwide. Still, Hogan says, when it comes to tapping needed resources, "we have a blank check." The group also has the blessings and support of GM's top management, including CEO and chairman John F. Smith.
Despite eGM's low head count, forming a dedicated group to drive Internet initiatives within a big company is an increasingly popular business model. For instance, Procter & Gamble Co.'s P&G Interactive is an internal "center of excellence" that helps the consumer-products company's product groups jump-start Internet business-to-consumer initiatives.
P&G's multifunctional group has twelve full-time and six part-time employees, including IT, marketing, and business staffers, who help the various brands launch marketing programs on the Internet. P&G has about 100,000 employees worldwide.
Doug Aldrich, a VP at EDS unit A.T. Kearney Inc. and a consultant who has worked with eGM, says internal business units focused on E-business initiatives make sense for large companies such as GM. "You need this kind of inside spin-off to really effect change in the enterprise," he says. "You have to reinvent the core business without being encumbered by the legacy practices of the core business. This was how the PC got invented within IBM. Any other approach--task forces or committees established within the existing corporate structure--can't survive the ankle-biters and naysayers whose careers are being threatened."
Photo of Hogan by David Cox
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