Page 85 - ENTREPRENEURSHIP Innovation and entrepreneurship

53231_Innovation and Entrepreneurship.qxd 11/8/2002 10:50 AM Page 78

78 THE PRACTICE OF INNOVATION

Another American, William Crapo Durant, saw the change in
market structure as an opportunity to put together a professionally
managed large automobile company that would satisfy all segments
of what he foresaw would be a huge “universal” market. He founded
General Motors in 1905, began to buy existing automobile compa-
nies, and integrated them into a large modern business.
A little earlier, in 1899, the young Italian Giovanni Agnelli had
seen that the automobile would become a military necessity, espe-
cially as a staff car for officers. He founded FIAT in Turin, which
within a few years became the leading supplier of staff cars to the
Italian, Russian, and Austro-Hungarian armies.
Market structures in the world automobile industry changed once
again between 1960 and 1980. For forty years after World War I, the
automobile industry had consisted of national suppliers dominating
national markets. All one saw on Italy’s roads and parking lots were
Fiats and a few Alfa Romeos and Lancias; outside of Italy, these
makes were fairly rare. In France, there were Renaults, Peugeots,
and Citroens; in Germany, Mercedes, Opels, and the German Fords;
in the United States, GM cars, Fords, and Chryslers. Then around
1960 the automobile industry all of a sudden became a “global”
industry.
Different companies reacted quite differently. The Japanese, who
had remained the most insular and had barely exported their cars,
decided to become world exporters. Their first attempt at the U.S.
market in the late sixties was a fiasco. They regrouped, thought
through again what their policy should be, and redefined it as offer-
ing an American-type car with American styling, American comfort,
and American performance characteristics, but smaller, with better
fuel consumption, much more rigorous quality control and, above all,
better customer service. And when they got a second chance with the
petroleum panic of 1979, they succeeded brilliantly. The Ford Motor
Company, too, decided to go “global” through a “European” strategy.
Ten years later, in the mid-seventies, Ford had become a strong con-
tender for the number one spot in Europe.
Fiat decided to become a European rather than merely an Italian
company, aiming to be a strong number two in every important
European country while retaining its primary position in Italy. General
Motors at first decided to remain American and to retain its traditional
50 percent share of the American market, but in such a way as to reap
something like 70 percent of all profits from automobile sales in North