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Source: Industry and Market Structures 79

America. And it succeeded. Ten years later, in the mid-seventies, GM
shifted gears and decided to contend with Ford and Fiat for leadership
in Europe—and again it succeeded. In 1983—84, GM, it would seem,
decided finally to become a truly global company and to link up with a
number of Japanese; first with two smaller companies, and in the end
with Toyota. And Mercedes in West Germany decided on yet another
strategy—again a global one—where it limited itself to narrow seg-
ments of the world market, to luxury cars, taxicabs, and buses.
All these strategies worked reasonably well. Indeed, it is impossi-
ble to say which one worked better than another. But the companies
that refused to make hard choices, or refused to admit that anything
much was happening, fared badly. If they survive, it is only because
their respective governments will not let them go under.
One example is, of course, Chrysler. The people at Chrysler knew
what was happening—everybody in the industry did. But they
ducked instead of deciding. Chrysler might have chosen an
“American” strategy and put all its resources into strengthening its
position within the United States, still the world’s largest automobile
market. Or it might have merged with a strong European firm and
aimed at taking third place in the world’s most important automobile
markets, the United States and Europe. It is known that Mercedes
was seriously interested—but Chrysler was not. Instead, Chrysler
frittered away its resources on make-believe. It acquired defeated
“also-rans” in Europe to make itself look multinational. But this,
while giving Chrysler no additional strength, drained its resources
and left no money for the investment needed to give Chrysler a
chance in the American market. When the day of reckoning came
after the petroleum shock of 1979, Chrysler had nothing in Europe
and not much more in the United States. Only the U.S. government
saved it.
The story is not much different for British Leyland, once Britain’s
largest automobile company and a strong contender for leadership in
Europe; nor for the big French automobile company, Peugeot. Both
refused to face up to the fact that a decision was needed. As a result,
they rapidly lost both market position and profitability. Today all
three—Chrysler, British Leyland, and Peugeot—have become more
or less marginal.
But the most interesting and important examples are those of much
smaller companies. Every one of the world’s automobile manufactur-
ers, large or small, has had to act or face permanent eclipse. However,