U.S automobile companies had been very successful up until the 1970’s. They suffered enormous losses during that period. This is due to their inability to adapt to changes in the economy and the changes in consumers’ taste. They continued with their old values, and neglected new opportunities and threats in the market.

The first sign the U.S automobile companies missed was the oil crisis in 1973. Oil price spiked and small fuel efficient cars from foreign companies took advantage of that while U.S companies were still focusing on fuel consuming trucks and cars. Consumers quickly turned to the fuel efficient cars over the traditional fuel consuming light trucks or passenger cars. Although the U.S companies had responded to this shift in taste but it was too late because they had lost large amount of market share already.

Another major problem the U.S companies did not fix in time was their product quality and their inattentiveness to the safety of their products. As consumers were become more aware of the quality and the safety of the cars they drove, all the defects in the U.S cars were exposed. All these defects resulted in enormous expenses for the automobile companies as they had to recall their products. Moreover, consumers had lost trust to the U.S cars due to these poor qualities.

The massive profit loss resulted in that period proved that companies could not stick with one business plan. The U.S automobile companies’ reluctant to move to more compact cars led them to lose a lot of market shares, and they did not change their value proposition to match the consumers’ need in high quality cars resulted in profit lost, even bankruptcy as well. Therefore, companies need to be more flexible with their business plans in order to be sustainable.

http://en.wikipedia.org/wiki/Automotive_industry_in_the_United_States