Why don’t we see Hummer (the very Status Symbol Sports Utility Vehicle) on the road anymore ? Let’s understand it with STEEPEL analysis…

Hummer’s demise: Remember that giant square box car which looks like they just came from Hollywood film set. When money was flowing freely in the late 90s, Hummer established itself as a status vehicle (designed for military and available to the general public). The fact that you needed a big bank balance just to fill it up with fuel was part of the appeal. Hummer was car of the car sub-industry of large recreational commercial vehicles, but Hummers doesn’t exist anymore. In 2010, GM tries to sell the brand to Chinese Co. that failed through and shortly ceased production. 

We can learn from Hummer's demise as how the remote environment in an industry operates and how it affects its future growth. STEEPLE is the tool used to perform this analysis.

Setting the context: To being with, it is obvious that an organization operates within an industry and each industry has its life-cycle beginning with start-up and ending with decline / renewal stage. So, how do we define an industry ? Well, industry is a group of organizations or business units participating in similar economic or commercial activities, producing similar products or services. For instance, the clothing retail industry is made up of organizations that manufacture and/or distribute clothing. Organizations operating in industries are influenced by multiple factors (to be precise; internal and external) which affect the industries and are out of organization’s control. 

The analysis used to understand the length, breadth and extent to which an organization operating in an industry being affected is called Remote Environment Analysis. The said analysis will be used on this article to understand what lead to the demise of SUV Hummer. So, let’s begin…

Political & Legal factor: Around 20 liters of fuel/100 kms, Hummer was not environmentally friendly car. Govts. across countries have moved to pass legislations that penalizes products that pollute more (in the form of pollution taxes). Taxes on fuel are also a big revenue earner for many Govts. Some regulations can generate growth but the others can increase costs and stifle growth.  These laws have impacted the larger recreational vehicles negatively.

Economic factors: The Hummer ran into timing problem. Disposable income levels dropped and the fuel price sky rocketed which made hit he luxury car industry. Economic factors can include economy growth rates, inflation, interest rates, foreign exchange, unemployment levels and wages growth. If the economy is going through low growth (declining in a recession), this may make it unrealistic for a business plans aiming for a large increase in new customers.

Social factors: Social factors were initially powerful for Hummer as it was linked with status of the people driving the high-powered military style vehicle. However, they are no longer helpful as consumers attitude shifted towards being more environmentally friendly car and are purchasing fuel efficient cars.

Technological factors: For a large recreational car industry, disruptive technology like Tesla’s entry to the market and along with several other electric car industry has signaled a fundamental shift away from the cars like Hummer. Computers run cars, raise efficiency, handling , safety and performance in several ways.

Environmental & Ethical factors: For the automotive industry, environmental factors are not looking good. Emission scandal that affected Volkswagen and demise of Hummer highlights the keys issues. Reduction in resources will raise raw material costs for many companies. New industries (wind turbines and solar energy) with alternative sources of energy are very young and growing as these companies are providing efficiencies and helping the technology to reduce pollution.

Synopsis: STEEPLE is an effective tool for identifying and understanding the effects of remote environment on the growth of an industry. For success of an organization operating in an industry, is eminent to consider the remote environment factors. Absence to consider the same could lead to short-term hype and demise in the long-term.