Allison Transmission: Creating a European Face

Allison Transmission Division is a $2 billion unit within General Motors (GM) with a very specialized product - heavy-duty automatic transmissions for commercial vehicles. Although the division is part of GM, more than 90 per cent of its output is directed to external customers. The case presents a familiar challenge faced by many globalizing firms: a pioneer and leader in a market holding more the 60 per cent of the market in North America, but less than 10 per cent outside North America. The presence of leading original equipment manufacturers in Europe who are the key customers for Allison, and the large market potential in Europe presents a strategic opportunity, but the cultural and institutional differences present a formidable challenge. The technological differences in Europe augments this challenge and the uncertainty surrounding a new hybrid technology that is emerging in Europe make the decision even more complex. Also presented is the company's attempts in Europe for a decade leading to the trigger issue - a decision between a joint venture in Austria and a wholly owned unit in Hungary. The case provides a rich organizational context to challenge students to go beyond a typical alternative analysis to consider the broad strategic issues and identify a comprehensive strategy for Europe.