Ford’s bet on $4 gas
As Forbes reports here, Ford and GM have been retooling their plants to shift away from SUVs to smaller cars. Underlying this business plan is a big assumption about the future of gas prices — they are explicitly betting on gas in the $4 to $4.25 range per gallon. So here are a few questions to consider:
What are the underlying assumptions that drive your business model? These assumptions could be about interest rates, commodity prices, technology, competition, customer behavior. These assumptions pervade business plans, but they are seldom made explicit or tested. What happens if your underlying assumptions are wrong?
