If a car manufacturer focuses a lot on downstream activities such as warranty fulfillment and financing operations, but also considers the differentiation and cost of the cars themselves, the resulting strategy is likely to be a failed strategy.

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Directing an overwhelming amount of managerial time, attention, and resources to value-creating activities that produce the greatest margins, to the detriment of other important, albeit less profitable, activities is a pitfall for companies. For example, a car manufacturer may focus too much on downstream activities, such as warranty fulfillment and financing operations, to the detriment of differentiation and cost of the cars themselves.

If a Car Manufacturer Focuses a Lot on Downstream Activities