It costs to balance power. Inequality is free or at least cheap.
General Motors balanced power, got two organization to have the same goals or at least similar goals, with Motors Holding Company. Motors Holding is General Motors venture capital firm. It finances young dealers, looking for the strongest individuals. As it is a unit of GW, it aligns the interest of these dealers with the corporation. When a dealer is having trouble, this unit can go to the units of General Motors as that dealer’s representatives. A manager in General Motors “will be much more willing to accept Motors Holding as unbiased and as likely to be right than he would be
to accept a dealer.” Drucker must be talking about dealers that must small businessmen in deed. A business of two or three people. A salesman, a manager and a mechanic? My olds dealership had 3 salespeople in the 50s. It had a dozen in the 70s.
It is a clever idea but Drucker’s text suggest a few issues. First, the profits of Holding Motors is limited. In effect, GM is paying to balance the goals of dealers with the goals of the company. Second, the dealer is required to buy back shares of the dealership as quickly as possible. It suggests that the dealer may also be paying for this service by not having the same kind of flexibility to negotiate terms.