I – Strengths
Strength 1: Detroit receives freighters from more than 100 world ports
The Detroit River is a 24-mile long river and one of the busiest rivers in the world and receives freighters from more than 100 world ports (Detroitmi.gov, 2014). This is a long-term asset the city of Detroit has since it connects Lake Michigan, Lake Huron, St. Lawrence Seaway and Erie Canal. During the first half of the 20th century during Detroit’s rapid industrialization, the river became polluted but in recent days much effort has been put to restore and conserve the river. According to a study, 150,000 jobs depend on the river crossings and its pretty much guaranteed that the river would be useful for a very long time. It also has a lot of potential to raise its economy by either implementing a higher tax on exporters or by expanding its services enabling more jobs for the city.
Strength 2: Manufacturing facilities
We know the city of Detroit was the 4th largest city in America during the first half of the 20th century since it was where the biggest motor and manufacturing companies used to be. Currently, the motor manufacturing business is dead, but the facilities and company plants are still there. These are huge assets; they could be sold to other manufacturing companies who could take better use of these resources for extra revenue (Carey, 2013).
II – Weaknesses
Weakness 1: Low Diversification
“Detroit has been historically dominated by the automotive industry, and has not been able to redeploy its knowledge and practices in the same way” (Sassen, 2013), said a professor from Columbia University. Detroit’s economy depended a lot on the economic performance of the automotive industry, which was risky because whenever a decline of the auto industry, the city’s economy would also decline. The law of diversification says that assets must be split into different sectors for lower risk.
Weakness 2: Poor financial plan
According to the Detroit Emergency Manager, the city is insolvent because “it continues to incur expenditures in excess of revenues despite cost reductions and proceeds from long-term debt issuances – it is clearly insolvent on a cash flow basis” (CNBC, 2013). Operating expenses have been rising and exceeding revenues by about $100 million a year since 2008 (CNBC, 2013). Its debt is getting even bigger and with the way the city is performing they will not get out of bankruptcy any time soon; they need to build a new financial plan. The long-term debt is killing Detroit; it should be renegotiated or restructured if the city is to be put on the path to a sustainable future.
III – Opportunities
Opportunity 1: New arena project
A 650 million dollar investment in a new arena will create approximately 5,550 jobs in the city of Detroit during construction and about 1,000 jobs permanently (Detroitnews.com, 2014). The arena plans to host many more events than the Joe Louis Arena does (another arena in city of Detroit), including games for its local hockey team as well as concerts and other crowded events. It will help the Detroit economy in terms of real estate because it will help bridge the gap between midtown and downtown by stabilizing property prices and increasing it as a whole over a larger region.
Opportunity 2: New for-profit farms
One of the richest men left in Detroit, John Hantz, has an idea of creating land scarcity by converting the abundant empty pieces of land into a large-scale for-profit farm. This is a great opportunity for the city of Detroit because according to Hantz, “it will restore big chunks of tax-delinquent, provide decent jobs with benefits, supply local markets and restaurant with fresh produce, attract tourists from all over the world, and most importantly, stimulate development around the edges as the local land market tilts from stultifying abundance to something more like scarcity and investors move in” (Whitford, 2009). It’s a great opportunity because with land prices dropping it makes it more possible to succeed in the farm business plus it will hopefully add diversification to the city’s assets.
IV – Threats
Threat 1: Higher minimum wage
The minimum wage has been raised from $7.25/hour to $10/hour, a big increase (Detroitnews.com, 2014). Most of the times the minimum wage increase hurts the economy because it tends to help the low class but not the high class. The high class are the most responsible for the economy so if it doesn’t help the high class, the economy of the city of Detroit will probably not get any better. However, studies show that sometimes the minimum wage raise helps to pump up the economy temporarily and get a bit more cash flow.
Threat 2: Sale of electric and hybrid vehicles jumped 84% over the last year
Detroit’s competition in the motor industry has been getting even tougher. Its competitors Toyota, Tesla and Nissan have been leading in electric and hybrid vehicles (Shepardson, 2014), and none of those companies belong to the city of Detroit. According to General Motors, “sales of its plug-in hybrid Chevrolet Volt sales fell 9.2% in December” and “CEO Dan Akerson said he wanted Volt production to be 60,000 in 2012 – but demand hasn’t met the company’s expectations” (Shepardson, 2014). Is not a big surprise that they have not succeeded with this new generation of cars since for many years they specialized on manufacturing fuel motors. It is expected that electric and hybrid cars will become more popular as time passes by so it may be a serious threat for General Motors if they don’t innovate and compete with the other hybrid and electric car makers.
VI – Strategic Model – Operational excellence
I think Detroit city should use the Operational Excellence strategy (best total cost) because they have all the skills for outstanding operations and production, but they lack the demand they expect to bring up the economy, as it was during the first half of the 20th century. Since they went bankrupt, they probably do not afford to invest millions of dollars for obtaining product leadership. Companies of Detroit just need to get busy again manufacturing with high demand and find the way to reduce costs in their operating procedures.
Works Cited

Carey, Nick (2013). Detroit manufacturing rekindled by newer companies betting on city despite bankruptcy. [ONLINE] Available at: http://www.huffingtonpost.com/2013/08/02/detroit-manufacturing_n_3693304.html. [Last Accessed 13 February 2014].

Sassen, Saskia (2013). Unlike Detroit, Chicago’s diversified industrial base has helped it to successfully switch from a material to a knowledge economy. [ONLINE] Available at: http://blogs.lse.ac.uk/usappblog/2013/09/02/detroit-chicago-economy/. [Last Accessed 14 February 2014].

Shepardson, David (2014). 2013 electric vehicle sales jump 84%. [ONLINE] Available at: http://www.detroitnews.com/article/20140103/AUTO01/301030070. [Last Accessed 14 February 2014].

Unknown (2014). Fascinating facts. [ONLINE] Available at: http://www.detroitmi.gov/Visitors/AboutDetroit/FascinatingFacts.aspx. [Last Accessed 14 February 2014].

Unknown (2014). Higher minimum wage hurts economy. [ONLINE] Available at: http://www.detroitnews.com/article/20140211/OPINION01/302110002/0/OPINION01/Our-Editorial-Higher-minimum-wage-hurts-economy. [Last Accessed 14 February 2014].

Unknown (2013). Detroit emergency manager says city is 'clearly insolvent'. [ONLINE] Available at: http://www.cnbc.com/id/100732776. [Last Accessed 13 Febrauary 2014].

Unknown (2014). New arena project good for Detroit. [ONLINE] Available at: http://www.detroitnews.com/article/20140214/OPINION01/302140004/0/OPINION01/New-arena-project-good-Detroit. [Last Accessed 13 February 2014].

Whitford, David (2009). Can farming save Detroit?. [ONLINE] Available at: http://money.cnn.com/2009/12/29/news/economy/farming_detroit.fortune/. [Last Accessed 15 Febrauary 2014].