When the first mass produced automatic transmission was introduced to the public in the 1939 Oldsmobile, it was produced by the Hydramatic Division of General Motors which was a joint venture between the Cadillac and Oldsmobile divisions of GM. The first few years, Hydramatic was its own division and subsequently a profit center. As the demand for automatic transmission skyrocketed for domestic car production and then later for tanks in WWII, the division was transformed into a cost center. Hydramatics were used in many GM cars, not just Cadillacs and Oldsmobiles. Hydramatics were also used in early Fords and other independent makes in the 1940's and 1950's.

1. What issues do you believe arose that caused friction between the GM divisions that led to Hydramatic becoming a cost center instead of a profit center?

2. What would be the argument to have kept Hydramatic a profit center? How could this have successfully been accomplished?