Business Changes in General Motors Review

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Introduction

According to Mathis and Jackson (2008) in certain situations, it’s essential to embrace organizational changes because change carries revolutionary character. Besides, organizational changes are conventionally linked with development for the course of evolution, meaning steady transformations. Therefore, discussing the need for change in an organization is pertinent to underscore that it’s usually caused by dissimilar factors that are relatively natural, as well as objective, especially liberated economies where multinational companies, such as General Motors fall (Mathis and Jackson, 2008). What’s more, as a result of globalization, it’s probable to anticipate that multinational firms that fail to embrace change to safeguard their competitive edge and enhance their market position, are destined to decline and possible demise. Indeed, the fast-paced globalization compels firms with an international presence to embark on noble actions aiming at organizational transformations. The liberated trade along with financial barrier eradication has resulted in the rapid growth of new-fangled markets and several competitors the world over (Mathis and Jackson, 2008). This paper discusses how General Motors as an organization has changed its operations through various products development, challenges that were the driving force to these changes and those changes that have been implemented by the organization for it to remain competitive within the market. Further, the paper evaluates the theories that are brought about as the business strives to survive as the question, demonstrates changes in the organization due to turbulent business environmental conditions today. Turbulence in English will imply a condition that is uncertain, complex and changing suddenly or quickly.

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General Motor Company was formed by William Crapo Durant in 1908 and has its global headquarter at the GM Renaissance Center in Detroit. General Motors being the largest privately-owned manufacturing industry in the world has been the global industry sales leader since 1931and as of 2004 its assets were nearly valued at $480 billion. GM employs about 325,000 workers, and has a production operation in 33 countries and sells cars in more than 200 countries. It also owns other motor vehicle manufacturers: Holden, Hummer, Opel, Vauxhall and Saab. It has joint ventures with Toyota in the United States of America, Shanghai Automotive Industry Corporation in Asia and with other firms throughout Europe.

For the last 76 years, General Motors was the global sales leader. Unfortunately, this trend did not last for long. In 2006, the company sold 9.1 million vehicles, yet its global market shares continued declining, GM problems stemmed from its competitive capabilities in the North American market, where Toyota and other foreign automakers made substantial gains. Towards the beginning of the year 2007, Toyota became the world’s largest automaker, but in the same year General Motors after experiencing several years of significant losses it returned to profitability. Interestingly, General Motors’ return to profitability was not attributed to its success in North American operation. However General Motors’ recent return to profitability was due to Asian operations, primarily in China, General Motors invested more than two million dollars in China which in the long run resulted in a positive return. This sale in China came from a 50-50 joint venture with the Shanghai Automotive Industry Corporation in 2006. In the same year, this joint venture manufactured more than 400,000 passenger automobiles and sold 875,000 cars in China this was 275,000 cars more, sold by Toyota in the same year, thus GM made a large investment in Asia to offset Toyota’s gain elsewhere.

Although GM’s operation in Europe downsized, it had upsized in the Chinese market after the sale of 7.2 million light trucks and automobiles in the year 2006, thus it surpassed Japan to become the largest vehicle market in the world. General Motors also had the second-highest market share in the Chinese market behind Volkswagen. Other factors that had led to GM achievement in China other than its partnership with China include; transfer of technology and introduction of managerial capabilities to Shanghai Automotive Industry Corporation through the joint venture, this helped it develop its own branded auto that contended with GM Bucks sold in China, it also invested about $500 million in Brazil to put up new manufacturing facilities to make up for the changes in Europe market decline. Its entry to the international market was meant to expand its market and to earn a positive return on its international investment (Stair and Reynolds, 2010).

Organizational Changes in General Motors

According to Sopar (1984); Bruining & Allegro (1984), organizational change is the purposeful and planned action of which the final results (structural changes) are more or less accurately formulated. Bruining and Allegro term organization development as determined planned activities, directed at changing a sub-system. It’s apparently clear that the home country of operation is often the most important source of competitive advantage, but research shows that a firm continues its growth into multiple international locations (Thomas, 1993).

Contrary to GM’s success it has had a number of challenges prior to its formation in 1908. Initial the road was smooth for the corporation after a partnership between Charles Mott, the founder of the first carriage company and William Durant the proprietor of the holding company that lead to the formation of General Motors Corporation. This success did not last for long since, in 1910, Durant who was by then in charge of the corporation lost power to the bank trust due to a crumple of new vehicle sales and debt accrued by the company in its operations.
In order to get General motors back, Durant secretly purchased the company after earning money from the Chevrolet Motor car company which he had started jointly with Louis Chevrolet in 1911 (Trist, 1990).After a remarkable proxy war in American business history Durant took back the control of the company, he then revolutionized General Motors Company into General Motors Corporation in 1916. Shortly after he then lost control this time for good, after the collapse of the new vehicle market, but Alfred P. Sloan led it to its post-war global dominance after taking charge of the corporation.

General Motors’ success was evident again during Alfred P Sloan’s term when the company outsmarted Ford Motor Company in sales during the early 1920s. Customers wanted the low-priced and most basic car models and for Alfred to meet these demands he invented new ways of managing a complex worldwide organization like GM (Tremblay, 2007).

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In March 2005 General Motors announced momentous organizational and leadership changes designed to develop and hasten GM’s global product development. CEO Wagoner announced the changes adding that the future success of General Motors in the global automotive market depended heavily on the ability to leverage broad and deep resources in the key sector of product development. He further commented that they were realigning and expanding some key administrative responsibilities, to necessitate capitalization on significant development opportunities seen around the world. The attempts were to accelerate efforts to get more cars and trucks in the market faster, to provide value to their customers and to increase their global sales.

Problems

To get to the root causes of turbulence in General Motors a number of questions had to be answered related to the direction of energy resources, alternative technology, economic conditions, cultural values, internal emission pollution and policies were to be studied. The answer would estimate the market shares; provide input to forecast the market size for electric vehicles in general. Regrettably, the causes and effects of key environmental forces on any business are complex and obscured with uncertainty which makes them difficult to depict and quantify (Emery, and Trist, 1965).

When the housing market and the greatest American economy collapsed, the auto market went along with it. In March 2005 GM announced losses of almost a billion dollars for the previous six months and dropped its shares to the lowest level in more than a decade. This was considered to be the biggest single-day loss since 1987 this was reflected in the Dow Jones American Stock Market of which GM’s share lost 35 points. With GM rating being the strongest among the three-car manufacturing company, it was now behind in the race with the plans to cut off 10% of the production of cars in North America. This sped up the bleeding on the American car institution’s balance sheet as the company pleaded for loans to avoid bankruptcy over the holiday seasons of 2008 (Emery. and Trist, 1965).

Unfortunately, in June of 2009 GM eventually succumbed and filed for bankruptcy, after the intervention of the market researchers and analysts GM crisis was attributed to their dependence on the home country for their market and increasing health care cost, as the company was providing health care coverage to almost 1.1 million people in America, another factor was the introduction of globalization, the market expanded but this expended market contributed towards the economic problems of the United States of America. US companies especially General Motors was no longer enjoying monopolistic powers in the business world, as it was facing a big threat from foreign companies like Toyota, Honda and Nissan (Kurtz et al, 2007).

Brands’ introduction required large investment to maintain equality and were a barrier to innovative thinking, this lead to fixed investment in SUV production and inadequate experience in the production of smaller vehicles. Economy fluctuation in the country affected sales leading to the increase in the prices of commodities and rise of fuel prices and also the devaluation of the American dollar weakened the currency in the global market, this curtailed their buying potential. The company was greatly affected by increased regulations like those passed in Copenhagen Summit, which regulated the percentage of carbon emission in a country and also the regulation recyclable parts.

Solution to Problems

However what happened after the bankruptcy of GM company was one of the most controversial, but also one of the most successful, incidents of government intervention into the private business of all times. The government scrubbed off all the companies’ arrears and gave them additional finances to recuperate from their calamity. (Hitt et al, 2008).

Conclusion

New product development and forecasting for electric vehicles must be considered in the context of selected universal forces that interact with and affect the expansion of the market prospect for them. To attract customers through the integration of car design and technology, GM engineers are selecting software platforms on which to base these systems and determine how to distribute the software system throughout the car components. Craft production as far as GM is concerned involves skilled workers making products according to customers’ requirements and catering to individual preferences. A skilled worker must be acquainted with the product design, machine function, tooling and integrate these into operation. Government policies regarding emission standards, mileage standards and fuel prices have certainly affected GM, these and other changes may play a role in the future and may lender GM less competitive in the future. In conclusion, General Motors have done an almost excellent job turning things around and marketing the new company.

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Reference

Emery, F. and Trist, E. (1965). “The causal texture of organization environments”, Human Relations, Vol 18 p 21-32

Hitt, M.A et al (2008). Strategic Management: Competitiveness and Globalization, Concept and Cases, Cengage Learning Inc.

Kurtz D.L et al, (2007). Contemplary marketing, Canada: Cengage Learning Inc.

Stair.R and Reynolds.G, (2010). Principle of Information System, Newyork: Cengage Learning Inc.

Thomas, R. J., (1993). New Development: Managing and forecasting for Strategic success, Canada: John Wiley & Sons Inc.

Tremblay, V. J., and Tremblay, C.H (2007). Industries and Firm studies, Newyork: M.E Sharpe Norton, S.W.

Trist, E. (1990). The Social Engagement of Social Science), The University of Pennsylvania.

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