General Motors and Ford Motor Companies’ Change Management

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Introduction

Change management is the methodical style and use of knowledge, implements, and resources to address the change. It encompasses outlining and implementing corporate policies, arrangements, processes, and technologies to manage transformations in external environments and the business surrounding. Successful change administration surpasses project handling and technical roles undertaken to execute organizational alterations and entails leading the staff to align to the significant changes within the company (Jayatilleke & Lai, 2018). The core objective of the change management is usually to effectively adopt innovative procedures, goods and commerce approaches while regulating negative results. This paper discusses the management of vast organizational transformations that may inhibit substantial influences on a company and its employees. It conducts this assessment while using Ford Motor Company and General Motor Company as the main point of focus and how the changes impacted their operations.

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Background of the Companies

General Motors and Ford Motor Company have dealt with adverse issues within the pre and post TARP influencing them to redefine and transform how they conduct business. Both organizations have since responded to such pressures differently. Ford Motor Company being one of the leading automotive producers of all time commenced its operations under the management of Henry Ford in Detroit, Michigan. Henry Ford’s first manufacture was in 1903, which was model A, with an under the floor with its engine retailing at $850 (Langerud & Jordan, 2020). In the first season of commerce, the company traded 1,708 vehicles. On the contrary, General Motors Company was established in 1902 by William Durant, who believed that the locomotive would one day substitute the horse chariots (Kay, 2019). The organization did not gain market presence until 1908, and began with a Buick holding enterprise. By the close of 1908, General Motors Company had purchased Oldsmobile, and in 1909, they acquired Cadillac, Elmore, and Oakland. In the beginning of 1990s, automobile manufacturers faced significant challenges due to the market crash of 1907 which adversely impacted numerous small and medium businesses which depended on the banks for financing (Kay, 2019). Durant saw the economic recession as an opening, thus he bought other smaller car manufacturers and firms that created automotive accessories and spare parts. Consequently, in 1908 all these companies that were purchased by General Motors Company were consolidated under the GM umbrella (Kay, 2019). The approached adopted by the two motor vehicle echelons have since enabled them gain market share and competitive edge within the current market.

Business Problem Statement

The continuous transformations within the organization of General Motors and Ford Motor Company have led to a devastated inflation and economic slump. However with the structural and new administrative abilities, these corporations have increasingly developed over the years. The 2008 economic downturn which significantly affected the American locomotive sector influenced the industry professional, scholars, and media outlets to make various recommendations concerning transforming and restructuring the Big Three aspects of the organizations (Fetzer, 2017). Most of these comprise bankruptcy, a court-supervised technique of restructuring, and closure of companies. The locomotive sector’s crisis of 2008 to 2010 was also part of the international financial slump that impacted Asian and European car producers, but was adversely felt in the American locomotive production sector (Fetzer, 2017). The economic drop further impacted the Canadian marketplace by virtue of Automotive Products Trade Agreement.

The American Motor sector was weakened by the significant upsurge in prices of vehicle fuels connected to the 2003 to 2008 energy predicament which discouraged acquisition of sport utility vehicles (SUVs) and pick-up trucks that have low energy economy. The popularity and relatively high income margins associated to these locomotives inspired the American Big two vehicle manufacturers, Ford Motors and General Motors to regard them as their primary products. Therefore, with limited fuel-effectual models to supply the market, the sales for the locomotives began to decline. In the ending period of 2008, the situation became critical as the credit crisis influenced the cost or raw materials compelling the companies to file for liquidation and impending bankruptcy (Fetzer, 2017). The Canadian and United States federal administrations issued exceptional monetary bailouts amounting to 85 million dollars to enable the corporations to reorganize and jettison legacy debit through Chapter 11 bankruptcy with the intention to curb substantial job fatalities, and disrupting destruction to the general production industry.

Changes in Organizations

Organizational transformations occur when a business makes a change from its present state to the desired future position. Managing the organizational transition is the procedure of planning and executing alterations in firms in a way that aims to regulate workforce resistance and cost to thee business, while increasing the success of the change efforts. An element of an enterprise adjustment is the change agent who is catalyst during the change procedure to certify effective organization implementation of an innovative framework (Tavčar et al., 2018). Consequently, for a transformation to become efficient, the managers, shareholders, and employees at the top level of the business should be the role models in promoting the change to all junior staff through training. Fostering transformation can be challenging in all establishments, particularly when the company is expected to make substantial shifts that necessitate coordinated, cross-functional efforts to become productive.

However, the leading auto manufacturing companies were compelled to conduct as an outcome of their failed practices automotive production which was a significant player to the aspects that resulted to the 2008 to 2010 economic slump that influenced international recession. Transformations that comprised more than one sector should therefore be effectively planned and have active backing of all the players involved (Dzwigol et al., 2019). A strategic program is a technique that reacts to a concern that, when solved, will inhibit significant effect on the company’s outcomes.

The adoption of innovative transformations usually necessitate that project administrators understand how to handle organizational modifications. It is vital that they appreciate how to identify shifts and strategize for its impacts, and how it can influence everything from the frameworks, employees, and organizational culture. Handling change has numerous components comprising threats, stakeholders, and communications management. However, the real worth depends on the directors’ and change agents capabilities to detect and antedate the change components in a particular program and plan (Barrow et al., 2017). Therefore, it is essential that the executives and other change agents are skilled to undertake numerous responsibilities identified as images of handling transitions.

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Images of Change Management

Today, businesses are constantly transforming their processes, strategies and procedures in reacting to the dynamism of the global trade market. Companies are faced with external and in-house forces, and in response they are expected to constantly alter their operations. Consequently, numerous scholars have conducted intensive research of the images of change management and how the managers play a role in executing them. There are two distinct images of administration, such as control which identifies a company as a tool and shaping that denotes a business as living. Images can however be referred to as frames, opinions, and metaphors that act as the psychological tactics that impact an individual’s interpretation of what they perceive as happening in their corporations, what they think should happen, and how they should happen. Considering such beliefs, the theory of images of change outcome was created (Lauer, 2020). The concepts state that results are partly inclined and some expected outcomes can be realized and unintentional where only shifts of all intended results can be actualized. Employing various perspectives and images of transitions relies on the kind of transformation, contexts, and stage of change. It is essential to understand that numerous change images can exist, but for such to happen, the change agents and managers should have the capability to utilize the necessary transitions as the events require them.

Organization’s Approaches to Change

Conversely, distinct types of establishments will address transformations in various ways. Likewise, directors in specific positions will tackle shifts in different techniques. Such dissimilar approaches are classified into sic images of administration adjustments comprising, managers, coach, navigator, nurture, caretaker, and interpreter. It is essential to be conversant with such images as it was in the case of Ford Company and General Motor Corporation which are the key point of focus in this paper. By November 2008, both automotive manufacturers asked the American government for a 50 billion dollar bailout to evade bankruptcy (Kaur & Sharma, 2017). Moreover, with several the encounters these businesses faced, they have since become the best locomotive retailers in the United States.

In reaction to the auto industry crisis, the national administration expected that General Motors Company (GMC) would transform their locomotive manufacturing operations to get support from the state government. The three images of transition that were utilized in the execution of adjustments that would propel them back to the top of the international marketplace involved interpreter, administrator, and caretaker. On the contrary, Ford Automobile Company also undertook the responsibility of director, but dissimilar to GMC, it became a coach and navigator in the adoption of innovations. Both establishments played the position of a director as they approached the challenge of bankruptcy linked to increased labor costs, fuel prices since the energy prices surged past 4 dollars in 2008 (Fetzer, 2017). Similarly, they assumed the role of a director as they faced the global economic slump that impacted the Asian and European locomotive producers that discourages the acquisition of SUVs and pick-up trucks, and credit crunch that influenced significant competition from foreign auto manufacturers, and shifting exchange charges.

Next, General Motors Company experienced significant pressure comprising intense collapses in organizational administration involving numerous financial institutions acting recklessly, being negligent, and tackling too many risks without analysis. The moves have seen the businesses face drastic situations during their business operations. Both small and established businesses struggled with paying the healthcare coverage expenses for their staff. The surging energy costs opened large economies for General Motor’s hybrid and electric automobiles as customers shifted towards cheaper fuel types and preferences for smaller and fuel conserving cars. General Motors was further pressured to tackle their concerns of increased structure expenses as it had one of the leading cost systems equated to all auto producers. Considering brand dilution, GMC manages 18 locomotive trademarks that differ in quality and are retailed in different marketplaces (Kaur & Sharma, 2017). The organization is infamous for its bureaucratic culture and structure which is rigid in nature. As a result, the company utilizes such images of change, as caretaker, navigator, and interpreter to adopt transformations that will enhance, strengthen it, and address the concerns as required by the national administration. The changes impacted the general operations of the company and compelled the employees to transitions their working techniques. On the stakeholders’ side, the change impacted the share values of the company and caused their stake to drop, thus they lost a significant amount of their capital. Finally, the transformation of GMC Company’s operations influenced the loss of employment positions, especially the staff designated in the sales department.

On the other hand, Ford Motor Company, who did not accept the government bailout packages utilize such images of change, as navigator, interpreter, and coach as they encountered intense pressure to tackle their poor manufacturing operations that have resulted to poor environmental reports. The locomotive echelon has been ridiculed for its poor strategies to regulate environmental degradation, unbeneficial Europe practices that have seen it loose billions of dollars in the European market (Shein & Bell, 2017). Furthermore, the company has used the two images of change to address the down-surging fuel costs, increasing raw material prices, dramatic competition in the marketplaces, and varying exchange charges. An amalgamation of numerous years of downwards locomotive retail and scarce availability of financial support has further led to additional extensive crises in the motor industry of the United States since the beginning of 2009. During the period, there was the reduction in vehicle sales from 70 percent in 1998 to 53 percent in 2008 (Langerud & Jordan, 2020). Nonetheless, the global capacity for production increased specifically in the European and Asian marketplaces. The United States motor sector has been profitable in each year since 1955 when it actively commenced business, except for the years preceding the American recessions and engagements in wars (Shein & Bell, 2017). The Ford Motor Company has therefore managed to handle its operations through their selected images of change despite the criticisms and adversities they initially faced. The director image of change enabled the Ford Company to retain its employees as they navigated through the economic recession period. However, it impacted the tasks of the managers as they were compelled to alter their roles to help the workers adjust to the changes in the company.

Communicating the Change

Despite the widespread of the blame for the 2008 to 2010 economic recession falling on the automobile corporations for their poor manufacturing practices, every player is culpable since the origin of the significant problems resulted from the partnership between the businesses and the government. The alliance has since led to poor decision-making and strategy formulation in Washington. Resolving the locomotive industry issues was an opening to commence the restructuring of a more efficient economy that transforms the association between companies and national administrations, and shares the resources equitably (Fetzer, 2017). The General Motor Corporation gained their current presence and appreciation because of their choice to adopt the coach and interpreter image, persistence, and determination to become the leading players in their sector.

The coach image enabled the company’s management to assess their actions and inactions to inspire adoption of transformations within the General Motor Company. In the adoption of such image of change, the transition can fail if the supervisors initiating the change feel demotivated; the employees are resistant to the transformation, and the company’s power and politics are perceived as in the case of GMC Motors (Fetzer, 2017). Therefore, during the transformation process, it was essential for the company to adjust its strategies to ensure they aligned to the coach image or change and they realized this through employing a visionary CEO. Similarly, the interpreter image which necessitates a sense-making skill approach was also vital for the GMC Company to aid them in understanding their prevailing situation. The image of change would enable the organization’s managers to instill sense amongst the supervisors to enable them communicate the transition among the employees who play a significant role in the business (Fetzer, 2017). Consequently, the interpreter and coach images of change were essential for the GMC Corporation to realize its current market share and competitive edge,

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With several bankruptcy and recession challenges Ford and General Motors face, their concentration on being the leading auto dealers has come to a apprehension. After the national government bailout in 2008, GMC has experienced significant transformations and redefined the methods in which it conducts business. The approach instigated the appointment of new members to the company’s management team with Daniel Akerson becoming the Chief Executive Officer (CEO). GMC presently retails 18 vehicle brands to accommodate the growing consumer demands (Tavčar et al., 2018). Change is influenced through diligence and hard work from stakeholders, directors, employees, and other players that are engaged in the production process.

The company’s new CEO assumed the interpreter image, which necessitates a sense making strategy including sense-giving and breaking to the situation an organization is facing. The image requires that transformations must occur to the individuals who intend to execute the change. Furthermore, the newly appointed GMC Corporation’s CEO who also portrayed the coach image, was expected to clearly communicate the intentions of the change and ensure its understanding amongst other team members comprising stakeholders, managers, and employees (Fetzer, 2017). Considering the CEO experience in management, the latter understands that everyone in the company may not promptly adapt to the alterations thus the CEO’s objective was to focus on the developing specific level of support to ensure the late adopters are accustomed to the change eventually. The senior manager planned to achieve such milestone by offering interpretations of the transformation to create sense for all the players in the GMC’s changing surrounding.

Conclusion

Change management plays a significant role in influencing an organization’s success in the turbulent and competitive nature of the current business environment. Numerous companies that were established before the economic slump that did not effective handle the transformations has since undergone closure while other are still presently struggling to maintain their operations. However, aligning and adjusting company strategies to align with the selected images of change is the approach that has kept Ford and General Motors competitive and gain significant market share despite the crisis they faced. Analyzing, understanding, and selecting the appropriate image of change is therefore vital to enable a business address the various shifts in the market, business industries, and government policies. Change management and images of change are therefore vital aspects that should be investigated further by the Ford and General Motors stakeholder to enable the companies maintain their prevailing market presence.

References

Barrow, J. M., Annamaraju, P., & Toney-Butler, T. J. (2017). Change management.

Dzwigol, H., Shcherbak, S., Semikina, M., Vinichenko, O., & Vasiuta, V. (2019). Formation of Strategic Change Management System at an Enterprise. Academy of Strategic Management Journal, 18, 1–8.

Fetzer, T. (2017). Paradoxes of internationalization: British and German trade unions at Ford and General Motors 1967–2000. Manchester University Press.

Jayatilleke, S., & Lai, R. (2018). A systematic review of requirements change management. Information and Software Technology, 93, 163–185. Web.

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Kaur, A., & Sharma, P. C. (2017). Sustainability as a strategy incorporated in decision making at supply chain management-case study of General Motors. International Journal of Sustainable Strategic Management, 5(3), 183–200. Web.

Kay, J. (2019). The concept of the corporation. Business History, 61(7), 1129–1143. Web.

Langerud, D. H., & Jordan, P. J. (2020). Leadership and change at Ford Motor Company. In Case Studies in Work, Employment and Human Resource Management. Edward Elgar Publishing.

Lauer, T. (2020). Change management: Fundamentals and success factors. Springer Nature.

Shein, J. B., & Bell, M. (2017). At Ford, turnaround is job one. Kellogg School of Management Cases.

Tavčar, J., Demšar, I., & Duhovnik, J. (2018). Engineering change management maturity assessment model with lean criteria for automotive supply chain. Journal of Engineering Design, 29(4–5), 235–257. Web.

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