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General motors

General Motors Corp. was the world’s largest automaker, and has been the global industry sales leader for 76 years. It was founded in 1908 and employs about 284,000 people around the world. GM manufactures its cars and trucks in 33 countries. Recent times, however, have not been favorable to GM. GM has posted a loss of $8.6 billion in 2005. GM has strategy of duplicating a successful design across several brands, known as “rebadging.”[i] GM saves money by following this strategy but fails to innovate.

            There are several external and internal forces that call for change in GM. External forces for change derive from the organization’s general and task environments.[ii] Internal forces can be considered as the forces inside an organization that might cause change. Due to the extreme innovation and better quality cars, Japanese automobile industry is successful to establish global business including its plants in U.S. This created an extremely competitive market in U.S between the domestic companies and the foreign companies. The external forces that call for change in GM are competition, new rules of production, new laws, inflation, the cost of living, and the sociocultural dimension. With the increasing competition and constant innovation GM needs to keep up and change it’s strategy of operation. Inflation and cost of living affect the demand of products, in this case GM needs to cut down its cost and try to lower their price to maintain or increase the sales. The internal factors that affect the GM are top  managers, their decisions and their sociocultural values.

            Stakeholders include Suppliers, Pensioners and employees and dealers. Suppliers like parts maker Tower Automotive Inc. and American Axle & Manufacturing depend on GM for a large chunk of their business.[iii] If GM starts relying on innovation and keeps changing its designs, these companies will go bankrupt. Pensioners and employees of GM have formed a Union called United Auto Workers Union (UAW). They resist closing the plants, reducing benefits, and increasing automation. Thus GM cannot cut down on their auto price, for it is very expensive for them to produce it. There had been several strikes in GM regarding employee pay cut. GM tried to cut the cost of cars by closing some dealers but they refused to sell out.

            In my opinion, GM should close some of its inefficient plants, move those workers to more productive plants and put every one at the lowest possible hours. This way, they don’t have to pay full salaries and they can continue to provide the workers with medical. If they need more workers they can hire them as individual contractors and pay them less than regular workers. This way, they won’t have to worry about those workers being part of union and they can still work full time. GM can also hire more experienced Product Design Manager and focus on innovation as well as quality of automotives. They can fire half of their executive staff and hire some dynamic hardworking executives, who are experienced and promising.

If GM cannot buy out the dealers, they can have a meeting with all of them and try to convince them how the business will profit more and find out alternatives to cut cost. For example, cutting down the shipping and handling cost. Being a large organization, GM can change its suppliers by putting an open bid for the contract of its new car parts. This way, they can have the best deal and get the good quality work done in low cost. For pensioners, GM has to pay them for they worked for the company. But GM can change its cultural environment trying to develop more trust between the management and the employees. They can reward the workers for their increased productivity, this will encourage them to work more efficiently and on timely basis. GM can also follow the management style of Sempco, a Brazilian company. In Sempco, the workers work in small groups, and they democratically vote to fire or hire the person based on their performance. All these groups compete to be the best among each other, considering the business ethics in the center. GM can definately learn something from them.  

[i] Griffin,Riky. Management (Ninth edition). Houghton Mifflin Company, 2008.(368)

[ii] Griffin,Riky. Management (Ninth edition). Houghton Mifflin Company, 2008.(345)

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