General Motors Turns Around Its Fortunes Case Study - Management Assignment Help

Assignment Task

General Motors (GM) was established in 1908 in Detroit, Michigan, USA. At that time, the company was the sole carmaker dealer in the region. They marketed their cars as a premium, luxury brand known for their reliability. By 1929, GM had surpassed Ford as the leading US passenger-car manufacturing company. GM’s success was attributed to the amount of autonomy its leader, Alred P. Sloan gave to its various operating divisions, in short, the de-centralised management approach that was used. Sloan also greatly strengthened GM’s sales organization, pioneered annual style changes in car models, and introduced innovations in consumer financing. Other brands made by GM at the time were the Chevrolet, Pontiac, Buick, and Cadillac. No other companies could compete with GM because they were not making as many brands of cars.

Japan’s automakers started to emerge in the 1930’s. Toyota, which emerged in the late 1930’s as a car manufacturer, one of GM’s main competitors, was known for manufacturing cars that were dependable, efficient, economical and tough. GM felt threatened, especially by the emerging Toyota of Japan, which negatively impacted its profitability, especially in the North American market. In 2001 GM’s sales were trending downward because Toyota had captured the market.

In 2009 the company faced bankruptcy and was forced to close several brands. The company received loans from the American and Canadian governments to support them during their time of crisis.

With the help of bailouts from the American and Canadian governments, and the restructuring of the company and the many other changes made, GM regained its market position. GM reduced the prices of some of its brands and reduced its overall costs by reducing staff salaries. The company also changed its culture to one where decisions were made more quickly by reducing the size of its Board and improved the efficiency and accountability of its employees through training and development.

Some challenges which GM faced in implementing its changes were:

• The use of a top-down approach which ignored the involvement of its employees
• Challenges from the Union on the cutting of salaries
• Lack of support from some Managers whose power would have been reduced under the new structure
• The slow pace of decision-making

The Company embarked on a number of initiatives to make their change initiative a success:

a) They sat down with the union to explain their predicament and came up with a win-win solution

b) They formed quality circles among their employees to come up with cost-cutting ideas and new approaches

c) They engaged in team building activities to get staff from both cultures to bond

d) They had large group interventions where they involved suppliers and customers in the exercise

e) They trained staff in areas where they were hitherto deficient.

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