GENERAL MOTORS CORPORATION

TOO BIG TO CHANGE?

Introduction

GENERAL MOTORS CORPORATION• General Motors Company (GM) designs, forms and trades cars, trucks and automobile parts worldwide. The Company also delivers automotive financing facilities through General Motors Financial Company, Inc. (GM Financial). It operates in four automotive segments: GM North America (GMNA), GM Europe (GME), GM International Operations (GMIO) and GM South America (GMSA). GM's total worldwide vehicle sales were nine million during the year ended December 31, 2011. The Company's GMNA segment develops, manufactures and/or markets vehicles under the brands, such as Buick, Cadillac, Chevrolet and GMC for its customers in North America. GM for its customers outside North America develops, manufactures and/or markets vehicles under the brands, such as Buick Chevrolet, GMC, Opel, Cadillac, Daewoo, Holden and Vauxhall.

1. GM Strategy & Current PerformanceTimeline & Headlines• March 29, 2009 – CEO Rick Wagoner resigned because of pressure from Obama’s Administration (trying to make a clear signal that GM was making a big change)

•March 29, 2009 – Wagoner was replaced by Vice Chairman COO Fritz Henderson

•December 01, 2009 – Henderson was fired by the board, was replaced by Ed Whitacre.

•Early August 2010 Ed Whitacre stepped down and was replaced by Daniel Akerson.

Fritz Henderson Edward E. Whitacre Jr.

• Daniel Akerson

1. GM Strategy & Current PerformanceTimeline & Headlines• March 30, 2009 – Government Released plans to provide working capital over the next 60 days so GM can restructure(If not successful, they will file Chapter 11-bankruptcy)

1. GM Strategy & Current PerformanceCurrent Strategy GM will restructure during the 60 days allowed by the

government:1. Profitability Sustainability 2. a Healthy Balance Sheet3. a More Aggressive Operating Structure4. Technology Leadership

This will make GM Stable & Competitive in Mkt

1. GM Strategy & Current PerformanceCurrent Performance : Human Resources• 2008 - Cut 15,000 Jobs• 2009 – Will cut 5,000 White Collar Employees in the 1st round of layoffs to reconstruct

• They hope they will be more profitable @ lower sales levels with less employees!

1. GM Strategy & Current PerformanceConclusion GM’s Current State:

Huge Operating LossesShrinking Market ShareSmall Current RatioHuge Layoff RatesFalling Stock PricesNot only will the accountants be issuing a “going-concern” for

GM but they will be faced with bankruptcy and possible closing down all together.

Their current performance is very poor and is in direct need of reconstruction which is exactly the stage they are at currently.

COMPETITORS:

• The major competitors of General Motors are domestic companies like Damiler Chrysler & Ford Motor and foreign companies like Toyota Motor & Honda Motor.

Damiler Chrysler  As the number two auto manufacturer in total revenues DaimlerChrysler has positioned itself as an industry leader, with this come many strengths. The DaimlerChrysler umbrella covers many well-known brands such as Dodge, Chrysler, Mercedes Benz, and Jeep. This means DaimlerChrysler has strong brands that are recognizable in almost every part of the world.

• Ford Motor Company Ford Motor Company is a global company with two core businesses: Automotive and Financial Services. The Automotive business consists of the design, development, and manufacture, sale and service of cars, trucks and service parts. Ford has been focusing on cutting costs to increase margins more than its competitors. It has used reverse engineering in the development of their products. Thus Ford has been an innovator in the auto industry. • Honda Motor Company  Honda motor company is not your average Japanese car manufacturer. Originally known for motorcycles, Honda has managed to elude the dominate keiretsu system in Japan and become one of the dominant automobile manufactures in the world. There is much strength to Honda. Honda has a reputation for producing high quality products from cars to motorcycles. Honda has won many awards for initial quality and customer satisfaction. Their automobiles are reliable and generally fuel efficient. Their research has afforded them competitiveness in innovative products.

• Toyota Motor Corporation The Toyota Motor Corporation was incorporated in 1937 and has many strengths being one of the industry leaders in the automotive industry. Toyota has three major brands underneath the company umbrella; Toyota, Lexus, and Scion. By having these three distinct brands, it lets the company reach many sectors of the globe in a choice of vehicle for customers. Toyota has traditionally also been the leader in Total Quality Management or TQM. By using the Kaizen theory of continuous improvement, Japan caught up the U.S. auto makers during the 1980s.•  

GM SWOT AnalysisSTRENGHTS

•Asia Pacific and Latin American Countries•Large Scale Operations•Variety of Brand Names•OnStar Satellite Technology

WEAKNESSES•Recalls•Declining Market Share•Decline in Financial Performance•Overly Dependent on US market•Poor Organizational Structure

OPPORTUNITY•New Emerging Markets•Increase in demand for Hybrids• Develop New Vehicle Styles and Models•Poor Organizational Structure

THREATS•Declining demand for light Vehicles• Rising Fuel Prices•Increasing price of raw materials• Growth of Competitors

Discussion Question:• 1. How would you describe the organizational culture at GM? Why was decision making so slow—“plodding” as one analyst described it?

While the case does not give much insight into GM’s culture, what is evident is that they have been slow to change.  Having not shown a profit for six years (or much profit in the last 15), GM has either been slow to recognize changing customer preferences and/or slow adapting to technological changes in the competitive automobile industry.  Decision making can be equated to ‘analysis of paralysis,” or the over-thinking of a situation, so that a decision is never made, in effect paralyzing the outcome.

Discussion Question:• 2. Why do you think the previous CEO’s (Mr. Henderson) attempts to change the organizational culture might have been lacking?

Henderson’s failure could be attributed to his obsession with numbers.  Too much focus on numbers may have clouded his judgment in that it was the culture of GM which needed to be changed.  Another reason could be that Henderson was a GM insider who had been with the company since 1984.  Having risen from the ranks to eventually become Vice President, Henderson could have adopted the same analysis of paralysis of other GM managers.  Having been responsible for approving many of the programs in his position as VP, Mr. Henderson may have also felt some attachment to them and let them continue.

Discussion Question:• 3. What changes is Mr. Whitacre making to the culture of GM?

Whitacre seemed focus on changing the decision making process of GM.  By empowering employees to make their own decisions, change could occur more efficiently with the use of too many committees.

Discussion Question:• 4. What types of resistance is he likely to encounter? Using Exhibit 6-5, what would be the best ways to address that resistance? Be specific.

Because of GM’s failing economic position, it would be expected that there would be structural and human resource changes in addition to the cultural change Mr. Whitacre was seeking.  These types of change often result in employee layoffs.  Considering the strong emotions that can arise during times of layoffs and the fact the GM had previously tried to change and had been ineffective, facilitation and coercion may be the most effective means of combating resistance.  Any efforts that take too long, or require trust may not work in GM’s situation.

Conclusion and Recommendation:• SUGGESTED STRATEGIES Below is a list of possible strategies General Motors could use to redirect profits and be able to maintain survival for the future.1. Market Development2. Market Penetration3. Product Development4. Restructuring5. Retrenchment6. Liquidation Implementations

Conclusion and Recommendation:• Suggested policies for General Motors would initiate with improvement in

their product then market growth, liquidation, and restructuring. Reasons for product improvement being at the top of priorities is that GM has to create a type of Hybrid vehicle that will allow it to keep up with the pace of the competitive environment, but must be a product that stands out from the crowd at the same time. Prime example of their idea for a Hybrid SUV, it fits the GM profile with maintaining the SUV portion, but allows the firm to stay with trend patterns.GM must also re-evaluate the market they are trying to approach, because for so long they have continued with a tradition outlook for automobiles, but now that times are changing their original target market is not looking for what they once were.

• General Motors needs to take a step back and take look at how they want to position themselves and towards what market since what they have been doing is no longer in favor for the company. An example of what GM could possibly do is producing a futuristic vehicle, which has been heard in rumors from Toyota about their next plan of action. If General Motors could provide a "futuristic" vehicle before Toyota has the chance to hit the market with theirs GM would be a step ahead of the competition.

Conclusion and Recommendation:• Liquidation would clearly help out the financial parts of the organization. Last but not least is restructuring, which General Motors most desperately needs to review possibilities. The company has taken a large hit in recent years and needs to find a way back to the top. This is only going to be achieved if something drastic is changed.

• Restructuring the product development pace would be a start as well as cutting back on employees because the company is growing in size but not in profit, which causes a red flag for GM. The company needs to be re-evaluated in many ways, but GM has been strong for many years that it is very possible for the company to come above these issues.

Conclusion and Recommendation:• The major thing for General Motors is to improve a Hybrid vehicle that will keep the position in the competition for the company as well as to be distinguished. Generating a Hybrid SUV is a brilliant idea and if GM can pull that off by the end of 2012 the future could look very bright for them. The company has a huge background proving that they can maintain being number one, it's just a matter of product development being maintained and refocusing products to the correct target markets.