Executive Summary
In this essay we will discuss the fall of the General Motors empire, the resistance to new change, a change in leadership and the new and improved General Motors. This report will briefly mention its bankruptcy and government bail-out in mid 2009.. GM’s current position will be discussed and its’ eventual purchase by the American Government. This report will also focus on the operation and change experience of the GM company in North America. Its most recent change strategies (as of 2009) will be discussed along with a brief overview of the results so far. Some recommendations will be provided as to what GM did right or could have done better with it’s former and current organizational structure.
Introduction
What is change? Many definitions have been offered, but most agree that change can be managed in one way or another. Likewise, all will agree that change is inevitable. Many companies, large or small will have to deal with such change, be it external or internal. This study will utilize the American carmaker General Motors as an example in change management.
In this assignment, the following issues will be discussed:
1. The Need for Change in General Motors
2. Resistance to Change
3. Leadership Change
4. A New General Motors
As General Motors is an enormous company with a long history, for the purposes of our discussion we will be mainly focusing on its change management experience during the 2000s where it was pressured the hardest and ultimately filed for Chapter 11 bankruptcy in 2009 to allow for organizational restructuring. Before continuing, it would be helpful to give a brief overview of General Motors’ history. General Motors (GM) was founded in 1908 and was based in Michigan. Eventually its sales surpassed Ford and became the largest car manufacturer in the world. GMs’ success was attributed to the leadership of Alfred Sloan. Sloan introduced such concepts as “planned obsolescence” (This meant a vehicles style would be expected to change every so many years) as a various pricing structure for different brands (Chevrolet-Pontiac-Buick-Cadillac) so its brands would fill different needs of the buyer and hopefully avoid competing with one another. The SUV (Sports Utility Vehicle) onset of the late 1990s reinvigorated GM for the time being as SUV’s made large profits and not to mention, increased fuel sales and consumption by 4%. e After 2001 sales had been declining. In the midst of America’s 2008 financial crisis, GM began to struggle. Being surpassed in sales by Toyota in early 2007 just made things worse. As a result, in mid-2008 GM received loans from the American and Canadian government in an effort to survive. Even with the loans, GM filed for bankruptcy in 2009 which became the fourth-largest bankruptcy filing in U.S. history. As part of the bankruptcy deal, GM would restructure and continue business, focusing on its four core brands in America – Chevrolet, Cadillac, Buick and GMC.
The need for change?
Every year retired workers’ health care and pension cost GM billions of dollars. Developing new models of cars and trucks added almost $1,500 to the cost of each automobile. GM had little choice but to generate cash in an attempt to resolve its apparent money issues. This meant doing whatever it took to keep up production and sustain sales. The best way to accomplish this would be with costly dealer incentives, heavily discounted sales, and cheap credit. These moves terribly damaged GM’s brands. CEO, Mr Wagoner could have done more to prevent this. A more engaged CEO may have sparked discussions with the union sooner, reduced manning and manufacturing more quickly or tried to throttle back on a dealership network protected by franchise agreements. It is believed more than not that Mr Wagoner attempted to make many of the right moves, but time was not on his side.
With the support of the The car-industry task-force, Barack Obama had to save GM and Chrysler. The threat of bankruptcy was used to force shareholders to renounce most of their investments. The fact that a long period in Chapter 11 may create permeant damage had to be considered by all. After all, who would want to buy something this expensive from a car from a company that may go under within a year or two. The task-force had to forcing through a “quick rinse” or “pre-packaged” bankruptcy to separate the good assets from bad assets. The purpose of all this was to allow a new, reinvigorated company to surface in just a matter of days with Chrysler or at most weeks with GM.
As we learned this semester, change is the transformation or modification of an organization and/or its stakeholders. There are several types of and ways to go about implementing change. Such as;
1. Planned Change- resulting from a deliberate decision to alter the organization.
2. Unplanned Change that is imposed on the organization and is often unforeseen.
3. Transformational Change in which the organization moves to a radically different, and sometimes unknown, future state.
4. Strategic Change of a larger scale, such as organizational restructuring.
5. Incremental Change of a relatively small scope, such as making small improvements.
6. Change Agent – The individual or group that undertakes the task of introducing and managing a change in an organization.
It was apparent that General Motors needed an immediate transformational change.
