The General Motors Organization’s Analysis

Introduction

The success of an organization is defined by various characteristics. They include both external and internal aspects of its activities as well as the coordination of its work. One of the examples of manufacturing companies that managed to coordinate their business operations in the most efficient way is General Motors. To reveal the reason for its success, it is crucial to consider the company’s organizational strategy and environmental factors as well as their alignment with the current organizational structure. Moreover, the company’s leadership style and its ability to adapt to changes should be assessed. The analysis of all the organizational components mentioned above would allow seeing a clear picture of how the company manages its activities in accordance with various situations.

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Organizational Strategy

General Motors is an excellent example of a manufacturing company that demonstrated the required degree of creativity and flexibility in readjusting its strategy to continually changing market conditions. To ensure its future growth and competitive advantage, it timely reacted to any societal shifts by adjusting its strategy in accordance with them (Kay, 2019). Such a distinctive capability of General Motors to coordinate its actions in the most suitable way allowed the company to remain in the market without experiencing long-term losses in sales. Hence, this manufacturer can be considered as a model for other companies involved in business activities of the same or similar kind.

All strategic plans of General Motors, regardless of emerging circumstances in the market, relate to the attempts to stay competitive in the automobile market as the competition tends to increase over time. For this purpose, the company implements a series of intensive strategies that contribute to its long-term success (Kissinger, 2017). The primary strategy of General Motors is cost leadership or, in other words, attracting customers with lower prices. It is complemented by the differentiation strategy, referring to the provision of a variety of products in different segments to satisfy a more significant number of buyers (Kissinger, 2017). These two principal strategies, cost leadership, and differentiation contribute to the increase in sales through the development of innovative products corresponding to the demand and affordable to all categories of customers.

However, in order to provide the product that would satisfy most buyers, the long-term strategy of General Motors needs to be periodically reevaluated and readjusted according to the market situation. The latest tendency in customers’ preferences relates to the rising concerns about environmental issues. To address them, the company elaborated a sustainability strategy incorporated in supply chain management, which complemented the generic strategies focused on costs and product differentiation (Kaur & Sharma, 2018). Such a measure facilitated the recovery from the latest financial crisis and the consequent bankruptcy of General Motors (Korail, 2018). The company’s reorganization and the involvement of new stakeholders, including the US Treasury and UAW Retiree Medical Benefits Trust, reinforced sustainability policy for further benefits (Kaur & Sharma, 2018). Hence, the activities of General Motors allowed demonstrating its growing social and environmental responsibilities.

External Environment

As can be seen from the organizational strategies of General Motors, the external environment continually poses specific threats to the company’s profits. The changing market conditions, including societal, economic, and environmental concerns of customers, require regular evaluations of its activities as well as their correspondence to such changes. However, General Motors has not always been successful in timely readjustment to the emerging circumstances in general and task environments. In the past, its incapacity to change the policies resulted in bankruptcy, and it is vital to consider the reasons that led to it as well as the methods the manufacturer used to overcome such challenges.

General Environment

The first aspect of consideration is the general environment, which has a significant impact on the activities of automobile manufacturing companies as they cannot control the global changes in the market. Therefore, it requires the continued willingness of the companies to readjust to various crises. As it happened to General Motors, the incapacity to follow the changes and the wrong choices led to irreparable consequences (Kaur & Sharma, 2018). The neglect for environmental shifts and changing market needs was the reason for the company’s past failures (Khan et al., 2017). On the contrary, the following attention to the existing market trends allowed it to recover over time.

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The current vision of General Motors corresponds to the general environment and satisfies the needs of customers as well as anticipates further changes. As it was formulated by the company’s CEO Mary Barra, they strive to ensure the manufacturing and realization of products with “zero crashes, zero emissions, and zero congestion” (Barabba, 2019, p. 41). Moreover, its policies include the latest market orientation on transportation services rather than only manufacturing and realization of products. Thus, for example, General Motors is focused on the development of autonomous vehicles and car-sharing services such as Maven (Barabba, 2019). In addition, the existing products of the company are also evolving in accordance with the shifts in the general environment as the manufacturers make their cars smaller, more convenient, and affordable for all categories of customers.

Task Environment

In order to attain the business goals of General Motors, which include the increase in sales by promoting product differentiation and low-cost leadership, it is crucial to consider the task environment of the company to reveal the conditions influencing its business operations. One of the principal conditions is the growing competition between the largest automobile manufacturers. Throughout history, General Motors’ primary competitor was Toyota, and the differentiation strategy is the best decision of the company to deal with this factor (Kay, 2019). Moreover, the advantageous market position of General Motors is attained through the orientation of target customers (Kissinger, 2017). All in all, the current situation seems to be beneficial for this automobile manufacturing company.

Organizational Structure

General Motors is a company that underwent a series of challenges, including bankruptcy throughout its history. Such a situation defined the continuous changes in its organizational structure following emerging circumstances as well as highlighted the importance of flexibility. The reorganization of General Motors in 2010 after the bankruptcy allowed the company to present a new organizational structure. In accordance with the contingency theory, which states that it is influenced by a set of factors, the manufacturer made efforts to assess them and readjust the structure to current needs (Barabba, 2019). The main principles of such readjustment were the expansion of the group’s role and higher employee engagement.

The necessity to establish communication of employees at all levels in terms of alignment of General Motors’ business plans is reflected in the change of organizational structure. The hierarchical structure existing before the bankruptcy was not working well anymore (Kay, 2019). The problem was in the unwillingness of top management to accept the change and the use of the old approach, including solely manufacturing and realization of products without paying attention to the need for additional services (Khan et al., 2017). Finally, the company had to reorganize and reconsider its actions, which resulted in its current stable market position.

The existing organizational structure of General Motors reflects the attained flexibility allowing it to find timely solutions to emerging issues. Its primary focus is on regional markets, which contributes to further differentiation of its products (Kissinger, 2018). Such a situation enhances the performance of General Motors’ products as well as increases customers’ satisfaction. It also strengthens the manufacturer’s capacity to maintain competence in the context of rising competition with Toyota (Kay, 2019). Hence, the organizational structure of General Motors can be characterized as regional divisional (Kissinger, 2018). It is entirely different from the initial hierarchical structure and more beneficial in terms of capability to adjust to changing conditions.

General Motors is governed by a Board of Directors and various committees with regular meetings for making critical decisions. However, the ultimate policy choices are the responsibility of the Board of Directors, which seeks to successfully implement the company’s strategic plans (“Our management approach to governance”, 2019). The required flexibility in the process is achieved due to the fact that all the committees’ directors, except the Executive Committee, are independent (“Our management approach to governance”, 2019). This situation allows assessing the market conditions in all possible aspects and coming to the best possible conclusion on further actions. All in all, the current organizational structure of General Motors seems to be highly beneficial in terms of the implementation of strategies intended to increase the company’s sales through the differentiation of products and services and their affordability.

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Appropriateness of Structure to the Environment and Strategy

The alignment of the organizational structure of General Motors with its current strategy is vital for future success. In this case, if these components do not correlate, all of the company’s operations become inefficient (Marx, 2016). This task is complicated by the necessity to consider factors of the external environment, primarily competition between manufacturing companies and the possibility of drastic market changes. The shift from price to quality in the automobile industry and the emerging concerns of customers and governments also contribute to the necessity of correspondence of the company’s organizational structure to the external environment.

As can be seen from General Motors’ strategic plans and orientation on customers in the context of rapidly changing market conditions, its structure fully corresponds to the factors influencing the business (Khan et al., 2017). A high degree of flexibility compared to the one of previously existing hierarchical organizational structure provides for a better outcome of strategic and operational business activities as well as strengthens the market position as one of the largest automobile manufacturing companies. Thus, General Motors’ organizational structure is appropriate for the environment and the current company’s strategies.

Management of Organizational Change

General Motors, like any other manufacturing company, is directly influenced by the smallest shifts in the external environment. This situation leads to the necessity of organizational change to align its policies with the current consumer preferences while creating an innovative next-generation product (Barabba, 2019). The rapid development of the automobile market forces manufacturing companies to perform multiple tasks at the same time. For this, managers should demonstrate the required degree of creativity and flexibility to improve the market position of General Motors. The history of the company proves its capacity to cope with emerging challenges by readjusting to the new conditions.

Throughout the years, General Motors proved its readiness to change following the changing perceptions and needs of customers. The principal shift in the company’s policy was related to the emergence of new customer needs (Kaur & Sharma, 2018). Taking into consideration the previous financial crisis that affected the manufacturer and the following bankruptcy, the organizational change is revolutionary. It resulted from the neglect of environmental and economic changes by top management and the consequent series of wrong choices. Thus, for example, in 2009, General Motors decided to introduce an innovative product, which was inappropriate regarding the market conditions (Khan et al., 2017). The crisis led to employment losses and higher fuel prices, and the customers could not afford the company’s products.

This is an example of poor management of organizational change performed by General Motors’ managers. It has severe consequences for the business and filing for bankruptcy in order to save the company with the government’s help. However, this experience revealed the incapability of the manufacturer to cope with market shifts and resulted in further consideration of economic, political, and social forces. The new policy has gradually led the company back to prosperity (Kay, 2019). The transformation went by the current CEO, Mary Barra, and her innovative solutions have proved to be more efficient than the previous actions of General Motors’ top management (Barabba, 2019). It allows concluding on the importance of managing the activities of the company properly in order to avoid significant losses resulting from the neglect of environmental or economic shifts.

The management of organizational change is conditional upon a variety of factors, which should be considered in the process. They relate to specific tasks of the company, such as strengthening the core, eliminating inefficient practices, and inventing a new business model for future prosperity (Barabba, 2019). While developing the new policies and strategies in accordance with the changing environment, General Motors considered all of these tasks and took several measures to ensure the successful management of emerging challenges.

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As the manufacturing company was known for the resistance to change from its top management, it was focused on the elimination of such barriers to increase profits. Therefore, the new business model of General Motors was orientated on customer satisfaction and the provision of additional services such as insurance or maintenance. One of its best decisions was the creation of OnStar customer service, allowing to connect to a call center in emergency cases (Barabba, 2019). Such measures contributed to the correspondence of the company’s activities to market needs.

In order to fully embrace the new business model, General Motors also emphasized the necessity to establish post-sale business relationships with customers. For this purpose, they included this task in the core practices and benefited from the improved image of the company among buyers (Barabba, 2019). Such initiatives allowed finally changing the perceptions of business activities by senior managers and increasing sales.

Lastly, General Motors adopted the experience of other companies in the aspects, which were problematic to it. They reduced material costs and significantly high salaries, and these steps allowed them to make the products affordable to a larger number of customers in accordance with cost leadership strategy (Barabba, 2019). As a result, the productivity and profitability of the manufacturing company were improved, and it managed to remain competitive in the automobile market.

Top Management Team’s Leadership Style

The concept of leadership is a vital part of any company’s success, and General Motors is no exception to the rule. Its recovery from the financial crisis and bankruptcy is mainly conditional upon the chosen leadership style of the company’s current CEO, Mary Barra (Moran, 2020). Being the first female CEO of a large automobile manufacturing company, she transmitted her vision to its employees at different levels and became known as a model example of a successful business leader (Maiorescu, 2016). Her policies of employee engagement, inspiration to perform the necessary shifts, and the creation of a company’s future vision correspond to transformational leadership as it is one of the most efficient types in the context of organizational change in accordance with emerging circumstances.

In General Motors, the importance of the leadership skills of the top management team is emphasized. The type of leadership attributed to it is described by efficiency, independence, and reliability (Moran, 2020). Such characteristics are extremely important in the situation of a company that has just recovered from the latest crisis and needs to adjust to the market changes. Moreover, the maintenance of trust among the members of top management teams is transmitted to all of the employees in General Motors and allows creating a positive work environment.

The efficiency of this leadership style has also been proved during the company’s crisis in 2014. It resulted from numerous injuries of customers due to a faulty ignition switch (Moran, 2020). Together with addressing the physical and psychological needs of the affected stakeholders, Mary Barra admitted the need for a change in the company’s business activities and conducted her own investigation of the case (Maiorescu, 2016). Her actions also aligned with transformational leadership by engaging employees and demonstrating readiness to take the required measures.

Appropriateness of the Leadership Style for the Motivational Environment

The chosen leadership style affects not only key stakeholders but also the company’s employees as it is directly connected to the creation of a proper motivational environment at work. The most popular way to motivate people is through financial compensations. However, it is not an ideal solution for each separate case as most senior managers value the feeling of pride for the performed work, satisfaction from the job, and interaction with the colleagues (Kay, 2019). General Motors provides for not only money but also the conditions allowing the employees to maintain the proper work-life balance and address their personal needs (“Our management approach to talent”, 2019). Therefore, the policies of this automobile manufacturing company regarding the creation of the motivational environment correspond to the transformational leadership style requiring a high degree of employee engagement.

Overall Effectiveness of the Organization and Recommendations

The progress of General Motors is apparent considering its position in the market in the past as a result of the financial crisis. The manufacturing company implements a clearly defined strategy orientated on the sustainable development of the inclusion of all external factors influencing the attitude towards its products. The competition with other actors in the automobile market does not represent a threat to the current position of General Motors. The transparency of their policies only contributes to a better acceptance of the produced cars, which correspond to the general customer needs.

Other positive shifts relate to the changes in the organizational structure of the company from hierarchical to a more cooperative form, enhancing communication between employees at different levels and the top management team. Over the years since its foundation, General Motors managed to develop the flexibility and creativity vital for future success in continuously changing market conditions. These achievements are partly conditional upon the use of transformational leadership style by the company’s current CEO and top management team. However, despite the seeming advantageous market position, General Motors still should work on enhancing communication with target customers.

The rapid development of technologies defines the latest market conditions. The economic, societal, and environmental concerns, with the predominance of the latter, require the automobile manufacturing companies to orientate on the target customer in order to increase the profits as well as ensure the sustainable development of the business. General Motors is one of the companies that is considered to be efficient in terms of pursuing such goals as customer satisfaction and differentiation of products in accordance with the needs of the external environment. However, there is one disadvantage that might lead to another financial crisis for the company. It is still unclear how customers accept their products, as the management seems to focus solely on the provision of innovative solutions rather than receiving feedback. This situation might result in their incapacity to readjust.

Conclusion

The consideration of organizational components of General Motors included their organizational strategy, structure, leadership style, the capacity to cope with environmental changes, and management of organizational change. The analysis revealed the positive tendencies in the overall development of the automobile manufacturing company, especially taking into account the latest financial losses and bankruptcy. These challenges seem to have positively affected the company’s strategic and operational planning. The transition from a hierarchical organizational structure allowed top managers to increase the engagement of employees in the decision-making process. All of the changes mentioned above are somehow connected to the need for satisfying customers. However, this task should be accompanied by a thorough analysis of their reaction to innovative products as no generalization is applicable to the case.

References

Barabba, V. (2019). Assessing General Motors’ innovation strategy over three decades using the “Three Box Solution.” Strategy & Leadership 47(2), 34-42.

Kaur, A., & Sharma, P. C. (2018). Sustainability as a strategy incorporated in decision-making at supply chain management case study of General Motors. International Journal of Sustainable Strategic Management, 6(1), 56-72.

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

Khan, S.T., Raza, S.S., & George S. (2017). Resistance to change in organizations: A case of General Motors and Nokia. International Journal of Research in Management, Economics, and Commerce, 7(1), 16-25.

Kissinger, D. (2017). General Motors’ generic strategy & intensive growth strategies. Panmore Institute.

Kissinger, D. (2018). General Motors’ organizational structure for flexibility in regional markets. Panmore Institute.

Korail, J. (2018). GM’s vision drives value for the company, communities and future mobility. Corporate Newsroom.

Maiorescu, R.D., (2016). Crisis management at General Motors and Toyota: An analysis of gender-specific communication and media coverage. Public Relations Review 42(4), 556-563.

Marx, T. G. (2016). The impacts of business strategy on organizational structure. Journal of Management History, 22(3), 249-268.

Moran, A. (2020). Mary Barra’s leadership style: What entrepreneurs can learn. Starting Business.

Our management approach to governance & ethics. (2019). Web.

Our management approach to talent. (2019). Web.

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