General Motors Organizational Change Changes Term Paper

  • Length: 8 pages
  • Sources: 4
  • Subject: Transportation
  • Type: Term Paper
  • Paper: #28488246

Excerpt from Term Paper :

Still, the future stated goal of GM is to develop an electric or hybrid version in all of its existing brands lines -- Chevrolet, Cadillac, Buick and GMC.

Outcome of changes

GM's most notable success has been overseas, where it is currently ahead of all of its competitors in the rapidly expanding Chinese market. "While GM is outpacing Ford in overseas competition, GM cannot solely depend on China for growth. While the emerging market contributed to GM's global recovery last year with 2.3 million in sales, it may not experience the same momentum this year [2011] because the Chinese government has ended incentives on small cars and rural purchases" (Benedicto 2011). Still, evidence of GM's health is seen in the fact that it recently announced that it will issue profit-sharing checks this month for hourly workers, the largest in a decade (Vlasic & Bunkley 2011:1). Talks with the UAW will soon recommence, and GM wishes to institute new productivity measures to improve worker productivity, including performance-based bonuses and offering company stock to union members as part of a new bonus plan to encourage company loyalty. That way, by working hard and not 'hard-dealing' with the company as before, unionized workers will be able to profit. GM is seeking to link high-quality worker performance bonuses to overall company success.

However, Detroit's harshest critics who hoped that the shift in product styles would produce a greener American car industry in terms of the environment as well as dollars have been disappointed with the post-bailout changes in GM. Although GM's 'greening' may have rehabilitated its image, and its small car sales like the Cruze are selling impressively in Europe and China, the average American GM car consumer has been slowly falling back into bad, fuel-guzzling habits. GM has done little to change the bulk of its output. GM's car sales have fallen 6% which are low even when "compared with last year's anemic numbers, while light trucks (which include pickup trucks, SUV's, minivans and crossovers) are up by more than 16%" (Niedermeyer 2010:1). In other words, the current prosperity of GM is once again built upon the foundation of large vehicles "Despite rolling out the much-hyped Cruze compact and the Volt plug-in hybrid, G.M. still sells half again as many trucks and SUVs as it does cars" (Niedermeyer 2010:1). While GM's current SUVs are more fuel-efficient than earlier models, "the Detroit automakers have three of the four lowest average fleet fuel economy ratings among full-line manufacturers, and none achieves the industry average of 22.5 miles per gallon," including GM (Niedermeyer 2010:1). The showy 'boutique' model of the Volt cannot make up for these dismal statistics.

Perhaps even more worrying for the future health of the company is the fact that GM remains mired in old-style promotional tactics to get consumers to purchase its cars, such as cash rebates from manufacturers, and low-interest loans, "Incentives like rebates help push vehicles off lots but erode brand equity and resale values that help automakers compete over the long-term. GM and Chrysler still lead the industry with above-average amounts of cash on the hood of each car they sell" (Niedermeyer 2010:1). Allowing cars to pile up was another 'bad habit' of the new/old GM, and is especially concerning given recent developments in the Middle East. "The bailed-out automakers are building vehicles faster than they can be bought" (Niedermeyer 2010:2). A large percentage of GM's recent vehicle sales are 'fleet sales' from government and other large-scale dealers, which means that currently robust sales figures are not necessarily indicative of long-term consumer demand for GM cars.

Conclusion

General Motors is undeniably a healthier and more forward-thinking company than it was before the bailout, and it has many strengths, most notably its overseas success. However, the final verdict upon its long-term prognosis remains uncertain. In February 2011, GM car sales were 49% higher, but critics contend that is due to unsustainable, hard-sell deals rather than real quality improvements (Sweeter deals, newer models, 2011, Associated Press). GM is still playing catch-up with its foreign rivals regarding the development of fuel efficient vehicles that can be used on an everyday basis (unlike the Volt). As gas prices go up again, in the wake of Middle Eastern instability, GM must be concerned that it continues to rely so heavily on large truck purchases, and even Chinese demand may be less sustainable than originally surmised, depending on that nation's government policies.

GM's corporate culture is evolving, as is the attitude and image it markets to consumers. But its actual behavior is still playing 'catch up,' and it still tends to resort to old formulas to bolster its financial outlook and justify the expense of the bailout. However, its leaner organization and renegotiated union contracts show that although the GM of today may be a work in progress, it has moved on in terms of its strategy and attitude, from the old GM of the past.

References

Benedicto, Tanya. (2011, February 26). Should the new GM thank Waggoner? The Wall Street

Journal. Retrieved March 1, 2011 at http://blogs.forbes.com/tanyabenedicto/2011/02/26/should-the-new-gm-thank-wagoner/

Bunkley, Nick. (2011, January 11). GM plans 2 plug-in hybrids. The New York Times.

Retrieved March 1, 2011 at http://www.nytimes.com/2011/01/12/business/12volt.html?ref=generalmotorscorporation

General Motors. (2011). Company information. The New York Times.

Retrieved March 1, 2011 at http://topics.nytimes.com/top/news/business/companies/general_motors_corporation/index.html

Nader v. General Motors. (1970). Courtroom View Network. Retrieved March 1, 2011 at http://lawschool.courtroomview.com/acf_cases/9243-nader-v-general-motors-corp-

Niedermeyer, Edward. (2010, December 16). A green Detroit? No, a guzzling one.

The New York Times. Retrieved March 1, 2011 at http://www.nytimes.com/2010/12/16/opinion/16niedermeyer.html?scp=1&sq=a%20green%20detroit?%20no,%20a%20guzzling%20one&st=cse

Niedermeyer, Edward. (2010, July 20). A green Detroit? No, a guzzling one.

The New York Times. Retrieved March 1, 2011 at http://www.nytimes.com/2010/07/30/opinion/30neidermeyer.html?scp=1&sq=General%20Motors&st=Search

Schneider, Greg. (2005, April 20). Industry giant galling behind: GM reports $1.1 billion loss.

The Washington Post. Retrieved March 1, 2011 at http://www.washingtonpost.com/wp-dyn/articles/A2396-2005Apr19.html

Some say GM needs shake up of corporate culture. (2009, March 3). The Washington Times.

Retrieved March 1, 2011 at http://www.washingtontimes.com/news/2009/mar/03/some-say-gm-needs-shake-up-of-corporate-culture/?page=2

Sweeter deals, newer models. (2011, March 1). Associated Press. Retrieved March 1, 2011 at http://ca.news.yahoo.com/sweeter-deals-models-push-general-motors-us-sales-20110301-075348-868.html

Vlasic, Bill & Nick Bunkley. (2011, January 13) Auto workforce gets dividend. The New York

Times. Retrieved March 1, 2011 at http://www.nytimes.com/2011/01/13/business/13auto.html?ref=generalmotorscorporation

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