Paul Andrei D.

Medina
PG-MBA
Student ID: 20160015683
I. Brief Introduction
The struggle of General Motors started during 1980's and 1990's. The firms
production began to falter in early 1980's. Due to emerging competitors from Asia
and Europe continue to affect its profit. It begins to falter when Roger Smith
takeover the CEO position from Alfred Sloan. The issues began to appear when a
massive corporate support staff takes over the decision making of the line units
which results to an endless discussion at committee meeting. Smith creates two
autonomous groups, BOC and CPC. Upon 1993, the appointment of Robert Stempel
was replaced by Jack Smith because Board of Directors are not happy with slow
turnaround that Roger Smith created. The newly appointed CEO cost cut reducing
the departments combining it into one. The GM's reorganization remains unfinished.
Despite all efforts from all CEOs, GM slide down the profitability curve.
II. Authors Point of View
The author is contemplating between two business solutions that will address
bottom-line profits and increase chances of GMs survival versus competition. The
first option is a complete reorganization of the company structure, by decentralizing
or centralizing certain functions and divisions that will impact its workforce and
operations. The second option is finding other root causes and address on issues
such as (a) reformed and aggressive marketing strategy that will rival competition,
(b) reducing the number of corporate staff and increasing production line staff.
These options will be discussed in detail in the next segment.
III. Time Context
The problem started due to the increased corporate support staff versus production
line workes; as they are the same people who took over the decision-making
processes of the firm. This led to an endless series of meetings and unresolved
issues that affected overall capacity of GM to maintain market leadership.
IV. Statement of the problem
Internally, staff unit began to take over the decisions of line production units,
during the time of CEO Sloan. As a result, costs across functions are not managed
efficiently. Roger Smith then took over as the next CEO who began cutting
headcount, and decided on centralizing certain functions. This sudden management
changes made the Board of Directors unhappy and decided it was time to make
Robert Stempel the new CEO. However, Stempel was slow with turnaround so they
appointed Jack Smith expecting that this change will no make GM a better company.

Frequent changes in top management has shown GMs lack of leadership instead of
addressing other issues such as introducing innovation or emerging with better
competitive strategy.
Externally, aggressive firms from Europe and Asia led to the decrease the profit of
GM as consumers now have more options for cars at a cheaper cost or of better
technology.

Element
Specific

The objective states that the firm would like to increase its market
supremacy as well as technological developments by implementing
organization design.

Measurable The objective states that the firm would like to implement the
organization design that continue into the second half of the 90's.
Achievable

Before setting the objectives the firm should assessed its capability of
adjusting to organizational change.

Realistic

The objective took serve specific purpose of pushing decision-making

down into the operating decision and reducing staff at corporate
headquarters.

Time Scaled The objective start on 1981 by redesigning organizational structure

which continues even to this day.
VI. Areas of Consideration
Internal

Strengths
1. With new technologies
and aggressive marketing,
the CEO of GM restructure
its organizational design.

Weaknesses

1.
Massive
corporate
support staff whom began
to take over decisionmaking
of
line
units
resulting to an endless
2. Development of 5 discussion in committee
independent division with meetings.
complete
authority
to
design, market, produce 2. Difficulty of members of
and sell its own particular the firm to adjust with the
line of cars.
constant
organizational

3.Constant redesigning of design.

CEO's
organization
structure when a problem 3. Existing bureaucracy in
the firm.
arises.
4.Reviewing the data of
the recent changes in
structure and how to
improve the organizational
structure.
External

Opportunities

Threats

1.
Readjusting
the
organizational structure to
cope
up
with
global
competition.

1. Competitive forces from

ASIA
and
Europe
challenged
the
firm's
market supremacy.

2. Investing to research 2. Wage of competitors are

new
technology
and significantly lower than
market
for
better GM.
profitability.
3. Agreement of the firm
3. Promotes new ideas and and Work union to keep
innovation.
the plant on work even if
not necessary.

VII.Alternative Courses of Action

Possible Alternative Course of Action: Instead of trying to change the organizations
structure and creating two groups with different work agreements and policies; it
might be more feasible if there will be a decentralization of SBU for different car
brands to be marketed differently, and centralization of more general functions such
as research and finance to create economies of scale. Hence, there will be an
alignment from the top management as a total GM, even with autonomous SBUs.
GM is the parent company that will lead overall targets, but it allows different car
brands to operate on its own divisions and flourish on its targeted consumers. GM
will provide scale on research, provide and ensure financial capacity, and overall
provide leadership per division. Each division then reports back to top management
for all innovations on marketing, sales, and distribution of their cars to consumers.
VIII. Strategy Formulation

I believed that there must be a management leadership team in every core

function. The top management must be centralized to achieve the organization's
common goal. In that way, the top management per division may appoint a specific
personnel to oversee the execution of its function but must be limited in number to
avoid the overflowing of support staff. In this way, finance, division, marketing and
etc representative may have the discretion to innovate and develop strategies of
building their brand and provided that it is still aligned with its organizational goal.

IX.Action Plan/Programs

Action

Specific Tasks

Identify

Investing
for
new Researchers of the firm.
technological
advances
Evaluation
of
the
and market strategies.
Management.
Identify new trends and
styles based on general
customers liking.

1.The market
2.Competition
3.Customers taste
4.Strength of the Firm.
5.Weakness of the Firm.

Responsible Area

Identify how to optimize

the strength of the firm
and take advantage of it's
current status.
Identify things that may
proved as a liability to the
firm as well as current
issues
preventing
the
company's growth and
improvement.

Establish an organizational Implement

a
job CEO, Top Management and
structure which establish a distinction
between Low management.
formal system of roles to support and line units.
Middle Management
avoid bureaucracy system.
In addition, promoting
coordination of work in
every division especially in
SBU's.

VII.Conclusion
Changing of organizational structure is a complex task, massive research and
information are needed for its success. Members of organization must be assessed
for its adaptability of change. With continuous change of trends, technology and
market, the top management must identify the factors which impedes the goal of
the organization especially the internal factors where bureaucracy is rampant and
how to minimize losses and maximize profitability. The CEO and competent top
managers must think of strategies to outplay emerging competition which hinder its
profit, developing aggressive marketing strategies and trending technology and cost
cutting may be necessary for it's growth.
XI.References
Crainer S, Dearlove D. Windfall economics. Business Strategy Review. 2003;14(4):68-72. Business
Source Premier [serial online]. Ipswich, MA. Accessed November 5, 2005. Randall, C.Todays
Economics. Boston Publications: Boston, MA. www.netlibrary.com. Accessed 12 November 2009.
Freedman MJ. Libraries in today's world. World Almanac & Book of Facts [e-book]. New York, NY: World
Almanac Education Group Inc.; 2004:16-17. Available from: MasterFILE Premier, Ipswich, MA.
Accessed November 5, 2005.
Ostro, A. "General Motors delimma " Mashable. Mashable, 8 Oct. 2009. Web. 8 Oct. 2009.