General Motors Corporation Downfall Case Study
General Motors Corporation was founded in 1902 and has produced nearly 450 million vehicles globally since their inception. The automobile giant has operations in nearly every country in the world. Up until the past decade, GM was enjoying rapidly growing sales and revenues. However, with the recent economic downturn, the challenge has been to capture and sustain their market share while adding to their bottom line. During the global economic crisis, management is left no choice but to make critical decisions that will enable their corporations to endure. Widespread change is necessary and was needed to all functions of GM’s business, including management style, structure, wages, branding, marketing, and technology.
The automobile industry employs nearly ten percent, or one out of ten, of the nation’s labor force. GM is one of the largest purchasers of U.S. steel, iron, aluminum, copper, plastics, rubber, electronics, and computer chips. So, in essence, the survival of many other American businesses relies on the survival of GM. If GM doesn’t make some essential changes to start realizing profits, many of their suppliers will suffer the same inevitable fate. According to the Auto Interiors Conference, U.S. auto sales for all foreign and domestic manufacturers have declined by more than 30%, which is the largest decline in over 50 years. (Mayne, 2010)
One of today’s top concerns in the business/political environment is the necessity of changing our energy dependencies and become more “green.” GM needed to be more proactive and implement changes in the company that would make them more environmentally friendly. Their ideas were to offer a more streamlined brand that meets the highest fuel efficiency standards without sacrificing any of the quality. Innovation was the key to GM’s successful transition and showed that the company needed to have a vision for the future that would not only regain the success they had experienced in the past, but pave the way for a more stable organization.
Many changes were needed to take place within the GM organization that would eliminate some of the brands that were sacrificing in quality. The discontinuance of the Pontiac line was the first step for GM to drop the brands that were lacking in demand, design, quality, and potential for profitability. They needed to focus on the remaining brands that could be engineered to be more cost effective and product the highest return on their investment. One GM executive claims that “over the next five years, GM will be focusing on the restructuring of our brand while focusing on our core business. Chevrolet, Cadillac, and Buick will remain at the core of our business. Other brands such as Saab, Saturn, and Hummer will either be sold or closed.” (Heller, 2008) The remaining brands will need to be monitored closely and continually evaluated for improvement if GM wants to remain proactive with future trends.
Technology