Car@on, Moni5!e Angeli#a C.
:!l <, <301
Pa@, :edri#$ 9onn B. MKA
SECTOR Consumer Durables
INDUSTRY Motor Vehicles Vehicles
MARKET CAP $49.3B
General Motors Co. engages in the designing, an!"a#t!ring, and selling o" #ars, tr!#$s, and a!too%ile &arts. General Motors 'GM(, one o" the )orld*s largest a!to an!"a#t!rers, a$es #ars and tr!#$s, )ith )ell+$no)n %rands s!#h as !i#$, Cadilla#, Che-rolet, and GMC. The #o&an )as "o!nded % /illia C. D!rant on Se&te%er 01, 0234 and is head5!artered in Detroit, MI.
Top Top Executives Execut ives
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Mar Teresa Teresa arra
Chairan 6 Chie" E7e#!ti-e O""i#er
Daniel Aann
President
Charles K. Ste-ens
Chie" 8inan#ial O""i#er 6 E7e#!ti-e 9i#e 9i#e President
Randall D. Mott
Chie" In"oration O""i#er 6 Senior 9i#e 9i#e President
:e""re A. Talor Talor
Chie" Co&lian#e O""i#er 6 De&!t General Co!nsel
8ored in 0234, General Motors )as the )orld*s largest #ara$er %et)een 02;0 and <334.
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GM "iled "or %an$r!&t# &rote#tion on :!ne 0, <332. In the %an$r!&t# &etition, GM #laied slightl o-er =4< %illion in assets and nearl =0>; %illion in de%ts.
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GM*s "ail!re o" leadershi& is asto!nding and ironi# gi-en its earl histor as an inno-ator, sas ?S &ro"essor Nan# Koehn.
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GM "a#es a !ni5!e o&&ort!nit to retool itsel" "or the <0st #ent!r, sas -isiting s#holar Daniel ?eller. Mean)hile, the U.S. go-ernent adinistration is e%ar$ing on an interesting e7&erient in &oliti#al e#ono, a##ording to &ro"essor :ose&h o)er.
Along )ith GM #o+"o!nder Charles Ste)art Mott, D!rant a#5!ired Olsmobile. The &air also #onsolidated se-eral other otor#ar #o&anies in#l!ding Cadilla#, Elore and Oa$land. In 0232, GM &!r#hased the &re#!rsors o" GMC Tr!#$ the Relian#e Motor Tr!#$ Co&an and the Ra&id Motor 9ehi#le Co&an. The ne7t de#ade )as "illed )ith ups an o!ns . A"ter %rie"l losing #ontrol o" GM, D!rant started the Che-rolet Motor Car Co&an. Shortl a"ter D!rants reo-al "ro anageent, GM relo#ated its head5!arters to Detroit and Al"red P. Sloan, :r. too$ his &la#e. GM also #reated the Pontia# di-ision, and this led to the deise o" the Oa$land %rand. Than$s to Sloans leadershi&, GM %e#ae the ost doinant "ig!re in Aeri#an #ar an!"a#t!ring.
"#T "E%T "&O%'(
In an arti#le )ritten % Donald Coo&er MA he stated !& to ; "a#tors as to )hat #o!ld ha-e )ent )rong in General Motors e-en tho!gh the )ere at their &rie "or ears.
)actor *+, GM designed and &rod!#ed
:a&anese, Gerans and then Koreans ade -ehi#les that )ere si&l %etter and ore desira%le. So, the and their Detroit %!ddies o""ered an endless series o" %ig #ash re%ates to %ri%e the !n)illing into %!ing the !n)anted.
the tie that GM )ere #reating de#ent #ars that )ere on &ar )ith their #o&etitors, their %rand )ere so tarnished alread that their #!stoers had #o&letel lost "aith in the and it )ill ta$e an ears to ta$e their re&!tation %a#$. And #an GM hang on "or that long to ta$e their #!stoers %a#$F
)actor *-, GM "ailed to de-elo& a good relationshi& )ith their &rod!#tion e&loees
o-er the ears and then, at #ontra#t negotiating tie, the &aid the &ri#e. The ended !& &aing )ages, &ensions and %ene"its that no #o&an #o!ld a""ord and, %e#a!se o" the
&oisono!s, ad-ersarial relationshi& )ith e&loees, the had to deal )ith a ilitant !nion that ade it i&ossi%le to anage &rod!#tion e""e#ti-el.
Maintaining a good relationshi& )ith o!r e&loees is a -ital &oint to a$e o!r #o&an "!n#tion e""e#ti-el. And o" #o!rse, i" o!r &rod!#tion e&loees "eel that o! dont -al!e the as !#h as o! sho!ld, then their )or$ )o!ld %e %elo) satis"a#tor. GM &aid the &ri#e dearl and the lost a good deal o" one !st % not aintaining good relationshi& )ith their &rod!#tion e&loees.
)actor *3, The third "a#tor is the s!&ree arrogan#e and in#o&eten#e o" #o&anies li$e
GMH#o&anies that are r!n % &eo&le )ho are o!t o" to!#h )ith realit or )ho la#$ the #o!rage to do )hat needs to %e done. GM has %een losing ar$et share "or ears and did nothing to "i7 their "!ndaental &ro%les in the %elie" that the are si&l too %ig and too i&ortant to "ail.
GM gre) o-er#on"ident that !st %e#a!se the )ere doing good that the )o!ldnt "ail. The )ere )rong. The "a#t that thet )ere losing ar$et share and the did nothing re"le#ts the )a that the thin$. GM thin$s that % ignoring the &ro%le ahead o" the and !st % si&l "o#!sing on the "a#t that their &rod!#ts are on to& then their &ro%les )o!ld "i7 thesel-es. The gre) arrogant and o-er#on"ident that % the tie the a#$no)ledged their ista$es, it )as si&l too late "or the to right their )rongs. And the s!""ered the &ri#e -er dearl "or it %e#ae the #a!se o" their do)n"all.
Other reasons behin 'eneral Motors o!n/all,
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GM aintained too an di-isions and &rod!#ts that loo$ali$e too !#h The didnt #!t o"" &rod!#tion !#h d!ring the e#onoi# #risis Uns!staina%le strategies Pension lia%ilities and health+#are iss!es All these &ra#ti#es res!lted into GM ha-ing a total o" =0>< %illion lia%ilities oss o" ar$et "o#!s a#ross the an di""erent &ort"olio le-els in the #o&an Oil &ri#esJ #ars ade % GM are traditionall not o" those )ith lo) gasoline #ons!&tion 'This #o!ld %e highlighted as another e7a&le o" rigidit o" GM and !n)illingness to a##e&t ne) trends and to res&ond to ar$et needs(.
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GMs "inan#ial etri#s ha-e "o#!sed on gro)ing ar$et share and re-en!e, rather
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than on #reating and s!staining &ositi-e net #ash "lo). General Motors is r!nning o!t o" #ash, des&eratel see$ing go-ernent s!&&ort and #onsidering %an$r!&t#.
CO&0O&TE 'OVE&%%CE 0&OB1EM2
8or o-er 033 ears, General Motors &laed a h!ge role in the glo%al a!to ind!str. Then s!ddenl, General Motors )as in a do)n"all. /as it the re#essionF /as it the #o&etition or )as it the &oor Cor&orate Go-ernan#eF GMs &ro%les #an %e tra#ed %a#$ to its roots, )hen "o!nder, /illia D!rant re#$lessl %o!ght ;2 #o&anies that nearl %ro!ght the into %an$r!&t# in the earl 02<3s. In 023, GM introd!#ed &oli#ies s!#h as "ree health #are and s!%stantial &ensions. ?o)e-er, the not+so+good &eriod "or General Motors )as d!ring 0240+0223, !nder the leadershi& o" &oer 2mith. 8irst, he "ailed in reorgani@ing GMs adinistration. Se#ond, the "ailed atte&ts in t!rning the #o&ans %!siness !nits into %ig+#ar and sall+#ar di-ision. Another is the "a#t that :a&anese #o&anies )ere a%le to o""er high 5!alit #ars at a !#h #hea&er &ri#e. The oard ostl #onsisted o" Siths #lose "riends rather than &eo&le )ho #o!ld a#t!all a$e the #o&an %etter. The #!lt!re o" an o&en and "ran$ de%ate %et)een %oard e%ers did not e7ist. At the tie o" its an$r!&t#, the CEO )as Ri#hard /agoner and )as naed as the an )ho lost GM. ?e didnt learn "ro the ista$es that Sith did %!t instead, he !st re&eated the sae ista$es. In short, General Motors )as r!n % a s&ineless %oard.
I&ro&er #or&orate go-ernan#e r!les set % GM #a!sed its do)n"allJ "irst o" all, it )as the #or&orate #!lt!re as entioned % Canis et al. '<303( or % Mon$s 6 Mino) '<334( ...the compan5 !as manae li6e an institution. 7t !as hihl5 ris68averse chronicall5
slo! to chane
enlessl5
bureaucratic
an contemptuous o/
competition. General Motors &rod!#ed ine""i#ient #ars 'in ters o" re5!ireents on
#ons!&tion( that did not at#h to the deand o" #!stoers a"ter ear <333. This )as #a!sed &artl % the high sel"+#on"iden#e o" the to& anageent.
&ecommenations, •
General Motors !st di""erentiate their &rod!#ts so that #!stoers #an get a sense
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o" -al!e+addedL CreateChange the organi@ation that )ill a$e the #o&an ore "le7i%le to %e
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a%le to #reate a right &rod!#t "or the right ar$et Ke &ro#esses s!#h as R6D, Mar$eting and ?!an Reso!r#es sho!ld %e
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#entrali@ed to a#hie-e #onsisten# Coordination aongst di-isions egin to &hase+o!t %rands that are no longer generating &ro"it Reassess the a&&roa#h to Cor&orate Go-ernan#e Too an &ro#esses are #entrali@ed at the #or&orate le-elJ start )ith de#entrali@ation %!t stri-e "or a ore #oherent )or$ing en-ironent
7%%OVT7O%2 O) 'E%E&1 MOTO&2
General Motors has ade &lent o" inno-ations, es&e#iall d!ring their &rie ears. Soe arti#les e-en sa that their inno-ations are ; generations ad-an#ed. In the ear 0241, their ele#troni#s de-elo&ed "or ot!s A#ti-e S!s&ension Te#hnolog. In an arti#le )ritten % Ronald /. Co7, Del#o Ele#troni#s, a s!%sidiar o" GM ?!ghes Ele#troni#s, &ro-ided CPC Engineering )ith &rotot&e a#ti-e s!s&ension ele#troni# #ontrol od!les d!ring 0241. In earl 024>, CPC Engineering esta%lished a &rogra to e-al!ate the te#hnolog % %!ilding a "leet o" 3 a#ti-e s!s&ension Cor-ettes )ith the R+0 ;<+-al-e engine. Instr!entation "or this &rogra )as initiall &ro&osed to %e the -ehi#le 5!ali"ied !i#$ To!#hs#reen CRT sste de-elo&ed "or the 0241 odel ear Ri-iera and Reatta, %!t the -ehi#le engineers &re"erred to ha-e the instr!entation on their ne) la&to&s. This )as the )a otors&orts instr!entation )as de-elo&ed, so DSO 5!i#$l de-elo&ed the re5!ired instr!entation to #o!ni#ate on the -ehi#les data %!s and the CRT idea )as s#ra&&ed.
In 02><, General Motors ade the 8irst A!tooti-e ra$e Sste 'AS(. Prod!#tion hard)are and s!&&ort )as &ro-ided % the #o&onent di-isions Del#o Moraine '%ra$e &ress!re od!lator(,Del#o Ele#troni#s '#ontroller(, Del#o Re 'solenoid -al-es( and Pa#$ard Ele#tri# ')iring harness(. This initial o""ering o" AS, ho)e-er, started )hat )o!ld %e#oe a signi"i#ant ind!str &enetration o" digitall ele#troni# #ontrolled AS in the 43s 6 23s and it ena%led the ne7t generation o" %ra$ing so&histi#ation sta%ilit #ontrol sstes o" the <333s. In 02>; a &roe#t )as initiated to de-elo& a -ehi#le #o&!ter !sing a i#ro&ro#essor. The e""ort )as e7e#!ted at the Ele#troni# Control Sstes De&artent )ithin the GM Engineering Sta"". This ECS De&artent )as #reated in 02>0 % Tre-or O. :ones !nder the dire#ti-e o" Ed)ard Cole to ad-an#e the !tili@ation o" ele#troni#s in a!too%iles. The algoriths and inter"a#e #ir#!itr !sed in these &roe#ts &ro-ided a good $no)ledge %ase "or this i#ro&ro#essor s&e#i"i#ation. the earl 43s, i#ro&ro#essors )ere integrated into &rod!#tion -ehi#le sstes. And their %iggest e-ent et ha&&ened in 02>0 )hen General Motors ade the 0st #ar that the A&olo 0 dro-e on the oon. These are onl a hand"!l o" their inno-ations o-er the ears. /hat a$es these inno-ations !ni5!e are the "a#t that it %e#ae a %aseline "or other #ar #o&anies to "ollo) "or "!t!re generations o" #ar inno-ation.
0&CT7C1 1E&%7%'2: C2E 1E&%7%'2
Pro%les denied and sol!tions delaed )ill res!lt in &ain"!l and #ostl das o"
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re#$oning Ne-er resist #hange In #or&orate go-ernan#e, the right &eo&le is %etter than the right str!#t!re All sta$eholders !st )or$ together to a$e GM*s %an$r!&t# "iling a #oa
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rather than a &eriod in the storied histor o" this Aeri#an #or&orate i#on The ost i&ortant &oint "or anone in anageent to learn and ree%er is
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!st )ho is the #!stoer. ose sight o" the #!stoer and o! lose sight o" the "!t!re.
2ources, mone5.cnn.com General Motors Co 'Co&an Des#ri&tion( A##ess htt&one.#nn.#o5!ote&ro"ile&ro"ile.htlFs%GMQ !atchmo;o.com The ?istor o" General Motors 8ro !i#$, Cadilla# and Pontia# to Che-rolet '9ideo S#ri&t( A##ess htt&))).)at#hoo.#oinde7.&h&Fid221Q bobmaconbusiness.com Manageent essons to %e earned "ro the 8ail!re o" General Motors. <332, A&ril 1 A##ess htt&%o%a#on%!siness.#oF&<;3Q hbs!6.hbs.eu GM /hat /ent /rong and /hats Ne7t. <332, :!ne 0 A##ess htt&h%s)$.h%s.ed!iteg+)hat+)ent+)rong+and+)hats+ne7tQ Dshort.com . /ee$l U.S. Retail Gasoline Pri#es Sin#e <333 online. <332, :!ne #it. <30<+3+<4. A##ess htt&dshort.#oin"lationheadline+#oreCPI.htlFgasoline+#r!de+ sin#e+<333Q.
