Various Issues The above discussion has centered primarily on GM's change experience during the American automobile industry crisis. How did other
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Task: Develop a change management strategy that will help General Motors to gain commitment from their 

stakeholders.


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CHANGE MANAGEMENT AT GENERAL MOTOR (GM) Brief History 8: Overview of General Motors General Motors (GM) was founded in 1908 as aholding company for Buick. based in Michigan.ln the 19205. its sales surpassed that of the Ford Motor Company hence becoming the largest car-manufacturer in the world. Most attribute GMs' successes at this time to the leadership of AlfredSloan. Sloan introduced such concepts as "planned obsolescence" (where the style of a car wouldbe changed every few years) as well as a tiered pricing structure for its different brands(Chevrolet-Pontiac-Buick-Cadillac) so that its brands would fill different niches as well as notcompete with one another. (Corporaelntom'ntion—l-listory) With the rise of the Japanese automakers (especially Toyota) in the 19805. GM was beginning tobe threatened. The SUV (Sports Utility Vehicle) boom of the late [9905 halted GMs decline forthe time being as it made large profits (especially in the North American market).While sales had already been declining alter 200]. it was only when the financial crisis beganthat GM began to struggle. It was surpassed by Toyota in early 2007 as the world's largestautomaker in terms of sales. In late 2008, GM received loans from both theAmerican and Canadian governments to help it stay afloatDespite all that. GM had to file for bankruptcy on June 1. 2009 which became the fourth—largestbankruptcy filing in U.S. history. As part of the bankmptcy deal, GM had to sell or discontinueseveral brands. such as the luxury Hummer brand (sold to a Chinese company),ln return. GM would restructure and continue business. focusing on its four core brands inAmerica — Chevrolet. Cadillac, Buick and GMC. Reasons and Forces for Change: Change Analysis for General Motors (2000-2010) The following are some of the forces of change that have affected GM in the period above: External Forces These include the highly competitive automobile markets North America is GM's largest market (followed by China) and in 2008 GM sold 29 million vehicles in America with Toyota a close second at 2.2 million. While GM is still leading sales in America, its market share has been eroding constantly. down from the 30% in the year 1999 (where it sold 5 million vehicles) "122% in 2008. It should be noted that many of GM's sales during the 2000s were that of SUVs and trucks which were hit the hardest when fuel prices went up. On the other hand, Toyota with its more fuel efiicient cars benefited. Another main force is that of the ongoing financial crisis which has severely affected GM's cash flow. In late 2008, GM predicted that it would go bankrupt without government aid or a merger by 2009. Internal Forces One main internal issue is that of GM's previous agreements with the trade unions. The UAW {United Auto Workers) union of which almost all ofGM's employees are members has been criticized for imposing high wage costs on employers. For example, GM pays its employees on average $74 per hour compared to Toyota employees who receive $44 an hour. Likewise it must run its plants at 80% capacity minimum whether they need to or not. These agreements have hindered GM's ability to conduct cost»cutting and is one of the reasons that drove it to file for bankruptcy (in order to force new agreements with unions). GM's CIO Ralph Szygenda has cemented that "We have a serious legacy cost problem that a number of our competitors do not, including healthcare and pensions. Sometimes. it feels like having one arm tied behind your back. Our processes tend to be as good as any automotive company in the world...But we're still not as profitable as we need to be." Types of change In this section, the types of change implemented and experienced by General Motors will be discussed. Other automobile makers will also be compared. along with the changes affecting them. Harvard Business School lists four main types of change programs. namely,structural change. cost cutting. process change and cultural change. GM suffered from a careless mentality that came with market leadership in the 19605 and 703, though by 1990s it began to streamline its processes and become more competitive in the face of competition, especially from the Japanese automakers and from Ford & Chrysler. Furthermore. as a journalist cemented, GM has been "struggling with a change agenda for years", i.e. it has been unable to come up with a focused idea of what to change. In recent years GM has been focusing primarily on cultural change and cost cuttingprograms Alter GM's recent bankruptcy filing, GM's chairman and current acting CEO Ed Whitacre Jr. stated that he wanted a company with "less bureaucracy" and more young blood. In a 2009 press release. the new GM which emerged from bankruptcy revealed its new emphasis, which was a focus on "customers, cars and culture". GM also has special divisions in charge of leading innovation, such as the Advance Portfolio Exploration Group (APEX). which provides advice into what brands and markets to pursue in the future. as well as recommending when a product should be discontinued or changed. Steps in the Change Management Process The following section will highlight some of the steps taken by GM as it goes through its change management process. As GM has along history. the steps discussed below are those that are themost recent.

Culture Change GM had already begun moving in this direction much earlier in the late 19905 with its "Rim Common. Run Lean" initiative, which promoted centralizations of functions (e.g. GMconsolidatcd its purchasing ofiices from 25 to 1 in the U.S) and removal of any unnecessary andredundant processes. (Henry 2008) In its most recent round of culture change measures, GM removed its automotive product boardand automotive strategy board with an 8-man decision making team reporting directly to theCEO, its objective to speed up "day-to—day decision making". GM alsostated that it wants to instill in its employees greater accountability and responsibility, as well asemphasizing the need for risk»taking and not playing safe. Former GM CEO Fritz Henderson (who stepped down in December 2009) outlined the followingsteps that will be taken by the top level, namely, more visits to operational centers, dealers andcustomers ("getting out of the office") to built rapport with fellow employees and customers. Cost Cutting Trimming its cost has also been very high on GM's change agenda. Some measures includedshifting of GM's models, such as Saturn and Hummer to other companies and focusing on itsfour core models in the US (although it still maintains overseas holdings such as Opel andDaewoo). It also includes retrenchments and pay-cuts — although this has been limited by union agreements (discussed in the constraints section below) and is one of the reasons why GM filed for bankruptcy (in order to obtain a better bargaining position against the unions). GM's total cost-cutting target for 2008-2009 would be $15 billion. Constraints and problems with the change process The limitations and problems affecting General Motors change process will be described here, along with discussions as to why they are occurring. Problems with cultural change plan Some have criticized General Motors' top down approach, saying that GM has had a long history of mistrust towards its employees, unlike Toyota who according to John MacDufi'ie of Wharton Business School, "relies on contributions from employees. It feels vulnerable, but your willingness to be open to that vulnerability is what helps you make it work." Likewise, he says that GM's biggest failure is that of the failure to learn from others and that the "top—down culture" of the American automakers did not place trust in the workersflhis means that in order for cultural change to be successful, GM has to start empowering its workers in the way Toyota did, where workers played an active part in the change program, rather than merely telling them what to do. Problems with Cast-curring Cost—cutting plays a major part in GM's change plan. While it had been implementing such measures prior to its bankruptcy, it was hampered by various factors, such as prior agreements with the UAW (United Auto Workers) union that prevented it from lowering employee wages below a certain level. It also had to keep plants operating at a minimum capacity, no matter how unprofitable. Results of the change process It should be noted that the change programs described in the previous sections have beenattempted many times previously by GM to a various degrees of success. These changes are thelatest that have been implemented by GM in the year 2009. The results of the changes will bedescribed below: Culture Change Result: GM has had various culture change programs in the past with varying success, such as the Go Fast program (to eliminate bureaucratic inefficiencies) and GMS, General Motor's version ofToycta's lean production systemr It is clear that despite such programs its overall culture was still unsatisfactory. Emerging from its bankruptcy in 2009. GM implemented another round of culture change programs (as discussed previously). So far. the results have not been promising. marked by the resignation of CEO Fritz Henderson irt December 2009, with the board of directors stating that it was "unhappy with the pace of the Detroit automaker's turnaround since it emerged from bankruptcy". On the other hand, the results of GM's latest round of cultural change program. aimed at creating a leaner, more efficient company will obviously not be seen immediately. Cost Cutting Results GM's extent of cost-cutting can be clearly seen by its employment figures — from 1998 to 2009,its employment in North Amrican went from 226,000 to 101,000 workers. Other measuresinclude trimming over 1,100 dealerships (affecting 100,000 jobs) and fourteen plants. Nevertheless, GM has recently stated that its focus is on boosting sales, rather than "cutting their way to profits". Nevertheless, the substantial job cuts (GM aims to reduce its factory workforce from 62,000 to 40,000) as well as small scale changes, such as buying cheaper pencils and removing voicemail from factories will certainly lead to a significant amount of cost savings. Various Issues The above discussion has centered primarily on GM's change experience during the American automobile industry crisis. How did other automakers fare? Response of other automakers

Various Issues The above discussion has centered primarily on GM's change experience during the American automobile industry crisis. How did other automakers fare? Response of other automakers In early 2009, Toyota posted its first annual loss in sixty years, proving that even the hardy Japanese automakers could be affected by the financial crisis. Toyota's response was to emphasize its superior working culture and to conduct drastic cost-cutting, such as pulling out from Formula One. In November 2009, it posted a $242 million profit, proving that it was capable of a turnaround. Even Honda, surprisingly, is projecting a net profit of $1.2 billion for2009. Volkswagen, Europe's largest automaker, also will end the year with a profit mainly due to strong sales in China which is now its biggest market (China is the second largest market for GM). But how does GM compare with Ford & Chrysler? Chrysler, like GM, filed for Chapter 11 and aimed to create a company from the profitable parts, selling away any unprofitable elements (Chrysler also formed an alliance with Italian automaker Fiat).Ford has been more successful, avoiding both bankruptcy and government loans and instead pursued various paths to recovery, such as securing private credit and negotiating with the United Auto Workers union to lower healthcare and retirement benefits. It also offloaded its ownership of the Volvo, Jaguar and Aston Martin marques. That said, its turnaround has been proceeding slowly and it expects to burn through $17 billion before turning a profit. (Brynaur2007) Recommendations It is clear that despite extensive efforts by GM to turnaround its struggling sales, its change measures have not been entirely successful. The following will discuss other options that it can pursue to reach its turnaround goals of increasing sales and market share. Producing the right automobiles GM has long been criticized for its fuel-inefficient cars, leaning heavily towards SUVs and trucks. While this made it a top-seller during the late 1990s when fuel was relatively cheap, with the increase in oil prices it made a large majority of its cars unattractive. On the other hand, companies like Toyota managed to increase their sales with their "right-sized" fuel-efficient sedans. It was only in mid-2008 that GM announced plans to review its car lineup, with more fuel-efficient cars to be in production only by mid-2010. GM has also focused on hybrids, such as the battery powered Chevrolet Volt (due for 2010) but such cars are for a niche market, and must start improving its mass-market cars to be more economically attractive. Improving public perception GM is currently majority owned by the government and by extension, the public. As such public perception is especially important. This extends to not only providing efficient customer service (GM's culture change is emphasizing this) but also to not appearing wasteful or "ungrateful" in the eyes of the public. This might mean cutting any unnecessary expenditure (which GM has also begun to do) and creating good products and ultimately becoming profitable. The latter is especially important for GM as it must not be seen as letting the public money spent on their bailout go to waste. Conclusion General Motors, from being the world's largest automobile manufacturer (and seller) ultimately filed for bankruptcy in 2009 and received government bail-out money to the tune of nearly $60billion. Many change factors led to this, including the ongoing financial crisis, increasing competition from the Japanese (and European) automakers and a weak and overextended product line-up that no longer had much consumer appeal.GM responded, after emerging from bankruptcy, with two major change measures - cultural change and cost-cutting. Cultural change included removing layers of bureaucracy as well as increasing the accountability of executives and educating employees. Cost-cutting measures included massive staff retrenchments. The results have not been promising so far. GM's CEO Fritz Henderson resigned in December2009 as the board of directors was not satisfied with the speed of the turnaround. It also faces pressure from the government to improve its profitability and repay its loans. Nevertheless, if the momentum of the changes is maintained, some beneficial results will definitely be seen in the longer run.GM is still a vast-company with a strong base in two major markets, namely United States and China. It must do all it can to exploit this position, as well as work to minimize any of its weaknesses, such as a poor product lineup and perception. In doing so it would be able to at least increase its market share and hence profitability

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