Basic factor of successful business is to meet the changing demand of the market, which is governed by the customers. Due to the constant changing pattern of customers’ needs, the company has to change the organization in order to ensure long-term sustainability in the market. The demand of the situation claims introduction of new methods and upgraded technologies, which are the basic criteria for organizational change. At times, these changes are subject to resistance from the work force due to their long-standing habits and reluctant attitude towards adoption of new habits. The strategies towards organizational changes thus faced serious challenges, which are to be properly managed by the supervisors. The organizational change is always for the betterment of the performance of the company and the sooner the stakeholders realize the importance of this change, the better it is for the organization. This report will put light on the issues of organizational change with the balancing factors and subsequent strategies for this purpose with respect to the esteemed organization, General Motor of USA (Khan & Hashim, 2014).
Case study- Organizational Change in General Motor
The journey of General Motor was started in the year 1908. The company was then the only renowned car manufacturer in the region of Michigan, USA. Gradually it had occupied the place of the biggest manufacturer of motor globally, which was held by them till 1920. This is due to the dynamic leadership of Alfred salon, who was instrumental in introducing several new models in the global market. Later on, with the invasion of the Japanese car manufacturers in the global market, GM had gradually lost its market share with the inevitable declination in the performance graph. Even the financial assistance from American and Canadian Governments were not found enough through provision of loans.Subsequently in the year of 2009, the company was declared bankrupt. This phenomenon had forced the company to close several brands with subsequent sell to one China based company. This time the management of the company had realized the importance of organizational change through restructuring followed by initiation of creating changes in the company. On this context, the company had found the necessity of organizational change to sustain in the market and had initiated several changes for the interest of the company to run successfully their domestic and global business with the basic brands in America like Chevrolet, GMC, Buick, and Cadillac (Jones, 2012).
Forces of change
The forces of change for General Motor are mainly of two types- external forces and internal forces.
External forces to change
Basic external force is the pressure felt by the company through their global competitors, especially in the form of Japanese companies. Out of them main competitor was Toyota, who had proved their competency in the American automobile market. This market was earlier dominated by the compatriot company General Motor. GM is still the market leader with the turnover of nearly 2.9 million US $ while Toyota and other global competitors are there to clinch the market share. This criterion had made remarkable impact on the profitability of the company (Kothari, 2015).
The second external force to exercise organizational change is financial crunch faced by General Motor that had affected the surplus on working capital and the cash flow of the company.
Internal forces to change
The overhead cost is another area of operation management, which had made negative impact on the profitability of the company. This is entirely the internal force. The high level of wages in the form of hourly wages rate of $ 74 is reckoned as quite high in comparison to $ 44 of Toyota. This featured event is due to the long-term agreement with the workers’ union, which had forced the company to run its plant with the minimal level of 80% capacity irrespective of its requirement. These factors played vital role towards the event of bankruptcy of General Motor (Lombardo, 2017).
Assessment of organizational change
The company had initiated strategies to make changes in the operations through the process of changing its structure, process, cost, and culture. Different steps in these respective fields were induced in order to ensure the profitability of the company. The changes were also introduced to ensure quality assurance for the customers through the changes in traditional practices of respective fields. Cost cutting is one of the major steps, which was obvious and had been initiated to prove the long-term sustainability of the company to ensure at par with the cost of the competitors. The structural change had been introduced to reduce the top-level management employees by trimming the decision makers. This step was initiated in order to ensure speedy process of decision-making. Cultural change had been planned in order to ensure better and efficient deliverables through implementation of proper hierarchical level with assignment of delegation of authority. This step is instrumental for accountability and responsibility on the part of the employees (Jusko, 2014).
Assessment of such changes by GM management
The management of General Motor had observed problems in the implementation of cultural and cost pattern changes.
The company had earlier practiced top down approach, which was not instrumental to acknowledge the contribution of the employees. The newly implemented organizational change includes cultural change by introducing down top approach which is practiced by other companies to ensure due acknowledgment of the efforts of the employees. This system needs proper application of delegation of authority with the proper study of the ability of the employees. While implementing down top approach, the company had ignored this aspect by assigning the authority to employees without proper training to them so that they can implement proper execution of strategies, which are fixed by the company (Miller, 2014).
Main implementation of cost changes are initiated by cost cutting in different ways. Main domain of cost cutting is in the area of wages restructure, which is severely countered by the employees through the empowered agreement with trade union, which was confirming non-lowering of the wages of the employees with the maintenance of the capacity level of production.
Impact of the change process by General Motor Management
Result of cost curtailment
The change process related to cost curtailment was found evident from the employment data of 1998 to 2009 that had shown remarkable reduction of employment strength from 2, 26,000 to 1, 01, 000. Now the company is in a position to concentrate in sales. Moreover, the company had a thought of reduction of factory work force from 60,000 to 40,000. These steps were really proved instrumental towards effective cost management on the part of the company (Briody et al., 2012).
Result of cultural change
The introduced cultural change had shown phenomenal achievement as the same had made the employees more focused with their objectives. They are ready to prove their abilities with more responsible and accountable way to honor the management decision of empowering the employees for better deliverables.
Effectiveness of strategies of organizational changes
Apart from the basic two organizational changes in the domains of cost and culture, the company had adopted some other organizational changes, which were developed in recent period. These changes can be instrumental in regaining the pride of the market leader in the automotive industries by surpassing the competitors like Toyota and others. These changes include concentrating on the core brands of products, which are proving beneficial for the company along with other already implemented organizational changes in the forms of cost management and cultural management (McGregor, 2014).
General motor had passed through the darker days of their journey caused by intense level of competition by external competitors, which was resulted to bankruptcy. To get rid of such odd situations, the company had introduced different level of organizational changes in the form of cost changes and cultural changes. Basic objective of the company is to regain their position in the global automobile industry by implementing better working condition and justification of costs incurred in the operation management of the company. This basic objective can only be achieved through increased sales and generation of substantial profit to sustain in the market with better market share. These changes had shown the positive mind of the management but before implementing different change strategies, the management should make a thorough process of SWOT analysis enabling them to regain their position in the competitive market with distinctive edge.
To end the report of organizational change in General Motor, some recommendations are required to make this report complete. The recommendation for organizational change in the company is to be prioritized with the introduction of fuel-efficient cars, which are good for global environment. Moreover, the company should carry on research for the automobiles, which can run on renewable or alternative energy. This will lead to organizational change, which can show the roads towards success for the company in long run with the awareness the company can project for the future generation. The company should more insist on research and development domain so that they can show the path of success to the world in the area of car manufacturing with salient features to encourage the thought of awareness towards environmental friendly cars.
Briody, E., Pester, T.M. & Trotter, R., 2012. A story’s impact on organizational-culture change. Journal of Organizational Change Management, 25(1), pp.67-87.
Jones, K., 2012. General Motors Undergoes Major Organizational Change to Survive. [Online] Available at: https://prezi.com/yb9prv_a-yt_/general-motors-undergoes-major-organizational-change-to-survive/ [Accessed 31 July 2017].
Jusko, J., 2014. CEO Mary Barra is Driving Culture Change at General Motors. [Online] Available at: https://www.industryweek.com/quality/ceo-mary-barra-driving-culture-change-general-motors [Accessed 31 July 2017].
Khan, M.A. & Hashim, M., 2014. Organizational Change: Case Study of General. Bridgpeort: University of Bridgeport.
Kothari, V., 2015. General Motors India announces organisational changes. [Online] Available at: https://timesofindia.indiatimes.com/business/india-business/General-Motors-India-announces-organisational-changes/articleshow/47929212.cms [Accessed 31 July 2017].
Lombardo, J., 2017. Toyota’s Operations Management, 10 Decisions, Productivity. [Online] Available at: https://panmore.com/toyota-operations-management-10-decisions-areas-productivity [Accessed 31 July 2017].
McGregor, J., 2014. What GM could do to change its culture. [Online] Available at: https://www.washingtonpost.com/news/on-leadership/wp/2014/06/05/what-gm-could-do-to-change-its-culture/?utm_term=.e872a634955a [Accessed 31 July 2017].
Miller, J., 2014. Changing the culture at General Motors. [Online] Available at: https://www.detroitnews.com/story/opinion/2014/12/04/gm-must-change-culture/19856805/ [Accessed 31 July 2017].