Organizational Change: Case Study of GM (General Motors) Case Solution

Abstract

The case describes the organizational change which occurs when the major sections or activities of the organizations are altered. The change usually occurs due to changes in technological advancement, globalization, stiff competition from global competitors and the need to remain a market leader. The management strives for change management whenever they realize that the current business processes, strategies, employees’ behavior, organizational culture is not capable to meet the needs of customers whose demands are constantly changing and evolving. The case describes the organizational change meaning to alter the activities, processes, administration of an organization in order to achieve the desired organization that is to make the business sustainable for the foreseeable future.

The case argues that there are external and internal forces behind the change. External forces are the technological advancement, economical change, competition, legislation and globalization. Internal forces include Management change, Organizational restructuring and Entrepreneurship. The change is not easy to implement and manage and when this happens, as it leads to disastrous results for the organization.

Whenever the management decides to implement change, it faces resistance from two sources, individual and organizational change. Individual resistance, mainly from employees, take place because of habits of olderemployees, which have developed over the years and they are not ready to change them. After then resistance comes from employees who are sacked due to change. One of the most important factor is the fear of the unknown. Organizational sources include the limited focus on change, threat to expertise and threat to the authority of powerful employees in the organization.

The management has to implement and manage change in such a way that the desired objective of the organization is met which is to remain sustainable in the global market. The case argues that change agents utilize tactics to manage change which include implementing the change fairly, select employees who embrace change, education and communication, participation, building support and commitment and manipulation.

Problem Statement

General Motors has not been able to manage its revenues and cost since the emergence of Toyota which has captured the market of North America from GM and forced it to file for bankruptcy. Currently, the management of General Motors requires to regain its position in the market by changing the way they operate.

Case Analysis

General Motors (GM) is the largest car manufacturer in the world and one of the leading companies in the business. Since its establishment in 1908, it has experienced phenomenal growth over the years. It has the unique feature of producing cars of unique designs and style, thus establishing a firm base of customers all over the world.The brands of the company include Chevrolet, Pontiac, Buick and Cadillac.

However, since the emergence of Toyota Japan, the profitability of the company has been affected adversely. Toyota has captured the market and gradually threatening the position of General Motors as the world’s No 1 car manufacturer. During 2009, the state of the company was such that it filed for the bankruptcy and closed its several brands. This has forced its management to change its strategy and processes to regain its market share and emerge as market leaders.

One of the internal forces was the remuneration paid to the labor which was much higher than the competing company, Toyota, paid its employees. Secondly, as they had an agreement with theirlabor union, it was operating at 80% capacity,as the profitability of General Motors changed the way it operates.

Cost of Brands

The cost paid to employee per hour paid by GM is 68% higher than Toyota due to the agreement with the trade union. GM has reduced its workforce by 55% from 1998 to 2009 in order to maintain its profitability level. Although the costs are reduced, but the management must consider the aftermath of this action. They should consider that remaining employees may be demotivated by the fact their colleagues are sacked and may fear that they would also be unemployed one day. This fear can affect their productivity neutralizing the advantages achieved from cost cutting.

The quality of the products may also suffer in terms of design and comfort levels. Labor Unions must be taken in confidence if more employees are to be sacked and their concern to be heard. The employees must be informed the reasons for the change taking place and the need to take immediate action. They should also be trained to improve their productivity. Their suggestions must be heard about the ways to tackle change and they should be encouraged to give ideas about the ways to improve quality of cars. If the management suggests a technological change, then employees must be trained to cope with it……………………

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Organizational Change: Case Study of GM (General Motors) Case Solution
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