General Motors is planning for a change management in order to overcome its problems related to financial sustainability and competition being faced by Japanese market specifically Toyota. General Motors has identified factors that have resulted in low profit margins for the company. These issues were mostly due to the high employment costs associated to the company with regards to the idle working hours set by trade union in order to gain personal benefits associated to their increased wage rates. General Motors is adapting cost cutting and cultural change management in order to overcome these issues. Furthermore, General Motors is launching a fuel efficient variant of car in order to be less dependent on fuel prices and have a competitive advantage over other manufacturers.
General Motors is facing several issues pertaining to its financial credibility and it has filed it bankruptcy case in order to sustain in the market. General Motors is moving towards a change management approach via using cost cutting strategy and cultural shift strategy in particular. There are several external and internal issues associated to the change management as a whole by the employees and trade unions specifically. Apart from this, the emergence of Toyota as a strong competitor has threatened the operations of General Motors and has captured its market share significantly. In order to compete with Toyota and sustain in the automobile industry, General Motors has decided to launch fuel efficient cars along with improvements in brand image via maintain high quality.
Analysis – Kotters eight step plan
Need for Change
The determinant factors of a change management within an organization could vary from one business to other business depending on the nature, size and environment of the business. Following factors could lead to a change in the overall organization:
- Social and Cultural Changes
- New government policies
- Changes in global economic conditions
- Changes in manufacturing processes
- Advancements in technology
- Changes in demand and taste of customers
- Innovation in the design of products and services offered
- Relocation of the organization’s operating unit
The development of Japanese markets pertaining to car manufacturing proved to be a major threat for General Motors. The threat created by Toyota Motors was not just specific to any particular category of General Motors but affected the growth of all of its branded cars such as Pontiac, Cadillac, Chevrolet and Buick. General Motor’s profitability and financial stability was affected pervasively by Toyota specifically in the geographical region of North America.
Although General Motors wasthe sole manufacturer of cars in Michigan for a long time period since 1908 and was in the list of largest automobile manufacturers in the world, still Toyota managed to capture its markets in 2001. Consequently General Motors had to file a bankruptcy case and seek government’s assistance in order to prevail and sustain in the market.
With the help of government’s assistance and sale of several business units pertaining to various brands to Chinese automakers, General Motors were in state of restructuring and opting for a change management process within the entire company.
There were significant internal issues even that were affecting the growth and day to day running of General Motors and were leading towards an overall change in the business’ structure. The most dominant factor leading to change in General Motor’s organizational structure was the high costs associated to the employees of the company.
General Motors were paying 68.18% higher wages to their employees i.e. $74 per hour compared to the wage rate of Toyota’s employees i.e. $44 per hour. This significant difference in the wage rate of employees pertaining to Toyota and General Motors was due to a strong and dominant trade union present at General Motors.
The trade union of any organization can affect the productivity of the business adversely. This is because they can force the employees of the business to call off for strikes in order to benefit the personal endeavors of the employees on contrary to the organization’s goals and objectives. It is evident form the excessive wage rate that the trade union of General Motors is strong enough to affect the running operations and decisions of the company………………….
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