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Cultural approach (by Robin)

Answer to the 2nd question of the scoop-it team project

GM Group 1's insight:

GM was the largest car manufacturer in 1980 when Toyota appeared. Then, they progressively lost market shares. In 2009, they almost went bankrupt due to the financial crisis but were saved by a loan given by American government. In order to survive from bankruptcy and save money, GM decided to change its culture in different ways.

First, GM promoted centralizations of functions (e.g : consolidated its purchasing offices from 25 to 1 in the U.S) and removed any redundant process. Then GM replaced its product board and automotive strategy board with an 8-man decision team reporting directly to the CEO in order to boost decisions. GM wanted to give its employees greater accountability and responsibility on the same model as Toyota. Moreover, former CEO Fritz Henderson (who resigned in 2009) wanted to build a better relationship with employees and customers by asking the top management to visit operational centers, dealers and customers. But this  decisions to change met some resistances and some criticizes. Some criticized the top down approach of GM and said that GM has a long history of mistrust towards its employees (contrary to Toyota). It means that if GM wants to be successful in this change, they need to empower their employees the way toyota did, where workers played an active part in the change.

Actually, the challenge for GM was to start the cultural change and build a company ready to face the issues of the 21st century. But where Toyota (the global leader) tries to replace robots by employees and trust their expertise, the culture of GM is to tell the employees what to do and not trust them.

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GM struggles with a defective ignition switch — and possibly a defective corporate culture

GM struggles with a defective ignition switch — and possibly a defective corporate culture | GM change | Scoop.it
A corporate culture averse to bad news may have played a role in slow response to faulty ignition switch.
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Contingent approach: General Motors (GM) (by Henrik)

Answer to the 3rd question on the GM case

GM Group 1's insight:

GM was forced to adapt to their changing environment. The automobile industry is highly competitive and therefore a company who wants to stay in this industry must always adapt to the actual economic situation.

The financial crisis of the years 2008-2010 had a big effect on General Motors.

The company used to manufacture big cars that are very fuel consuming. These cars are really attractive because Manufacturers made 15% to 20% profit margin on an SUV, compared to 3% or less on a car. This strategy was many years successful but as the financial crisis begun the fuel prices went up. Now the demand of large trucks and SUVs dropped significantly and with it the sales of General Motors. Other companies such as Toyota with its smaller cars benefited.

 

Another problem with its cars arises, when the customers changed their buying behavior. SUVs and Trucks were the Top-Sellers of General Motors in the 1970 years and after, but now most of the people become more aware of the environmental problems. Many people want to drive ecological cars. General Motors failed to recognize this trend in Society.

These two reasons forced GM to adapt and create new models, which are more efficient and consume less fuel.

 

Furthermore GM had to adapt its cost structure to the Competition. For example GM pays its employees 74 euro per hour, this is a very high salary compared to Toyota employees who receive an average of 44 euro per hour.

 

Cost cutting is a major part of GMs Changing Plan, but there are some difficulties with the United Auto Workers Union. Therefore it's only possible to reduce the labour cost to a certain level. This is a disadvantage for General Motors compared with other automobile manufactures.

When the CIO of General Motors, Ralph Szygenda was asked about this Problem he said: “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.”(Driving Change at General Motors 2005)

This shows clearly that General Motors had to change its structure to keep up with the competition. In addition to the cutting of salary the company reduced its workforce from 226.000 to 101.000 from the year 1998 to 2009.

 

Summing up one can say that General Motors was forced by the environment (financial crisis, change in customer behavior, Competition) to make huge changes.

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answer to question one by Shi Peishan

question 1

 

GM Group 1's insight:

GM: the description of the case in the area of organizational change

General Motors was founded in 1908 as a holding company for Buick, based in Michigan. In the 1920s, its sales surpassed that of the Ford Motor Company hence becoming the largest car manufacturer in the world. But with the rise of the Japanese automakers (especially Toyota) in the 1980s, GM was beginning to being threatened. The SUV (Sports Utility Vehicle) boom of the late 1990s halted GMs decline for the time being as it made large profits (especially in the North American market).

While sales had already been declining after 2001, it was only when the financial crisis began that GM began to flounder. It was surpassed by Toyota in early 2007 as the world’s largest automaker in terms of sales (Hawkes 2007). In late 2008, GM received loans from both the American and Canadian governments to help it stay afloat.

Despite all that, GM had to file for bankruptcy on June 1, 2009, which became the fourth largest bankruptcy filing in U.S. history. As part of the bankruptcy deal, GM had to sell or discontinue several brands, such as the luxury Hummer brand (sold to a Chinese company).

In return, GM would restructure and continue business, focusing on its four core brands in

America – Chevrolet, Cadillac, Buick and GMC we will be mainly focusing on its activities in North America and its change management experience during the 2000s where it was pressured the hardest and ultimately bankruptcy in 2009 to allow for restructuring. In this report we will be mainly focusing on its activities in North America and its change management experience during the 2000s where it was pressured the hardest and ultimately bankruptcy in 2009 to allow for restructuring.

 

 

 

 

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Fixing a Weak Safety Culture at General Motors

Fixing a Weak Safety Culture at General Motors | GM change | Scoop.it
GM needs to create a safety culture that encourages employees to speak up about large, small, and potential failures.
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How Ed Whitacre brought GM back from the brink - Fortune Management

How Ed Whitacre brought GM back from the brink - Fortune Management | GM change | Scoop.it
Days after General Motors went bankrupt, former AT&T CEO Ed Whitacre took over as chairman. He found a company paralyzed by old ways and seemingly unable to change. Inside his fight to get GM moving again.
FORTUNE -- General motors filed for Chapter
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Bankruptcy will force lots of changes on GM - May. 29, 2009

Bankruptcy will force lots of changes on GM - May. 29, 2009 | GM change | Scoop.it
assuming an entity called "General Motors" does emerge from bankruptcy, it will be a different company than the one that went in
GM Group 1's insight:

This article, written in 2009, right after GM was stated to be in bankruptcy, explores the possible modification in GM's structure.

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Two GM board members resigned, while Chevy and Buick got new U.S. sales heads

Two GM board members resigned, while Chevy and Buick got new U.S. sales heads | GM change | Scoop.it
General Motors said two board directors plan to depart later this year, and the car maker appointed two vice presidents to oversee sales of its Chevrolet and Buick brands in the U.S.
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Our impressions about the scoop-it project (by the whole team)

Our impressions about the scoop-it project

 

GM Group 1's insight:

From this digital research, we have our first chance to know the scoop.it tool and in the process to use it we learned a lot about GM’s case of business and change management.


At the beginning, we had trouble to adapt to it because it is not way we used to do most of our case studies and as employees at GM, we don’t want to change. But since we had a person in our group who adapts quickly and was very helpful for the others, we started learn how to use it fluently.

Another difficulty was to find time to work together because of our heavy timetable and the fact we don’t live in the same area of the city. We appreciated using digital media for pedagogical process because it was highly efficient, especially for the teamwork allowing us to prepare the work before meeting to make sure everybody agrees. Scoop.it is quite convenient to share the articles needed for the case study. We don’t need to transform it in the the way we used before, like u-key, e-mail.


As a conclusion, our team experienced some change in the way to do teamwork and pedagogical process and we handle this change very well.

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How to explain the successes or difficulties experienced in the GM change case? (by Adrien)

Answer to the question 4 of the scoop-it team project

GM Group 1's insight:

The first difficulty the encounter came from the strong resistance the workers opposed the management. It can be explained by the classical error made by many car manufacturer at the time : “Top-down culture”. The top management imposed the cultural change instead of making it come from the workers. Toyota on the other hand relies on contribution from its employees to outline the future of the company. Even though it may seem dangerous it is the only way to make the workers accept and understand the change, especially when the company has a history of unsuccessful change.

The second difficulty GM faced came from its agreements with trades union (United Auto Workers) as it was explained in the third question. They had been able to prevent the wages from going below a certain level and they forced a minimum activity even if it was not necessary.

 

The third difficulty General Motors faced was the fact most employees did not realised the company had to change with for instance the trades union refusing to cut slack on salaries. People waited until they were backed against the wall, facing total bankruptcy, before accepting the need to adapt to the fast moving environment.

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Answer to the question 2: GM cultural change by Robin

Answer to the question 2: GM cultural change by Robin | GM change | Scoop.it
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Fritz Henderson on Culture Change at General Motors - YouTube

General Motors President and CEO Fritz Henderson discusses changes within GM's corporate structure
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GM Has a New Model for Change

GM Has a New Model for Change | GM change | Scoop.it
Change takes guts. It takes imagination. It takes commitment, declares John Taylor of General Motors's APEx team. APEx is designing radically new...
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How General Motors Was Really Saved: The Untold True Story Of The Most Important Bankruptcy In U.S. History

How General Motors Was Really Saved: The Untold True Story Of The Most Important Bankruptcy In U.S. History | GM change | Scoop.it
Five years after an unprecedented government bailout there's no shortage of people--including President Obama--taking credit for rescuing the most important industrial company in American history. But the truth of what happened during GM's darkest days has never been told. Until now.
GM Group 1's insight:

This article outline the economic plan GM wen through to exit their 2009 crisis.

 

They decided, under the Chapter 11, two divide GM into 2 distinct entities. The new company that would come out of the crisis will have kept all the important asset while another company, name Motors Liquidation Inc. would sell all the bad assets dragging them down.

 

The plan was adopted after months of planning by the board and allowed GM to resurrect very quickly.

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