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How General motors came back from the brink

How General motors came back from the brink | GM change | Scoop.it
General Motors, the giant car maker, races back on to the US stock market this morning, after the biggest share offering in American history, and investors were falling over themselves to get a piece of the company.
GM Group 2's insight:

This articles is about the results of all changes operate by GM. And now GM is back on the stock exchange. And every body wanted to get a piece of the new GM. 

 

In the article we have a quick summary of the changes operate during the past year. 

 

We have results of the company: now GM earns $3000 every time they sell a car. Instead of loosing $1000.

 

This articles is about the come back of general Motor.

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I. Description of the studied case

I. Description of the studied case | GM change | Scoop.it
GM Group 2's insight:

Due to liabilities well surpassing their assets, GM ran out of cash and filed for bankruptcy in 2009. In order to face this issue, GM had to radically change different parts of its business. The economic crisis caused many households to forget their car buying plans and with the rise of gas prices, buyers turned towards low consuming vehicles, thus dropping the activity of the company.
GM had started diversifying its brands at the beginning of the 20th century and controlled over 40 companies such as Cadillac, Pontiac or Chevrolet. All these companies ran as separate entities and not as a unified firm, causing competition within the carmakers own brands.
GM also treated its employees very well by giving them high salary increases over the years, full life going health insurance and high pensions. This caused each new built car an additional $1,400 in costs.
To deal with its problems, it started by separating itself from some of its brands. It sold Hummer to a Chinese firm, but well under the price it had expected. The company also decided to regroup its activities into two entities. One comprised of the brands it desired to keep and that will be beneficial to the company and the other comprised of all the brands the company wished to sell. It hoped to have a cleansed company in just a few months (before the start of September).
The ‘profitable’ entity would now only regroup 14 factories that would be able to break even in the US market with 10 million vehicles sold. With fewer sub-brands, it will be able to target better its advertising campaigns and concentrate on better innovative vehicles.
The results took more time than expected to arrive but the company was saved from bankruptcy and is now profitable again. Layoffs occurred but most jobs were saved.

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III. Cultural Approach

            I will now analyse the change General Motors underwent using the perspective of cultural approach.

 

            First of all, before starting a cultural change all the employees must be convinced that a change is necessary. One of the main thing that enabled people to think that a cultural change was needed, was the bankruptcy of General Motors, according to one of our Scooped article “ General Motors is an organization that if you went to a psychiatrist he would have prescribed electroshock treatments bankruptcy is electroshock”. So, we can say that thanks to the bankruptcy of General Motors, people were ready to start an efficient cultural change.

 

            Secondly, I will present you some effective cultural change in General Motors Company:

 

-       General Motors’ Chairman and current acting CEO Ed Whitcare Jr. stated that he wanted a company with “less bureaucracy” and “more young people”.

-       They now focus more on “Customers, cars and culture” (Shunk 2009)

-       They have a special division in charge of leading innovation, and they promote centralizations of functions and removal unnecessary and redundant process.

 

            In order to explain their change, they built a project called Building Movement. Building movement is a project that consists in creating education shows to explain change and they do a communication drive to articulate the values. They also gave HR manager special tasks to handle this change, their role was to support change among the employees but not to drive it. General Motor’s senior’s managers and CEO took the time to visit their employees in operational centres, dealers and customers, according to a Scooped article “Getting out of the office”.  The main goal of these kinds of visits was to rebuild a good relationship with fellow employees and customers.

            According to another article, in order to build a successful cultural change, General Motors had to start empowering its workers in the way Toyota did. To achieve change management, workers must play an active part in the change program rather than be passive.

 

            To summarize, in order to make his change acceptable by its employee and modify the culture of the organization, General motors needed something to make their employees aware that a change was inevitable. So the bankruptcy of GM was the key point to start a cultural change. After that, GM modified step by step the culture of the organization by taking into account some tactics to overcome resistance among its employees, for instance by involving employees in the change efforts and educate the workforce as we saw in class. 

 

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The Before / After GM change

The Before / After GM change | GM change | Scoop.it
GM Group 2's insight:

A brief chart on what change during GM organizational change.

 

Nicolas

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Rebuilding GM's corporate culture

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GM Group 2's insight:

In this article, GM's new CEO explains how GM has changed its culture.

They do not base themselves on a cost culture anymore (trying to cut costs no matter the consequences) but are now orienting towards a customer culture (trying to satisfy the customer's needs).

This is an ongoing process that is highlighted by the number of vehicles called back to prevent accidents that may occur. They do not care about the cost of calling all the vehicles back, they only care about the people's safety.

 

Charles

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General Motors bankruptcy: End of an era - Jun. 1, 2009

General Motors bankruptcy: End of an era - Jun. 1, 2009 | GM change | Scoop.it
General Motors filed for bankruptcy protection early Monday, a move once viewed as unthinkable that became inevitable after years of losses and market share declines capped by a dramatic plunge in sales in recent months.
GM Group 2's insight:

This article is about summarizing consequences of GM’s bankruptcy on the company; the federal help, layoffs, cutbacks in health insurance coverage, Removal from the Dow Jones industrial average and the NYSE.

It also develops the “New GM” they want to build, based on four brands in the U.S. market (Chevrolet, Cadillac, GMC and Buick) as well as many of its more successful overseas operations.

 

Thomas

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gm-cartoon.jpg (800x551 pixels)

gm-cartoon.jpg (800x551 pixels) | GM change | Scoop.it
GM Group 2's insight:

A humoristic insight of the feeling of GM executives during the change.

 

Nicolas

 

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Here Are Some Of The Management Changes That Are Saving GM

Here Are Some Of The Management Changes That Are Saving GM | GM change | Scoop.it
Look under the hood.
GM Group 2's insight:

This article published by business insider explains us what are the management change that are saving general motors. 

 

1°) More control on budgets and internal finance 

2°) Their employees are more involved

3°) GM is a whole company, no more inside divisions 

4°) They are aware of rivalry and paid attention to their competitors 

 

Thibault

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Les secrets de la résurrection de General Motors

STRATEGIE- En faillite en 2009, le géant automobile a retrouvé sa place de leader mondial en 2011. Une renaissance due à une reprise en main par l'Etat américain et à une réduction drastique des coûts et des marques.
GM Group 2's insight:

A french article about the new strategy that GM adopted in 2009.

 

The tittle of the article is "The secret of the resurection of general Motor".

 

In this article we learn more about the changes that happend in general Motors company to become again the first car maker in the world.

 

The changements:

             - the creditors become the shareholder (because of the huge debt)

             - they splitted the company in 2. On one side with the assets to be devested and one side with a new company

             - reduce expenditure

             - change the culture of the company

             - make cars that use less gaz

             - ...

 

This article is all about the resurection of General Motors.

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GM's Randy Mott: What I Believe... - InformationWeek

GM's Randy Mott: What I Believe... - InformationWeek | GM change | Scoop.it
CIO's five core principles underpin automaker's three-year IT transformation plan.
GM Group 2's insight:

In this article, the journalist explains and comments GM's CIO's recent declarations.

 

According to the CIO, there are five principles to GM's new IT plan: 

 

- align the IT business with the rest of the company

- IT systems should be build with IT companies that know the business or if possible in-house

- the mix of experienced professionals and college hires are beneficial to the company for innovation

- constant change and innovation is needed to maintain competitive advantage

- bringing projects to an end at high speed is essential

 

 

Charles

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General Motors : Mary Barra va prendre les rênes d'un constructeur transformé et prospère (2/2) - CCFA : Comité des Constructeurs Français d'Automobiles

General Motors : Mary Barra va prendre les rênes d'un constructeur transformé et prospère (2/2) - CCFA : Comité des Constructeurs Français d'Automobiles | GM change | Scoop.it
GM Group 2's insight:

This article give us some useful information about GM's today situation. 

 

In 2014, GM is a huge and powerful company again. It hasn't be so powerful and healthy since many years. 

 

They said that if they failed it's because they didn't understand the need of change.

But now they know that if they want to be a leader they need to constantly change to stay and remain competitive.

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II. Contingent Approach

When General Motors ended up in bankruptcy it was quickly perceived as an electroshock, which convinced every employee that the company needed to evolve. The CEO at this time, Fritz Henderson started an organizational change of General Motors. He focused on the improvement of competitiveness and of the market. This change management can be seen from the contingency perspective.

First, General Motors was lacking of competitiveness and had failed to react to the trend in the markets. Consequently, one of the first decision was to adapt to those environmental circumstances by downsizing and decreasing the number of brands. Moreover to deal with external circumstances, the company reoriented its production to build cars according to the customers’ needs and wants. These changes had one goal: to allow General Motors to give different but adapted answers to its markets and their evolution.

However to face future issues, General Motors was also restructured to speed its decision making. The company cut unnecessary layers of management and was made less bureaucratic. After that, employees were able to take decisions rather than going up the chain of command. As there is no one way to react to situations, the possibility to decide quickly and/or locally guaranteed a more adapted answer and so a better competiveness.

Then, employees became also responsible of their own actions. In the past, they were rewarded regarding to the overall firm performance but with individuals making decisions, it was easy to identify their contributions and make them accountable for it. They could see this as a constraint but also an opportunity: the company started to encourage risk-taking. Consequently, employees are pressed to act differently upon the internal and external situation.

 

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IV. Planning Approach

We will now analyze the change General Motors underwent using the perspective of planning approach.

First of all the leader in charge who planned this change was Steve Rattner he was chosen by President Obama to save the car industry. He and his team, the Auto Team, made the following assessment of GM. In other terms, the followings are the information they had access to, to plan the Big Change.

First the car company is not able to pay back its debt of 54 billion dollars. 1st June 2009 the company registers under chapter 11.Also the company loses 3 billion dollars each month.Secondly the cars produced have high fuel consumption, while the price of gas surges. Its retiree and healthcare obligation cost the company more than $ 1,500 per vehicle.Eventually, at almost equivalent labor costs, it sells its cars 3,800 dollars less than Toyota.

Here is the plan the Auto Team choose to change GM back into a successful company.

The first objective was to cut through the company the make help it survive. The idea was to cut GM in half to disinvest in the first part and sell it and to get the other one to work successfully. These are the steps that were planned:

Sell 4 brands: The objective is to lower internal rivalry & focus the expenses of marketing on the ones remaining.Restructure staff: The objective is to lower the cost of manufacturing 
(The new workers salary is $14/hour, the staff is reduced from 91K to 65K)Close dealerships: The objective is to focus on some brands and lower rivalry among GM own brands (Close 1500 Dealerships).Close plants: The objective is to increase efficiency & lower cost of manufacturing
(Close more than 10 plants)

In the end, less than 40 days after the new 
GM was born and this little graph shows 
the results of the process.

The second objective was to change GM culture and to focus on the European market which was not going very well. The Auto Team choosed Dan Akerson for the task: This is the long term process he chose:

First change the culture:

Less engineer oriented: GM shouldn’t do everything. The objective is to outsource more to do only what GM knows how to do, to decrease manufacturing costs.Car more customers oriented: The objective is to create vehicles with lower consumption; better quality matching the customer needs to increase the sales.Less Bureaucratic oriented: The objective is to create a faster decision making process.

Second improve situation in Europe:

Lower Opel costs: The objective is to decrease R&D and manufacturing in Opel to get a better positioning on the European Market.

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V. About Digital Challenge (2)

How do you explain the success experienced in your change case ?

The main reason of the success of general motor is the help of the government. They needed a loan to help them and this is what the US government gave them.

Financial expert started to optimize every aspect of the company (they reduced all the cost of production) by selling all the unnecessary and costing part of the company, from the employee to the cars’ brand.

In the same time, General Motor succeeded to adapt its production to the market. For example they produced electric cars.

Finally general motor has been saved because: they optimized the production and adapted the company to the market. Even if it was hard and expensive they changed the vision and the culture of the company.

 

 

What do you retain from its digital research?

 

What did you learn (regarding organizational change and the pedagogical experience)?

 

First of all the class taught us all the different change that a company can operate and the consequences if those change. The consequences depend on the way you effect the change and how you explain it. You have to convince the workers of the benefits (for them and the company) of these changes.

The class of organizational change showed us how important it was to adapt his company with the environment. The top managers have to be aware of the evolutions of the market. Sometimes big changes are necessary.

Every times a company effects a change it has to explain it to its employee. Everybody has to understand why the company decided to realize this change. Thanks to the course we understand now how important changes are in a company and we’ve seen all the danger to realize a change in a company.

But changes are not always because of the market. It can be a change in the vision of the company, in the organization, in the structure…

 

 

What did you like ?

 

We liked the fact we worked on case study in every courses. Thanks to the case study we could see changes that really happened in different companies. We have seen good changes and changes that didn’t work.

We also appreciate the fact we worked in group, it permitted us to explain each other what we understood and what we didn’t.

We choose the subject we worked on. This is good because it is actual subjects that interest us. That was really appreciated.

Scoop it asked us to write a sum up of the articles we posted, every times we posted something on the wall we had to understand it to make this little sum up.

 

 

What was difficult?

 

The main difficulties were in our organization. In the team we were six people. It has been really hard to find times to talk about our scoop it, or to prepare our homework where everybody was free.

It was also hard and long to find relevant articles on General Motors.

 

 

What do you think of using digital media for pedagogical purposes?

 

The fact we used scoop it was really interesting. We didn’t know this tool.

it permitted us to discover a new toolIt gave to the course an organizational aspect (we had to find time to take care of our scoop it wall)When other people in the team found relevant articles it was really interested to read themWe all found different and relevant information

We want to say it was a good thing to use digital media in this class, it permitted us to use new way of communication.

 

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V. About Digital Challenge

V. About Digital Challenge | GM change | Scoop.it
GM Group 2's insight:

We can say that the success experienced in the GM case is due to the government of the United States of America. They gave enough money to GM in order to stop the bankruptcy of the company. GM had to sell some of its company like Saab or Hummer, shut down some plants and, without the intervention of the American government; there would have had a bigger number of layoffs.

The digital research in the pedagogical experience point of view with Scoop-It was very convenient to use. The way it is presented is very clear and it’s very easy to “scoop” or re-scoop an article. One difficult thing was to find a good article, relevant for the case, quicker than the other groups. But we did it. According to the organizational change in General Motors, we found some difficulties to isolate one major change and its results. GM was in a very troublesome era and they tried a lot of things to save the company.

The use of digital media is very good in a way that everybody can check the advancement of his co-workers and then knowing exactly the whole advancement of the project. It’s also a way to improve the school-based education with the computers. But be careful, we don’t learn more, we are just searching for the information. We have a great available source of knowledge but we don’t acquire it. We have to make sure to use the digital media in a right way.

 

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General Motors Company Needs to Change, Right Now (GM)

General Motors Company Needs to Change, Right Now (GM) | GM change | Scoop.it
GM's strategy for handling the recall debacle isn't working. What's needed: Real leadership from CEO Mary Barra, right now. - John Rosevear - Industrials
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Brad Coulter on the General Motors Turnaround Strategy on CBC - YouTube

Brad Coulter shares his insight on the General Motors turnaround strategy during an interview on CBC
GM Group 2's insight:

This low quality CBS video is very interesting !

It offers an insight and a summry of the strategy of GM during the big change in the 2000's. The expert explains what the company has to do and why.

1)The process is going quite quickly, that the executives have done what was needed:
- Eliminate debt obligation,

- Reduce the retiree obligations,

- Shut down of un-needed assembly plant

- Eliminate bad brands

- Restructure the staff

 

2) According to the CEO it is a real change of culture.
Known to be awfully bureaucratic they will flatten the organization and to streamline the decision making processes.

3) Focus on 4 brands.

 

4) Challenges: Increase the sales and wait for the economy to be better. GM need to reach again its customers with better advertising.

 

Nicolas

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Management Practices, Relational Contracts, and the Decline of General Motors — HBS Working Knowledge

Management Practices, Relational Contracts, and the Decline of General Motors — HBS Working Knowledge | GM change | Scoop.it
What led to General Motors' decline? Long regarded as one of the best managed and most successful firms in the world, its share of the US market fell from 62.6 to 19.8 percent between 1980 and 2009, and in 2009 the firm went bankrupt. The authors argue that the conventional explanations for GM's decline are seriously incomplete. They discuss a number of causes for the firm's difficulties, and make the case that one of the reasons that GM began to struggle was because rival Toyota's practices were rooted in the widespread deployment of effective relational contracts--agreements based on subjective measures of performance that could neither be fully specified beforehand nor verified after the fact and that were thus enforced by the shadow of the future. GM's history, organizational structure, and managerial practices made it very difficult to maintain these kinds of agreements either within the firm or between the firm and its suppliers. The authors also argue that at least two aspects of GM's experience seem common to a wide range of firms. First, past success often led to extended periods of denial: Indeed a pattern of denial following extended success appears to be a worldwide phenomenon. Second, many large American manufacturers had difficulty adopting the bundle of practices pioneered by firms like Toyota. The paper concludes by discussing the implications of this history for efforts to revive American manufacturing.
GM Group 2's insight:

This article published by Harvard business school, explain us what led to General Motor’s decline.

            During many years, General Motors was seeing as one of best-managed and successful firms in the world.

 

Three mains reasons can explain this bankrupt of General motors:

 

-       Senior managers were confident about their success and didn’t care about Japanese competition, and it was a huge mistake.

-       General motors try to adopt Toyota managerial practises with a lots of difficulties, and take a long time to understand was Toyota was doing.

-       Problems to develop relational contracts. They treated both its suppliers and its blue-collar workforce homogeneous and they had problems in hierarchy organisations.

 

General Motors is a good example that shows us, how we manage or we change our management is very important and could have big issues. 

 

Thibault

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Back to the Drawing BoardCan a New Company Culture Save General Motors

Back to the Drawing BoardCan a New Company Culture Save General Motors | GM change | Scoop.it
General Motors is betting that a new company culture—one emphasizing risk-taking and independent decision-making—can help reverse its fortunes. But the carmaker has been down the culture-change road many times before.
GM Group 2's insight:

In 2009, the new CEO of General Motors Fritz Henderson initiated a change in the firm's culture.

 

Its vision was base on four precepts he will instill in GM: risk taking, accounting, speed and customer and product focus. To go along with this idea of culture change, he decided to launch a project called Building the Movement to make it happen.

 

Henderson changed the top organization and HR's purpose became to support cultural change. To embed the four core values, two teams were created: the operating model team and the culture transformation team.

 

However, GM has a history of culture changes. Over the decades, it went through a lot but it wasn't always a great success. This time, there is a hope that the recent electroshock of the bankruptcy will help to overall resistances.

 

On the long term, GM will face the issue to stick to its new values and avoid complacency.

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General Motors needs to dump Opel, Morgan Stanley says - Reuters

General Motors needs to dump Opel, Morgan Stanley says - Reuters | GM change | Scoop.it
The Detroit News (blog)General Motors needs to dump Opel, Morgan Stanley saysReutersDETROIT (Reuters) - The time has come for General Motors Co (GM.N) to cut ties with its money-losing European business, Opel, which has been a drag on the U.S.

Via Kenia Walker
GM Group 2's insight:

Because of its money-losing European business, GM has to cut ties with Opel.


This operation could cost around 13 billion of dollars to GM.

 "GM has reduced the number of temporary and contract employees in Europe, and is working with the German union IG Metall to cut costs further, including cutting the hours of several thousand workers at two of its plants. The company and union also are in talks for a deal that would give GM wage concessions and the ability to close a plant in 2017."

 

According to an analyst from Morgan Stanley, Adam Jonas, Opel is the "single biggest threat to GM's long-term financial health and sustainability,"

 

The result can hurt the company's reputation and some costly restructurational actions.

 

Thomas

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