Overview and Analysis of General MotorsEssay Preview: Overview and Analysis of General MotorsReport this essayOVERVIEW AND ANALYSIS OF GENERAL MOTORS“General Motors has no bad years, only good years and better years” (Sloan, 1972). This mantra established in 1950 by former GM president Harlow H. Curtice may have been true at one point, but is called into question today by many, including Wall Street.
By many standards, General Motors is an extremely successful company, though an analysis of the corporation today uncovers many troubling issues. GM is and has been the worlds leader in automotive sales since 1931. (GM Website, 2004) By any corporate measurements, the company is a behemoth, operating across the globe with a 15% share of the worlds automobile market. The company also houses one of the worlds leading financial services companies, GMAC (GM Website, 2004). Though this giant company reports as a single entity, its two businesses are well separated. Our analysis will focus primarily on the automotive division.
The history of the automotive division is a novel one, spanning almost a hundred years with the incorporation of GM in 1908. William Durant, an innovative genius, founded the company by quickly joining together several leading car companies including Buick, Cadillac, and Oldsmobile. Durants vision, however, was plagued by details and the legacy he passed on to future CEOs was far from perfect. Alfred Sloan stated it best when he said, “General Motorshad then the makings of a great enterprise. But it was unintegrated uncoordinated; the expenditures were terrific –some of them not to bring a return for a long time, if ever– and they went up, and the cash went down. General Motors was heading for a crisis.”(Sloan, p18) Durants actions over 90 years ago set GM on its path, and led to both its huge success and current heartache. General Motors has always been a banding of “autonomous brands” leading to great invention, yet large duplication. As a former GM executive described, the advent of global competition after the 1970s dealt a crushing blow to this automotive giant. Its sheer size was a disadvantage as it competed with the more efficient Japanese firms. Today one of GMs primary goals is to bring its brands together to act as a single global company (Interview, 2004).
LEADERSHIPIn order to align 325,000 employees with a single corporate vision, GM has required outstanding leadership. The list of GMs eleven CEOs since the 1920s reveals a number of Americas best businessmen. (Please see Exhibit A for a full timeline of GMs leadership.) GMs first CEO was the famous Alfred Sloan who led the company for over twenty years. Described upon his retirement by the Board, “[Sloans] analysis and grasp of the problems of corporate management, his great vision and rare good judgment, laid the solid foundation which has made possible the growth and progress of General Motors over the years” (Sloan Foundation Website, 2004). Identifying credibility as the foundation of leadership, Sloan believed simply that “[leaders] do what they say they will do” (Sloan, 1972). One of his fundamental teachings was that leadership is not charisma and showmanship, but rather performance, consistency, and trustworthiness. Sloan was always a practitioner, leading by example.
Today, GMs youngest CEO in history, Richard Wagoner is at the helm. Wagoner has turned GM around in the four short years he has held the CEO position, putting GM in the lead of the U.S. Big Three car companies (Welch & Kerwin, 2003). Though he has had little time to establish himself, it appears that Wagoner could be on his way to the fifth level in the Level 5 Leadership hierarchy: Executive (Collins, 2001). Wagoners combination of personal humility and professional will are quite apparent. He is also first to leave his ego at the door, “the first to tell you that his own future is up in the air. It all depends on whether he can save GM from its past” (Welch & Kerwin, 2003).
Saving GM from its past is an interesting dilemma. As mentioned earlier, GM had great financial success until the 1970s. Furthermore, its leaders were some of Americas best. Yet now, some say that the past is what troubles the automotive giant. In an interview with a former General Motors executive, GMs sheer size as well as the sense of complacency developed after years of success was cited as the chief challenges GM would have to overcome (Interview, 2004). In a sense GM has been derailed, the strengths that once made it successful are the same forces that have led to its current flaws. (McCall, 1998) Thus, Wagoner is proposing to go against GMs years of tradition and “Challenge the process.” This is not the only step in the CIEME model that Wagoner has acted on. (Kouzes & Posner, 1995) He has already “Modeled the way” by cutting GM inefficiencies so that the company now competes directly against the streamlined Japanese automotives. Part of this streamlining includes Enabling the correct management to act. Furthermore, our interviewee attested to the fact that all GM employees were Inspired to share a number of Wagoners visions for the company. The remaining question is whether or not Wagoner will be able to Encourage the heart of General Motors.
7-S MODELBy applying the 7-S Model we will ascertain whether GM is internally aligned enough to move effectively toward accomplishing its objectives and meet these staggering challenges (Bradach, 1996).
Shared VisionEveryone who works at GM shares a common vision of GMs priorities (Interview, 2004). Moving into the 21st Century, GM is committed to:Acting as one companyEnhancing productsRestoring a customer focusEmbracing stretch targetsMoving with urgencyBecoming a global leaderHowever, in order to understand GMs current shared vision, it is essential to understand the past thirty years and the shake-up that occurred in the American auto industry when Japan entered the market. Until the 1970s GM was used to success; its market share in America exceeded 50%. Because the status quo suited it fine, the company stayed an inefficient conglomeration of different brands without a unified sense of purpose or vision of growth. Quality was not really a dimension in the American auto industry, and predictability
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GM and its employees live a simple but effective and meaningful life.
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In 1998, GM became the first to create a self-funded 501(c)(4) non-profit Corporation to serve the entire Detroit auto industry.
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Since its inception, GM has expanded its core manufacturing operation in Detroit and in Detroit is leading the growth and innovation of the US motor fleet worldwide. It has built the fastest-growing automotive market in the US in more than 30 years and the fourth largest global manufacturer of motor vehicles. GM also has expanded its workforce across the globe.
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By developing new automotive technologies in an environmentally friendly way, GM is helping GM be a leader across the entire motor spectrum.
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The industry continues to move forward in an orderly fashion. GM’s brand identity is evolving and GM’s global legacy is stronger than ever. All businesses with a strong brand identity are welcomed into GM’s vision.
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