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Organizational structure comparison
The organizational structure of an entity is a critical aspect of management. The structure contributes significantly to the efficiency, service delivery, and success of a firm. There are varieties of organizational structures, which an organization may assume. Such structures have many implications on factors such as cost, human resources, and chain of command in an organization. The structure adopted should ensure that communication among its departments or employees is effective, proper allocation of resources, reduced cost, and bureaucracy.
Companies adopt varying structures depending on their philosophy, industry, size commodity, and profitability. General Motors (GM) is a leading entity in the automobile sector. Consequently, the entity has massive revenues. The entity has various assembly plants in different parts of the globe. These plants are located to serve certain regions. The location of production plants ought to be strategic as the entity targets potential customers in certain regions.
GM has a hybrid structure, which blends in central and regional forms of organizational structures. In Michigan, the entity has its headquarters, which houses its financial department. Among other core departments in GM’s structure include GM North America, GM South America, GM International, and GM Europe.
A divisional structure differs significantly from the current structure adopted by GM. A divisional structure entails separating the organization as per the products. However, the hybrid structure embraced by GM is different since it blends in centralized and regional structures. A centralized structure entails having most branches of an entity in a single location. GM has most of its departments at its headquarters in Michigan. The European and South American subsidiary has offices in the headquarters that liaise with the top management personnel of the entire corporation. In a divisional structure, there is interdepartmental competition.
It may also occur in the hybrid structure since GM has various brands, which may compete amongst themselves. In the two structures, the unprofitable division in the divisional structure or brand in GM’s structure would be dropped in case of restructuring. The divisional structure would favor an entity that only manufactures products without undertaking any other responsibilities besides manufacturing. However, the hybrid structure is a compromised structure, which integrates other functionalities such as marketing and brand creation.
A functional structure has been employed by many entities globally. The entity departments are divided based on functionality. Subsequently, the entity will have departments such as finance, marketing, and production. This organizational structure encourages specialization. However, it results in duplication of responsibilities. Duplication of responsibilities results in inefficiency since an entity expends its resources on a single object in various departments.
Coordination of these departments is difficult. It affects the efficiency of the organization in its entirety. This structure would be unfit for GM owing to its scale of operations. The functional design is integrated into GM’s regional structure subsidiary. In Europe, the GM subsidiary now adopts this structure to complement the overall structure of the organization. The integration of such structures creates a hybrid organizational structure, which suits GM. There is not a specific organizational structure, which would suit an organization adequately. Nonetheless, managers make adjustments to guarantee the structure suits their organizations.
Evaluation of organizational functions about the structure
The financial aspects of GM have impacted massively on the structure of this organization. Between 2002 and 2009, the entity performed extremely poorly. The entity’s brands were no longer attractive and practical to most consumers amid the economic crises. Consequently, its sales dwindled resulting in massive losses. The government had to support the corporation with a massive bailout. Accordingly, the entity had to show financial prudence to prevent similar events.
The entity consequently closed many unprofitable plants that contributed massively to the level of its expenses. Furthermore, the entity had to lay off some of its workforces. The financial aspects of this organization have engineered massive changes in the organization. The organization is now more efficient. GM had to drop some of the brands that were no longer sustainable. Hence, GM now concentrates on a few brands, which can market adequately, resulting in relatively higher returns. GM has a structure, which combines both central and regional managerial structures. Under this structure, each regional subsidiary has its marketing strategy.
GM North America has its marketing strategy suited for its clientele. It is replicated in its European and South American subsidiaries. This kind of marketing allows each regional subsidiary or branch some autonomy. This kind of autonomy is essential since regional branches encounter varying challenges owing to differences in consumers’ preferences. The human resource is the most important in any entity.
However, in this entity, it has minimal influence on the organizational structure. The structure of this entity is driven largely by its brands and other factors such as trends in the industry. Some notable trends in the automobile industry include environmental initiatives that seek to create a hybrid, electric, and fuel-efficient automobiles. Operations is a key cost driver in this entity. The entity has closed operations in some of its plants that are less profitable to curtail costs. Similarly, it has also dropped some of its brands that were infeasible (Baligh, 2006).
GM has established subsidiaries in various nations to tap into lucrative markets. Brazil is the largest buyer of GM products on that continent. Accordingly, the entity has a good network on the continent, which captures Brazil and other countries such as Peru and Argentina. This kind of structure has assisted the entity to meet some of its organizational needs. These needs include the promotion of products and tapping into new markets.
Europe is another vital market segment for this entity. In Europe, it operates under various brands, which are under distinct subsidiaries. In England, it operates as Vauxhall, while in the rest of the European nations it operates as Opel. The regional structure has enabled the entity to access the global market. In some nations, where the entity has no subsidiaries, it has entered into joint ventures. Joint ventures have enabled the entity to curtail possible losses that may emanate from entry into another market. A joint venture also provides an entity with time to assess the potential of a market. Consequently, it can decide whether to establish a subsidiary.
Departmentalization is crucial since it enables the entity to meet some of its needs. The most pronounced department in the entire corporation is the financial department. All managerial work in GM is undertaken in this department. The decisions made in this department impact other sections of the corporation in various ways. Marketing is crucial in GM. The entity faces massive competition from Japanese carmakers that have dominated the American market. Marketing channels helps the organization meet its needs by promoting its brand, which increases revenues (Daft, 2006).
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Baligh, H. (2006). Organization structures: Theory and design, analysis and prescription. New York: Springer.
Daft, R. (2006). Organization theory and deasign. Princeton, N.J: Recording for the Blind & Dyslexic.