We will write a custom Case Study on General Motors Product Development specifically for you
301 certified writers online
The automobile industry is characterized by impulsiveness and indecision due to constant political, social, technological and economic transformations. Consequently, automobile companies find themselves in dynamic situations that call for steady adjustments.
In such circumstances, the companies require effective leadership to help in identifying the most feasible and productive changes. Brown (2007) maintains that car companies should transform their operations in order to remain competitive.
Hence, they need transformational leaders who can identify emerging opportunities and restructure the companies to exploit the opportunities.
The success of General Motors is credited to its effective leadership. In spite of General Motors having numerous competitive advantages over other automobile companies, it relies heavily on its transformative leaders.
The leaders are responsible for formulating operation strategies and establishing appropriate structures to facilitate implementation of the plans.
This paper will discuss the effectiveness of leadership in General Motors. Besides, it will identify various growth strategies that General Motors can pursue.
General Motors’ Leadership
According to Bayou and De Korvin (2013), the current state of automobile industry calls for transformative leadership. It underlines the reason General Motors hires transformative chief executive officers (CEO).
Through the transformative leadership of Mary Barra, General Motors has been able to restore order in all its global units.
Bayou and De Korvin (2013) allege that the most critical role of a transformative leader is to re-establish order and shrewdness into the messy whirl that is the modern day’s business atmosphere. Prior to Barra assuming leadership of the company, General Motors’ product development processes were in absolute confusion.
The company had at least 30 distinct platforms. Besides, the company offered inefficient services and manufactured inferior cars. There were needs to align operations and enhance organizational efficiency (Fogel, Morck & Yeung, 2014).
Barra embarked on these vital transformational objectives and within one year she managed to downsize the product line. In addition, she improved the quality of cars and ensured that employees were conscious of customer needs.
Today, General Motors manufactures its cars based on customer demands and preferences. Barra has instituted a team of leaders with varied skills in the automobile industry to help the company meet customer demands.
General Motors suffered from autocratic leadership for many years. The company’s leaders did not give employees an opportunity to explore their talents or make decisions. Employees received instructions from plant managers and CEO.
Such leadership style inhibited innovation. In return, General Motors was unable to compete with other automobile companies leading to its meltdown. Currently, the General Motor’s leadership has eliminated bureaucracy and emphasized on employee empowerment (Fogel et al., 2014).
Get your first paper with 15% OFF
Employees are responsible for making decisions on matters affecting their areas of specialization. Besides, they are accountable for all their decisions. Barra’s leadership has restored employee commitment and innovation leading to General Motors becoming competitive.
Indeed, the current leadership has helped the company to be in the forefront of the fight against global warming. General Motors has not only managed to offer value to its clients, but also reduce the United States’ overreliance on hydrocarbon-based fuels.
Bayou and De Korvin (2013) allege that General Motors is the second principal automobile company worldwide. One of the General Motors’ competitive advantages lies in its extensive geographic coverage. The company has 207 divisions that are distributed throughout the globe.
The different divisions share ideas on product development with each other, thus helping the company to develop superior cars. One of the challenges that automobile companies encounter is lack of efficient design teams.
However, General Motors has trounced this challenge by establishing a design team that can combine skills from different markets. Besides, General Motors produces its automobile parts at low costs due to economies of scale.
According to Dyer (2006), General Motors has an extensive collection of regional brands such as Cadillac, Hummer, Buick, Pontiac, Chevrolet, Saturn, and Saab. The extensive collection of brands enables the company to compete with other automobile companies in local and regional markets.
Its brands are not only strong, but also popular in most countries. Therefore, General Motors does not incur enormous marketing costs since most customers are familiar with its brands. Besides, General Motors reaches a broad market base relative to other companies.
Challenges to General Motors Strategies
General Motors faces a myriad of challenges in its plan to recover from past financial meltdown.
First, the company requires minimizing repetition in model production and producing vehicles that will increase its profit margin. To achieve this, General Motors has to ensure that its product range matches with the income distribution of its target markets.
Second, the company’s technology is not consistent with the dynamic automobile industry (Fogel et al., 2014). General Motors should update its technology in order to implement its recovery strategies.
Third, for General Motors to make a significant profit and minimize operation costs, it should scale down its global coverage. It requires relinquishing some markets that do not give it substantial returns.
Even though General Motors has conquered the liquidation that it experienced in 2009, the company still requires containing its operation costs as a strategy to regain productivity.
Finally, General Motors cannot realize its goals with undertaking a major restructuring and changing its corporate culture (Bayou & De Korvin, 2013).
The main challenge is that the United States’ government influences the decisions made by the company. Therefore, it is hard for General Motors to initiate cultural transformation or implement other strategies aimed at benefiting the company.
Possible Growth Strategies
For General Motors to overcome the current competition in the automobile industry, it should focus on alternative growth strategies. The company should invest in technology and focus on customer needs. There is high demand for trucks in the global market.
Hence, General Motors should invest in truck development as one of its growth strategies (Fogel et al., 2014). The truck development will help General Motors to increase its revenues, and therefore its competitiveness in global market.
Additionally, customers are buying hybrid vehicles since they are environmental friendly. Thus, General Motors should invest in hybrid electric cars as a measure to boost its sales volume.
Automobile industry is characterized by constant changes that call for effective leadership. Through transformative leadership, General Motors has managed to recover from past financial meltdown. Currently, the company is working hard to re-establish itself in the automobile industry.
The leadership has helped General Motors to abolish bureaucracy and encourage innovation. The company has numerous divisions worldwide that makes it enjoy economies of scale. Moreover, it has an extensive collection of brands that are popular worldwide.
The United States’ government influences decisions made by General Motors. Hence, it is hard for the company to initiate and implement recovery strategies. For instance, the company cannot reduce its global coverage since it has to get authorization from the government.
General Motors should invest in hybrid electric cars and trucks to achieve future growth. Demand for trucks and hybrid vehicles will continue to rise as people go for environmental-friendly cars.
Bayou, M., & De Korvin, A. (2013). Measuring the leanness of manufacturing systems: A case study of Ford Motor Company and General Motors. Journal of Engineering and Technology Management, 25(4), 287-304.
Brown, A. (2007). Organizational culture: The key to effective leadership and organizational development. Leadership & Organizational Development Journal, 13(2), 3-6.
Dyer, J. (2006). Specialized supplier networks as a source of competitive advantage: Evidence from the auto industry. Strategic Management Journal, 17(4), 271-291.
Fogel, K., Morck, R., & Yeung, B. (2014). Big business stability and economic growth: Is what’s good for General Motors good for America?. Journal of Financial Economics, 89(1), 83-108.