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In the contemporary business world, it is prudent for management teams of companies to adopt effective approaches to making decisions, which would culminate in improved performance outcomes. Effective strategies would also help business establishments to maintain their existence in both local and foreign markets. It is apparent that GM Motors recorded better sales in China, a relatively new market, in 2009 than in the US, which could be termed as an old market. It is notable that sales of motor vehicles in the Chinese market grew by 46%, while sales in the US remained almost stagnant (Bloomberg 2010a). It is no doubt that the management of GM Motors needs to adopt a new organisational design that would help it to take advantage of shifting trends in the global auto market (Bloomberg 2010b). This paper discusses the best approach that would be utilised for GM’s success in China. In addition, it highlights some of the structures that would be critical to expand to other markets across the world. Finally, it offers merits and demerits of adopting decentralisation in GM’s operations in the Chinese market.
Organisational structure ideal for GM’s success in China
Due to the fact that GM Motors recorded better sales in China than in the US, it is important for the company to use a strategy that would result in long-term trends of success in the new market. The best strategy that would be ideal for the enterprise is the team structure, which would focus on promoting teamwork and innovation (Blanding 2011). In the case study, it is notable that the organisation operates in China through a business venture with the SAIC Motor Corporation and Shanghai General Motors. However, it can be argued that the firm would reap more benefits if it would operate without collaborating with other companies. Since its products have already registered excellent results, it would be expected that they would continue to record exemplary sales in the future (Williams 2013).
The management should aim at establishing a major plant in the People’s Republic of China. Afterwards, it should create different teams of personnel. The cross-functional teams would work on different assignments, but with the aim of achieving common goals (Williams 2013). The teams would be critical to help the firm to learn about new opportunities in the expanding Chinese market. In addition, they would be essential to design high quality motor vehicles that would meet needs of customers. A vital aspect that should be realised in relation to the team structure is that it would remove functional barriers that would negatively impact relationships and creativity. Finally, the organisational structure would be key to reduce administrative costs of the company in China (Williams 2013).
Structures that would help the firm to expand to other markets
One of the approaches that would be utilised by the management to expand operations of the firm to other international markets across the world is the network structure. It would make GM Motors rely on other companies to perform important business activities, such as design, production, marketing, and distribution. Contracted firms would be paid on a contractual basis (Fung 2010). The approach would result in a fast pace of expansion of the firm to many world markets. Notably, the number of personnel and operations in different nations would reduce remarkably, leading to a reduction in operation costs.
Another structure for operating in other countries is the functional structure, which relies on a well-defined platform of corporate communications and responsibilities. It would make employees deployed in different countries answerable to the management via established channels, which would greatly improve productivity, and minimise cases of duplication of staff and equipment. In addition, it would be important to promote innovation among workers (Blanding 2011).
Merits and demerits of decentralisation
Decentralisation of GM Motors’ activities in China would result in some advantages. First, it would lead to greater efficiency and output. In fact, the management would focus on care, caution, enthusiasm, and delegation of authority. Second, it would result in relatively high levels of motivation and morale. Morale of employees would be increased because the delegation of duties encourages staff to work to produce excellent results. Third, decentralisation of the firm in China would lead to diversification of business activities by creating more job opportunities. In fact, new management teams would be assigned new duties. Fourth, it would promote effective control and decision-making processes within the firm, which would be essential to achieve excellent performance outcomes (Williams 2013).
However, the approach would also be typified by some disadvantages. First, it would lead to costly operations due to the fact that business functions would be duplicated. In fact, the merit has made small operations unable to adopt the strategy. Second, the approach would not support specialisation for the reason that all personnel would be involved in carrying out different tasks (Williams 2013).
It is apparent that GM Motors is a well-established firm that deals with motor vehicle production and sales across the world. It would be critical for the management of the firm to adopt the team structure in China. In order to expand to other world markets, the management can adopt the network and functional structures. As highlighted in this paper, decentralisation of the business establishment in China would have both merits and demerits.
Blanding, M, 2011, Getting to Eureka!: How Companies Can Promote Creativity, Web.
Bloomberg, 2010a, China Ends U.S.’s Reign as Largest Auto Market (Update2), Web.
Bloomberg, 2010b, GM’s China Sales Exceed U.S. for Third Straight Month (Update1), Web.
Williams, C, 2013, Principles of management. South-Western/Cengage Learning, Stamford, CT.