General Motors Company's Poor Management Issues | Free Essay Example

General Motors Company’s Poor Management Issues

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Topic: Business & Economics
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Organization development is defined variously by different scholars. According to Brown (2010), it can be conceptualized as a planned and strategic move to enhance the efficiency of an entity. The aim of such undertakings is to help the organization attain its objectives. A number of factors affect the efficiency of the strategies adopted to improve the performance of a firm. One of them is management. Poor management negatively affects organization development and, in the long run, the efficiency of the firm.

General Motors (GM) is a popular multinational in the world. It designs, manufactures, markets, and distributes automobiles and vehicle parts (Healey, 2013). Just like any other company, GM faces a number of challenges in its operations (Benbya, Passiante & Belbaly, 2004). Some of these problems have portrayed the company in a negative light. In addition, they have negatively impacted the company’s efforts at organization development (General Motors, 2015). As a result, it has lost its market share and value in the process. Most of these issues could be solved if the company had put in place clear measures of governance.

In this paper, the author will analyze a major issue that threatens the success of GM in relation to organization development. The problem selected entails poor management. A number of attributes associated with this issue will be discussed. They include a lack of creativity and poor management of inventory (Brown, 2010). Others include poor administration of finances and employees by the company’s management team (Brown, 2010). The risks associated with these problems will be discussed. Finally, strategies to deal with the challenges will be laid out.

Overview

Poor management has affected organization development in a number of multinationals around the world. GM is one of these entities. The problem is brought by, among others, globalization and its associated challenges (Brown, 2010). For example, operations in different countries involve dealing with employees from diverse social and political backgrounds. In the case of GM, poor management started when the company failed to control its operations.

As a result, the management ended up carrying out the activities of the firm in undesirable ways (Klein, 2000). Managers of big companies, such as GM, are supposed to regulate all operations of their entity. In addition, they are required to ensure that the employees adhere to the set standards of conduct. The activities of the stakeholders should be in line with the firm’s organization development strategic plans (Klein, 2000).

Poor Management in GM

Poor management is closely related to dysfunctional organization development. The reason is that the activities of administrators and leaders are crucial to the successful implementation of strategic plans (Klein, 2000). In GM, poor management emanates from a number of issues from within and without the company (Healey, 2013). One of them is the fluctuation in the value of the dollar. The management of GM has failed to come up with effective prices for their products (“General Motors”, 2015).

One of the main functions of the administration is to set prices for products in relation to the prevailing market conditions. According to Herod (2000), setting up prices involves studying the market and gathering information about demand and consumption. However, GM has failed to study its car market carefully, leading to a decrease in sales. As a result, GM has been overtaken by rivals. Japanese auto dealers, such as Toyota, are examples of companies that pose a threat to the existence of GM (McGrath, 2014). Many consumers prefer Japanese cars over those from GM because they are affordable and of high quality (Coase, 2006).

In a rejoinder, GM claims that Japan is engaging in currency manipulation (“Update 3”, 2015). However, a critical analysis of the issue reveals something different. It is the failure of the management that has led to a decrease in sales, threatening the firm’s organizational development.

The problem above can be solved without introducing the issue of currency manipulation. The main reason why American business magnates adopted this argument is because the US dollar grew weaker compared to the Japanese Yen (Dyer & Ouchi, 2002). Analysts have argued that poor management of one of the biggest companies in the U.S is one of the reasons behind the drop in the value of the currency. What this means is that the effects of poor management are not limited to organization development. On the contrary, the element affects the larger economy.

Lack of Creativity

It is one of the issues related to poor management and ineffective organization development at GM. The vehicle market is characterized by stiff competition. Generally, rivalry is healthy in any given industry. It is important for the management to retain the quality of their products. It is one of the strategies that can be used to avoid losing to the competition (Klein, 2000). General Motors may be one of the largest manufacturing companies in the world. However, it is not the best.

Some of its car models are not planned for before design (Benbya et al., 2004). The management is expected to carry out a study before coming up with a new model. The aim is to see whether the new product will be accepted in the market or not (Brown, 2010).

Considering that completion is stiff, GM should analyze what the competition is doing in terms of productions. The management should assess the models of cars produced by other companies to determine the improvements that can be made to attract consumers (General Motors, 2015). However, GM’s management team lacks creativity with regards to this issue (Benbya et al., 2004). The team has failed to operate as a unit to ensure the products succeed in the market.

Lack of creativity has led to the production of substandard models that lack appeal (Ruiz, 2014). Some of these products are weak and are not appreciated by consumers. As a result, the management has failed to fulfill its financial obligations to the shareholders in relation to profits (“General Motors,” 2015). Consequently, many cars have been recalled due to defects (Ruiz, 2014). Toyota is an example of a company that edged out GM in the production front with regards to creativity (Coase, 2006).

Chevrolet, one of GM’s products, performed poorly in the market compared to similar products from Toyota. Another model that did not excite consumers is Silverado. It was regarded poorly in relation to creativity that went to its production (Healey, 2013). Lack of appeal has negatively affected the company’s organizational development.

Statistics illustrate the performance of GM over the years. For example, in 2012, most of the top ten selling cars were from Toyota, Honda, and Nissan. GM did not make it to the list (“Update 3”, 2015). Poor performance in such a competition decreased the popularity of the company (Dyer & Ouchi, 2002). The management had a lot to do with the position of the firm at that time. If proper measures were put in place in relation to production, the company could be doing better than it is performing in the market today.

Poor Management of Inventory

Inventory management is an aspect of business administration that needs to be taken care of by the authorities. Some cars from GM are held in warehouses and yard for up to 90 days (“Update 3”, 2015). One of them includes Chang. The management lacks skills regarding the right method of production. As such, poor management has led to the piling up of inventory, which affects organization development in the long term. Most car manufacturers use the ‘Just-in-Time’ production method (Ruiz, 2014). The approach discourages holding of inventory (Coase, 2006). Production and supply are determined by the number of orders made. Most of the companies are aware of the disadvantages of holding inventory. The management of GM can learn from these firms (Brown, 2010).

If GM managers apply the right production methods, the company could not be facing the issues of poor turnover it is dealing with today. Poor turnover occurs when most products are not sold. As a result, there is a build-up in inventory. The inventory accumulation at GM is risky to business and to organization development. It has led to increased holding costs (Herod, 2000). The company faces risks of loss and damages to its vehicles, especially those in poorly managed stores (Dyer & Ouchi, 2002). The management should come up with ways of handling inventory for the firm.

Poor Management of Finances and Organization Development

It appears that GM has failed to learn from its previous mistakes. For example, in 2009, the company almost went bankrupt (McGrath, 2014). The problem can be traced back to poor financial management. Poor management has affected the financial plans of the company. The problem was caused by poor management of projects and the embezzlement of funds by the officials (“Update 3”, 2015). The problem could have been avoided if the company had hired capable employees to work in the financial docket (Benbya et al., 2004). Honesty was a virtue that was also lacking in the management team.

In spite of the problems, the company has not made any improvements in relation to financial management (Healey, 2013). Some of the individuals elected to the board of directors are not suitable for these positions. An example is Mullen. He recently joined the board as an administrator. He has served as a military advisor to presidents Bush and Obama (General Motors, 2015). The main question is whether or not his military skills are really what is needed to turn around the fortunes of GM. Employing such people does not help the company (Herod, 2000). Even though they are educated and experienced, they are not qualified to occupy certain positions in the firm. Such are the problems leading to poor management and organization development in the company.

Ineffective Management of Employees

One of the strategic plans associated with organization development entails the management of employees (Brown, 2010). However, GM appears to have problems with this issue. In 2014, the company fired over 15 employees as a result of recalls affecting nearly 85,000 sport-utility and pick-up vehicles (Ruiz, 2014). The problems were associated with ignition and airbag deployment. The fired individuals were blamed for the problem that originated from the manufacturing stage.

Employees should be treated with respect. Underperformance is largely associated with inadequate remuneration, poor working standards, and overworking (Klein, 2000). The issues with the recalled vehicles claimed the lives of many people. The problems were unique to GM’s products. People who suffered injuries sued the company. The organization lost a lot of money in the compensation program (“Update 3”, 2015).

The losses could have been avoided if the company had taken responsibility for its activities. The management was responsible for the recruitment of employees. It was their primary duty to ensure that they employ only competent individuals (Klein, 2000). It was their responsibility to ensure that the people involved in the production process had the required qualifications. It was also their duty to test the vehicles before they were released into the market. However, it seems the company did not follow these vital procedures (Ruiz, 2014).

To improve the quality of the production process, GM should be aware of how to motivate employees. Introduction of bonuses and paid leave programs are some of the organization development strategies that can be used to boost employees’ morale (Brown, 2010). The process would help in the production of high-quality goods since the employees feel appreciated (Dyer & Ouchi, 2002). The measures can be used to address the situation (Brown, 2010). GM should learn from its competitors. For example, Toyota appreciates the contributions made by its employees.

How GM Can Deal with the Problem of Poor Management and Reduced Organization Development

The company is still facing some issues with its management. However, it is possible to improve the situation and increase the confidence of consumers. For example, an effective marketing campaign can rebuild the image of GM (Klein, 2000).

However, before that, the management should ensure that it has quality products. Various marketing channels can be used to achieve an objective (Brown, 2010). In the past, few people knew about the company because it did not create awareness in public. Most of its marketing plans were poor. Poor management meant that the entity was unable to establish itself in many markets, affecting organization development in the process (Herod, 2000).

It is important to analyze how other companies like Toyota are marketing their products. Toyota is one of the entities that have exhausted all the marketing options available as a result of its functional management team (Healey, 2013). The use of the internet and other media helped the organization attain its current level of success. Consequently, GM should learn from such companies and capitalize on their strengths.

Conclusion

Management and organization development are important components of any firm. The decisions made by administrators determine the strategic direction taken by the company. When establishing the management team of a company, it is important to take into consideration the skills and experience of the individuals. A functional management team should be creative and in possession of problem-solving skills to enhance organization development. The individuals should also work as a team.

Management wrangles can affect the performance of a company. It is important for the administrative team to avoid conflicts of interest. Such a situation leads to problems like frauds, embezzlement of funds, and dishonesty among workers. General Motors can improve its position in the world market if it puts in place the right management team. Some of the problems faced by the company, including the recruitment of unqualified employees and reduced organization development, can be avoided. As such, every stakeholder has a role to play to protect the company.

References

Benbya, H., Passiante, G., & Belbaly, N. (2004). Corporate portal: A tool for knowledge management synchronization. International Journal of Information Management, 24(3), 201-220.

Brown, D. (2010). An experiential approach to organization development (8th ed.). New Jersey: Prentice Hall.

Coase, R. (2006). The conduct of economics: The example of Fisher Body and General Motors. Journal of Economics & Management Strategy, 15(2), 255-278.

Dyer, J., & Ouchi, W. (2002). Japanese-style partnerships: Giving companies a competitive edge. In J. Henry & D. Mayle (Eds.), Managing innovation and change (pp. 203-209). New York: SAGE.

General Motors. (2015). GM announces $5.4 billion in U.S. plan investments. Web.

General Motors. (2015). The New York Times. Web.

Healey, J. (2013). Government sells last of its GM shares. Web.

Herod, A. (2000). Implications of just-in-time production for union strategy: Lessons from the 1998 General Motors-United Auto Workers dispute. Annals of the Association of American Geographers, 90(3), 521-547.

Klein, B. (2000). Fisher-General Motors and the nature of the firm. The Journal of Law and Economics, 43(1), 105-142.

McGrath, M. (2014). General Motors recalls another 7 million vehicles, some dating back to 1997. Web.

Ruiz, R. (2014). Car owners criticize pace of G.M. recall repairs. The New York Times. Web.

Update 3- General Motors tops Canada auto sales in April. (2015). Reuters. Web.