General Motors (GM) has set the 2035 target date to phase out gasoline- and diesel-driven vehicles from its showrooms globally. GM is among the first automobile makers to put a timeline on transitioning to a fully electric lineup. As discussed by the CEO, the main goal for GM, as discussed by the CEO, Ms. Barra, would be to transition from its current business model (Colias). Vehicles that run on fossil fuels pollute the environment, and they account for 98% of GM’s total sales and profit (Colias). The company produces fuel guzzlers from large pickups, trucks to small cabs, which are the company’s biggest moneymakers are among the company’s least fuel-efficient vehicles on the road.
GM called the 2035 date to eliminate all fossil-fuel driven vehicles an inspiration. Even so, many nations, including Europe and Asian states, have also planned to ban gas- and diesel-powered automobiles by then. GM acknowledged the need to have its portfolio and broader car market go all-electric in previous business summits, although the plans were underway (Colias). The company’s motivation to go all-electric depends on government incentives and the desire to nudge clients towards purchasing plug-in cars. Indeed, the federal government and many states offer tax credits to consumers to subsidize the higher cost of electric-driven automobiles.
Following the declaration, GM’s shares experienced a sharp rise of about 4% in midday trading. The company’s shares have increased recently after the announcement to phase out all fossil fuel vehicles. The company has attracted investor enthusiasm that matches the shares of Tesla Inc. The company’s interest from investors, including the ESG funds, particularly focuses on environmental, social, and governance problems (Colias). GM’s plan to move to fully electric vehicles by 2035 would significantly accelerate electric-vehicle adoption.
Organization Challenges
GM faces challenges as a “legacy” compared to other companies making electric vehicles such as Tesla, termed “new modern cooperation.” The new modern corporation focuses on intellectual capital, which gives the organization ability to build platforms and make networks. On the other hand, legacy companies are poised towards short-term, siloed, and highly specialized research. According to Ms. Barra, GM CEO, there will be an increase of 27 billion spent for research and development (R&D) on electric vehicles (Mason). The expenditure will lead to a sale of one million electric vehicles by 2025. However, analysts have criticized this move by terming it as a piped dream that cannot come true (Mason). Any good move has to come with its challenges which might not be avoided.
Moving to electric vehicles also calls for mastering technical issues. Such issues include manufacturing and developing batteries in a voluminous capacity. The company has liaised with LG Chem Ltd to start a battery factory in Lordstown, Ohio (Mason). A lot of capital is needed to manufacture batteries to produce varied battery sizes for different vehicles. Companies like Tesla are far much ahead in both technological and price.
A legacy company like GM face challenges in changing the environment to the developed technology. Such companies operate at a lower urgency than the “new” modern corporations that bring advancements to market (Mason). GM is sure that it has to be at the same pace as New modern corporations such as Tesla in the next three to five years. However, while GM and other traditional manufacturers invest much in plug-in models, investors seem unwilling to reward them because they fund companies solely manufacturing electric automobiles. GM’s stock had lagged far behind the S&P 500 index, trading below $33 price its initial public offering (IPO) a decade ago.
Another challenging issue that the company is dealing with comes with the launching of low emission vehicles. The government is likely to tighten regulations on high emission vehicles following the launch of electric vehicles. GM has manufactured robust fossil-driven vehicles, which are estimated to increase by 2035. The main challenge will be on how to tackle or cooperate with the government regulations. Therefore, raising emission standards for the “traditional” cars produced by GM among other companies would be challenging.
Model of Adaptive Orientation: Renewing Management
Renewing management will be a suitable adaptive orientation for General Motors to enter the Electric vehicle market. This model introduces a change to deal with future conditions even before these conditions occur (Brown 72). Organizations that are hedged on this model are faster in developing new ideas, more responsive to competitive changes, and more participative in involving organization members in the renewal process. For GM, this model will be important in helping the organization to prepare for changes anticipated and hedge the competition from Tesla among other new modern corporations.
Analysis
The socio-technical system
The socio-technical system is one that coordinates human and technical activities. It consists of the goals and vision of the organization, the technical subsystem, the structural subsystem, the psychosocial subsystem, and the managerial subsystem (Brown 67). The system incorporates the goals and vision of the organization and activities used to produce the output, policies and procedures, network of social relationships, and organizational pattern.
Alternatives
Basic strategies to change
Basic strategies to change include the three organizational tenets such as structural, technical, and behavioral. A structural approach to change relates elements of an organization to one another, removes or adds hierarchy. In addition, it may involve downsizing, decentralization, and centralization. Technical changes impact machinery, methods, automation, and job design. As a result, it brings an organization to state of the art, helping it become more productive. Lastly, behavioral change has to do with the morale, motivation, and commitment of members. A legacy company like GM, eyeing for a shift to electric cars, would mean it will engage technical changes. It has to move close to “new” modern corporates with high technological advancements. Therefore, the technical system will require an overhaul following the purchase of new machines, methods, automation, and job design that fits the manufacture of electric cars.
Intervention techniques
Major intervention strategies focus on individual or interpersonal level, team or group level, intergroup level, and total organization level. Individual strategies would involve stress management, career planning, management by objectives, and employee empowerment. The company is transforming to a new structure and hence the need to empower employees, prepare them to adapt to the changes. For the change to be effective, team-building skills are important since employees work alongside each other sharing ideas and knowledge to fork knowledgeable workgroups. Intergroup will also be an important tenet to consider to enhance process interventions, quality management, and virtual teams.
Iceberg organization
It will have to employ the organization iceberg approach to organizational development for a legacy company like General Motors. Job definitions will be key to attaching employees with their matching job roles across all departments. Structural consideration will be evident as the organization spans control and hierarchical levels from top management to subordinate employees. The smooth flow of information will pave the way for a smooth transition from fossil oil vehicles to electric automobiles. Operating policies and practices will ensure that both employees and management follow criteria across all sectors. In effect, the company will engage behavioral mode that pursues power and influence patterns, development of interpersonal relations, openness, and risk-taking behaviors. This is a company in transition, and hence risk-taking behaviors in technicality and financial status have to be anticipated.
Recommendations and Summary
Based on the analysis of this research, there are several significant factors that GM should consider. First, it will be important for GM to scale down its production of fossil-driven automobiles. As noted, the company might experience challenges in the onset of electric vehicles as the government could tighten rules on high emissive vehicles. This means that the company might experience high fines because it produces the highest number of fossil fuel-driven vehicles. Therefore, scaling down production would mean that there will be manageable high emission vehicles by the time of low emission vehicles.
GM should stage vigorous campaigns aimed at searching investors and sponsors for the electric car manufacture. As noted, legacy companies spent a lot in research and development while the “new” modern corporations find investors and sponsors. The company might therefore run into losses by engaging R&Ds even before sourcing sponsors for the anticipated change. To be at the same pace as Tesla, the company needs investors to initiate innovations and equipment design.
GMs 2035 target date to phase out gasoline and diesel driven vehicles would be a way of changing its business model. The company would, however, consider renewing management and other socio-technical systems. Socio-technical systems including technical subsystem, managerial, psychosocial, goals and values will have to be aligned with the new change. As a legacy company, GM should invest more in seeking sponsors and investors other than R&Ds, which can milk the company’s liquidity assets. Major intervention strategies focus on individual or interpersonal level, team or group level, intergroup level, and total organization level. Individual strategies would involve stress management, career planning, management by objectives, and employee empowerment. The company is transforming to a new structure and hence the need to empower employees, prepare them to adapt to the changes.
Works Cited
Brown, Donald R. Experiential Approach to Organization Development. 8th ed., Pearson, 2011, pp. 32-75.
Colias, Mike. “GM to Phase Out Gas- And Diesel-Powered Vehicles By 2035”. WSJ, 2021, Web.
Mason, John M. “General Motors: The Problems Facing A Legacy Company (NYSE:GM).” SeekingAlpha, 2021, Web.