General Motors is a complex organization that operates globally and has a matrixed structure. For years, it has been no easy task to function successfully as the world’s largest automotive corporation. Overcoming various challenges of the modern business environment requires an adequate organizational structure accompanied by efficient and visionary leadership. In fact, the researchers today speak of the importance of strategic management in the context of organizational structure:
“Effective strategic management includes a global external orientation, clear business segmentation, an intimate understanding of strategic marketing and competitor analysis, a focus on appropriate measures of performance, systematic resource allocation, and a supporting organization structure and culture. The development of strategic management systems with these components will facilitate American organizations to compete effectively both domestically and internationally.” (Kellogg School of Management, 2005, “Why Strategy Is Important Today”)
As the official website of the company informs, the activity of General Motors is overseen by the Board of Directors. The Board has two main functions: the firsts are associated with electing the officers of the corporation, and the later is connected to managing its performance. At the moment, there are eleven Board members, including nine non-employee members and two management members. The Board maintains the corporation’s business and fulfills its tasks through some Committees. At the moment, there are six committees: Audit, Capital Stock, Director Affairs, Executive Compensation, Investment Funds, and Public Policy.
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Evaluating the composition and performance of the Board of Director, I believe it’s a very reasonable way to watch the owners’ interest in conducting a successful business, including optimizing long-term financial returns. The inclusion of two management members benefits the Board: it’s an additional method of ensuring the independence of the Directors, which is not only required by law but also necessary for balanced-decision making.
The automotive business is managed through strategy boards responsible to the Board of Directors. There are four strategy boards: the Automotive Strategy Board, North America Strategy Board, European Strategy Board, Latin America, Africa and Mid-East Strategy Board, and Asia Pacific Strategy Board. The Automotive Strategy Board is the most important one about other boards: its function includes global strategic direction of GM’s automotive business, which accounted for 80% of our sales and revenues in 2000.
The regional division is typical for the majority of large corporations with global operations, and it has proved to be the most efficient model. Each of the Regional Boards deals with the issues topical for the certain region and reports to the Automotive Strategy Board, together with complying with its general corporate guidelines.
As for the organization of production process, General Motors has been long perceived as an organization that violated the key principles of efficient organization advocated by the theorists. GM is notorious for multidivisional corporate structure instead of decentralized organizational structure. The coordinated policy is the ultimate value for the organization. However, individual business units enjoy significant freedom. Senior management is responsible for strategic decisions, while individual business units can choose the ways to implement them. Interdivisional units are created to keep the organizational structure integrated.
For years, the organizational structure of General Motors was labeled as M-form. M-form organizations, as opposed to U-form, are organized into relatively independent operating units, focused either geographically or on a particular task. However, latter research revealed that “large global corporations are creating a new organizational model in the 1990’s that is significantly different from the M-form organization that has dominated corporate structures over the preceding five decades and that has provided the context for much of current management theory.” (Bartlett, 1993, p.24)
M-form organization underlines decentralization of responsibility to operating divisions whose activities were planned, coordinated and controlled by a strong corporate management. It has long been viewed as the only possible vehicle for growth of large corporations in the era of globalization. In fact, the organizational structure of General Motors is far more complicated. Reporting procedures and inquiring tools limit the independence of the sub-divisions but for the sake of the well-being of the company.
Such model, I sometimes referred to as participative decentralization. It implies including divisional executives in strategic planning or policy formulation. So, General Motors is not a classical M-form example. M-form is a very formal structure, while a certain degree of informality is present in GM’s organizational structure.
There’s something more potent than a formal structure that makes General Motors integrated and prosperous. It’s organizational culture. The employees and managers are encouraged to develop emotional alignment with the mission and goals of the corporation, and this helps GM function as a wholesome entity.
With all the positive things said about the organizational structure of General Motors, there is space for improvement. Moreover, there is a clear and consistent need for development. The overall performance of the corporation turned out to be disappointing lately:
“[In May 2005] GM shocks Wall Street with the news that earnings are falling sharply, leaving its credit rating teetering on the edge of junk-bond status. A month later, it follows by announcing a $1.1 billion loss for the first quarter, and executives say they can no longer provide earnings guidance for the rest of the year. GM’s reliance on SUVs and incentives to goose sales hasn’t stopped its U.S. market share from sliding to 25.6%.” (Business Week, 2005, p.10)
My recommendations to the General Motors would include specific pieces of advice on certain levels of operation. For the Board of Directors, it can be beneficial to increase the number of management members: the insiders of the company should have a larger say in strategic decision-making. Also, I would like to recommend increasing the role of the Automotive Strategy Board. At the same time, Regional Boards should review the sub-division of the business units and figure out if there is a waste in the management system. Some business units can be merged in case they perform virtually the same functions. Similarly, the units overloaded with tasks can be further divided. These organizational changes will enhance the performance of General Motors.
___________________________________________________________
Evaluating the composition and performance of the Board of Director, I believe it’s a very reasonable way to watch the owners’ interest in conducting a successful business, including optimizing long-term financial returns. The inclusion of two management members benefits the Board: it’s an additional method of ensuring the independence of the Directors, which is not only required by law but also necessary for balanced-decision making.
The automotive business is managed through strategy boards responsible to the Board of Directors. There are four strategy boards: the Automotive Strategy Board, North America Strategy Board, European Strategy Board, Latin America, Africa and Mid-East Strategy Board, and Asia Pacific Strategy Board. The Automotive Strategy Board is the most important one about other boards: its function includes global strategic direction of GM’s automotive business, which accounted for 80% of our sales and revenues in 2000.
The regional division is typical for the majority of large corporations with global operations, and it has proved to be the most efficient model. Each of the Regional Boards deals with the issues topical for the certain region and reports to the Automotive Strategy Board, together with complying with its general corporate guidelines.
As for the organization of production process, General Motors has been long perceived as an organization that violated the key principles of efficient organization advocated by the theorists. GM is notorious for multidivisional corporate structure instead of decentralized organizational structure. The coordinated policy is the ultimate value for the organization. However, individual business units enjoy significant freedom. Senior management is responsible for strategic decisions, while individual business units can choose the ways to implement them. Interdivisional units are created to keep the organizational structure integrated.
For years, the organizational structure of General Motors was labeled as M-form. M-form organizations, as opposed to U-form, are organized into relatively independent operating units, focused either geographically or on a particular task. However, latter research revealed that “large global corporations are creating a new organizational model in the 1990’s that is significantly different from the M-form organization that has dominated corporate structures over the preceding five decades and that has provided the context for much of current management theory.” (Bartlett, 1993, p.24)
M-form organization underlines decentralization of responsibility to operating divisions whose activities were planned, coordinated and controlled by a strong corporate management. It has long been viewed as the only possible vehicle for growth of large corporations in the era of globalization. In fact, the organizational structure of General Motors is far more complicated. Reporting procedures and inquiring tools limit the independence of the sub-divisions but for the sake of the well-being of the company.
Such model, I sometimes referred to as participative decentralization. It implies including divisional executives in strategic planning or policy formulation. So, General Motors is not a classical M-form example. M-form is a very formal structure, while a certain degree of informality is present in GM’s organizational structure.
There’s something more potent than a formal structure that makes General Motors integrated and prosperous. It’s organizational culture. The employees and managers are encouraged to develop emotional alignment with the mission and goals of the corporation, and this helps GM function as a wholesome entity.
With all the positive things said about the organizational structure of General Motors, there is space for improvement. Moreover, there is a clear and consistent need for development. The overall performance of the corporation turned out to be disappointing lately:
“[In May 2005] GM shocks Wall Street with the news that earnings are falling sharply, leaving its credit rating teetering on the edge of junk-bond status. A month later, it follows by announcing a $1.1 billion loss for the first quarter, and executives say they can no longer provide earnings guidance for the rest of the year. GM’s reliance on SUVs and incentives to goose sales hasn’t stopped its U.S. market share from sliding to 25.6%.” (Business Week, 2005, p.10)
My recommendations to the General Motors would include specific pieces of advice on certain levels of operation. For the Board of Directors, it can be beneficial to increase the number of management members: the insiders of the company should have a larger say in strategic decision-making. Also, I would like to recommend increasing the role of the Automotive Strategy Board. At the same time, Regional Boards should review the sub-division of the business units and figure out if there is a waste in the management system. Some business units can be merged in case they perform virtually the same functions. Similarly, the units overloaded with tasks can be further divided. These organizational changes will enhance the performance of General Motors.
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If you need a custom research paper, research proposal, essay, dissertation, book report or term paper on your topic, EffectivePapers.com writes academic research papers from scratch. Starting at $12/page you can order custom written papers online. We work with experienced PhD. and Master's freelance writers to help you with writing any academic papers in any subject! High quality and 100% non-plagiarized papers guaranteed!
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