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Executive Decision Making at General Motors-
1 -How have GM’s strategy, structure, and decision-making processes evolved over time? How well aligned were they in each of the three major eras?
Strategy: An ingenuous marketing policy was based on internal diversification and commitment to innovation. The focus was on market share and top managers became more focused on cost rather than revenue
ALFRED SLOAN’S GM: Reviving up (1920-1956)
In 1908 the first automotive conglomerate and first vertically integrated company was created by Billy Durant. The challenge was poor management decision because of the internal competition and duplication.
In 1918 GM’s structure was reorganised by Alfred Slaon to make the management processes in line with the strategies. The Strategy was creating a multi-divisional structure called “decentralization with coordinated control.” Control is co-ordinated by Management groups and policies in the decentralized organisations.
Ultimately management committee was formed to handle the responsibility for decisions around resource allocation. As a result the company was Ranked #1 in the Fortune 500 in 1955 in both sales and net profits.
Coasting Toward Collision (1960s-1990s)
1970s oil crisis and increased competition was the test for GM’s prevailing structure, process and strategy. The new strategy was to focus more on market share and let the divisions compete with each other. Enforce top manager’s focus on cost rather than revenue.
− Structure: In this era the effective decentralized organization structure broke down due to complexity in operations and increased competition. There were different functions for divisions and global regions without economics of scale. At the end of this era GM was branded as a “dinosaur” in the global market.
Getting Back on a Common Track (1992 and Beyond)
Jack Smith became CEO and Chairman in 1992 and made several changes in the structure. Policy Group was eliminated and Management Committee was replaced
1 -How have GM’s strategy, structure, and decision-making processes evolved over time? How well aligned were they in each of the three major eras?
Strategy: An ingenuous marketing policy was based on internal diversification and commitment to innovation. The focus was on market share and top managers became more focused on cost rather than revenue
ALFRED SLOAN’S GM: Reviving up (1920-1956)
In 1908 the first automotive conglomerate and first vertically integrated company was created by Billy Durant. The challenge was poor management decision because of the internal competition and duplication.
In 1918 GM’s structure was reorganised by Alfred Slaon to make the management processes in line with the strategies. The Strategy was creating a multi-divisional structure called “decentralization with coordinated control.” Control is co-ordinated by Management groups and policies in the decentralized organisations.
Ultimately management committee was formed to handle the responsibility for decisions around resource allocation. As a result the company was Ranked #1 in the Fortune 500 in 1955 in both sales and net profits.
Coasting Toward Collision (1960s-1990s)
1970s oil crisis and increased competition was the test for GM’s prevailing structure, process and strategy. The new strategy was to focus more on market share and let the divisions compete with each other. Enforce top manager’s focus on cost rather than revenue.
− Structure: In this era the effective decentralized organization structure broke down due to complexity in operations and increased competition. There were different functions for divisions and global regions without economics of scale. At the end of this era GM was branded as a “dinosaur” in the global market.
Getting Back on a Common Track (1992 and Beyond)
Jack Smith became CEO and Chairman in 1992 and made several changes in the structure. Policy Group was eliminated and Management Committee was replaced