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Organization Theory For General Motors

Paper Type: Free Essay Subject: Commerce
Wordcount: 1755 words Published: 21st Apr 2017

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Organization theory is a sociology branch that focuses on the structure, systems and processes within an organization. Organization theory is thus applied by firms and states the activities and goals of that firm. General Motors Company was established in 1908 in Michigan by William Durant. By then it was a parent company for Buick. Later that year, it acquired two motor track companies i.e. the Reliance motor company which was based in Owosso, Michigan and Pontiac’s Rapid motor company.

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However, General Motors Company came to be the market leader in Motor industry in the early 1980s.It started with employing 349,000 employees and had 150 assembly plants. Currently, General Motors produce tracks and cars in over 34 countries worldwide. It sells the vehicles through such brands as Cadillac, Buick, GMS, Chevrolet, Holden, GM Daewoo, Wuling and Vauxhall. The United States is the largest national market for General Motors. Other markets include the China, England, Germany.Russia, Canada and Brazil. Daewoo Auto and Technology Company of South Korea is the main shareholder of General Motors. It has power training and purchasing collaborations with Isuzu motors Ltd and Suzuki Motor corp of Japan. The genuine General Motors accessories and parts are normally sold under GM Goodwrench, GM performance, ACDelco brands and GM brands with the assistance of parts operations and GM service. The GM transmissions and engines are sold via GM power train (Frederick, 1995).

General Motors Organizational Structure

With regards to its organizational structure, General Motors have transformed form a traditional model to a modern one. The change in the organizational model has had an impact as far as the customers and the local communities of General Motors are concerned. The traditional General Motors Organizational model consisted of a hierarchy with executive or the president on top, then senior managers or vice presidents. Followed by managers and finally the employees. The jobs were usually grouped into departments. The General motors were composed of various independent automakers and each automaker operated differently and competed with each other. The transformation of the organization model saw General motors unified and centralized whereby several individuals work towards achieving a common goal. The corporation is now run in a streamlined manner and the several departments have been abolished (The University of Virginia, 1993).

Multinational Company

With operations in 34 countries all over the globe, General Motors is a multinational company. Multinational companies refer to those organizations which have operations in many countries. The ability of the General motors to operate in many countries is enhanced by globalization. This entails an ongoing process through which societies, regional economies and culture become integrated as a result of execution and globe network communications. This is usually driven through the combination of technological, political, economic and biological factors.

Organization design

Managers at General Motors have encompassed the application of the organization design. They have created processes, roles and reporting relationships in order to match the organization’s form very closely. It is through the organization design that the company is able to improve probability that members’ collective efforts will be successful. The General Motors Company have been designed in a beauracratic manner whereby responsibility and authority have been arranged hierachically.This has enabled specialization and grouping of people who performs similar or related tasks in clusters. The bureaucracy in the General Motors have enhanced logic, rationally and most important, the efficiency. It has also had some demerits as far as rigidity and inflexibility are concerned e.g. slow decision making process e.t.c. (Salmon, 1989).

Divisional Structure

The General Motors Company uses divisional structure. Each organizational function is grouped into divisions. A division which is within the divisional structure usually has all the necessary information and resources within it. The General Motors can thus make a distinction based on geographical aspects e.g. the Russian division and the United Kingdom division and also on its products such as SUVs and another one for subcompact cars with each division having its own engineering, sales and marketing departments. This organizational structure have its own demerits which includes difficulty in product integration i.e. each GM divisional manager concentrates on delivering his or her products and fails to focus on integration and also the employees usually feel a bit affiliated towards their department only and they lacks sense of being a part of the organization. Divisional structure also inhibits the career growth of specialists as technical people may feel alienated from their colleagues in other divisions and also may lack some exposure to major developments taking place in the organization (Cook, & Woollacott, 1995).

Organizational Culture

The strategic leaders in the General Motors should are vested with the responsibility of creating the organizational characteristics that encourage and reward collective effort. The organizational culture is the most fundamental characteristic as it enables the organization to cope well with its environment. For General Motors to survive individuals must be integrated into a whole and also the organization must adapt effectively to the environment in which it is operating (Lung, 2003).

GM External environment

General Moors just like many other organizations does not operate in a vacuum. The organization has to be conscious about what happens outside its factory and office walls. These factors that occur outside the business boundaries are known as the external environment. They usually influence the organizations main functions, objectives and strategies. The main factors include the competition i.e. the extent to which other firms competes with the General Motors automobiles. The main competitors of the General Motors ifs the Ford Company. Ford was established in the 1920s by Henry Ford. It has been struggling to overtake General Motors Company using such strategies as lowering prices. Despite these, General Motors have been the market leader due to its variety and good management. To effectively deal with the competition threat from Ford and other automobile makers such as Toyota, the management should aim at improving the quality of the products so as to add the value to their customers. The company also needs not to flounder in the accounting practices such as derivatives and pensions which have brought huge costs in the General Motors. To improve its management, the General Motors Company has been reshuffling its executives over the years (Helen Dwight Reid Educational Foundation, 1994).

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The other factors that affect the General motors are; social i.e. how the consumer and communities at large behave with reference to the company’s products. The other external factor is legal i.e. the manner in which the legislation affects the organization e.g. the change of the laws regarding employees working hours. Economic is the other external factor which affects an organization. This relates to such issues as taxation, interest rates, government spending, global economical factors and general demand. The other external factor that affects the business is the technology. For instance, the General Motors have to move with the current trends in the motor industry as far as its production processes and product innovation are concerned. Others are ethics i.e. the morality aspect of doing a business (Bordenave, 2003).

The Stakeholders approach

The General Motors should adopt the stakeholders’ approach in which case all its stakeholders will be able to know well how the business is being operated. Stakeholders are those people that have an interest in an organization and are affected by the company’s omission or commission of its duties. The managers are required to decide on which views from the stakeholders are necessary to listen. The General Motors Company is currently undergoing through some significant transformations as it strives to become more competitive and so there could be several key things that the company could be involved with without the know-how of the company’s management. In an aim of maintaining its competitive status, it is important to enquire from some of its more insightful people who may be experts in the industry about the things that should be done by the GM management so as to make the organization healthier, stronger and a more competitive one. To achieve this, the managers can adopt stakeholder’s approach which believes that the managers in any organization should consider the views from all the company’s stakeholders and not relying only on the owners views. This inturn enables the stakeholders to have active interest as far as the business welfare is concerned. Some of the stakeholder approach and the potential benefits that can be achieved by business include offering the customers excellent after sale services and also good value products so as to create customer loyalty, social corporate responsibilities such as providing the locals with sports facilities so s to create good relations with them which may inturn help to increase sales.Also,a company should provide the workforce with good wages so that the employees can feel motivated and perform their duties enthusiastically and effectively( Rothstein,2005).

To stay healthier and stronger, the General Motors needs to keep away from its historical tendencies of being in its comfort zone and regarding itself as the greatest. It should focus on achieving and sustained the momentum so as to bring change and improvements.It needs to borrow a leaf from Toyota which is away ahead of GM (Coetzee, 2001).

The General Motors needs to innovate and be ahead of regulation i.e. it should take the opportunity and re-establish itself as a leader in Enviromental technology and avoid being regarded as resistant towards progress on emissions and fuel efficiency. This will enable the company to overtake Honda and Toyota which is deemed as leaders as far as this area is concerned (Greenberg & Baron, 1995).


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