Analysis of Business and Management Issues
1. Thinking Globally, Act Locally- Globalization & the Global Markets
It is considered as one of the largest automakers in the world today. Although the company headquarters can be found in Detroit, it employs “209,000 people in every major region in the world.”
The company does business in more than 120 countries around the world. Therefore, the impact of a shutdown reverberates around the planet and can severely affect the lives of hundreds of thousands of people. The company has manufacturing facilities in 31 countries.
GM demonstrated the importance of thinking locally by immersing itself in the culture of the target market. Part of the goal is to understand the work environment. Aside from thinking locally the company also demonstrated that the local market is important to the company. As a result GM focuses on corporate social responsibility so that the organization can give back to the local community. The company has factories in 31 countries.
2. Responding to Dynamic Business Challenges – Strategically & Operationally
The impact of the financial crisis of 2009 can still be felt today. People are wary of purchasing expensive items and this includes cars. There many unemployed people and therefore there are many that cannot afford to buy a new car. Instead of purchasing a brand new car, many opted to use their old cars. Thus, GM cannot expect record breaking sales until the global financial crisis of recent years no longer has an effect on the global economy.
The company decided to streamline its operations. The goal is to reduce the overhead cost while increasing revenue. Two of the most important things that occurred in response to the crisis were to fire two CEOs. The first one was fired after the U.S. government initiated a bailout process that prevented GM from filing bankruptcy.
The second one was fired while serving for only 6 months as a CEO. The second major change was to acknowledge the fact that the company had to maintain so many models and therefore GM had to retire legendary brands such as the Oldsmobile.
GM decided to fire two CEOs, the first one was Rick Wagoner and the second one was Fritz Henderson. Wagoner was fired because during his watch the company had to be bailed out by the U.S. government. It simply means that because of his leadership the company was pushed to the breaking point.
Henderson on the other hand was fired because he could not prove that he can engineer a quick turnaround of the company. Henderson had to show that he knows how to stop the heavy losses incurred by the company. But he was unable to impress the board and various stakeholders of GM.
General Motors is a global brand. The products that came from this company are known all over the planet. The success of the company enabled the corporate leaders to develop a competitive advantage over competing forces. Part of the plan is to think globally and at the same time act locally.
Therefore, GM cannot rest on their laurels so to speak because the real power lies in the hands of the stakeholders, not just the main investors and corporate leaders of General Motors. In a highly competitive world it is imperative to do everything to lower costs.
This is primarily the reason why the company had to expand its operations overseas. Consider for instance the commitment required to establish manufacturing facilities in 31 countries. From these locations, the company was able to manufacture cars and trucks that were sold all over the world.
Although it is the need to achieve a certain level of competitive advantage, General Motors cannot afford to simply focus on the global aspect of their business operations. It is also important to think locally. The ability to build a manufacturing plant from scratch in a chosen location helps establish an immediate connection to the local community.
Instead of bringing in workers and managers from the United States, the capability to hire from the local population enables the company to have leaders that understands the local culture. Although the business operation is relatively new, the people that were hired are already familiar with the local business environment and therefore the company need not start from scratch.
There is however no better way to demonstrate the capability to think locally other than the fact that the company demonstrated its sensitivity to the needs of the local community. Corporate social responsibility can be made evident through an environmentally-friendly business process.
Another example of corporate social responsibility is the support given by the company to social initiatives and programs to “encourage safe driving, including ones focusing on child restraint and safety belt use, intoxicated driving prevention, occupant compartment and trunk anti-entrapment, young drivers, and distracted driving.” By supporting these issues, the organization can be seen in a positive light. It becomes a form of promoting the products of General Motors without having to pay directly for advertising costs.
In a time of crisis the leaders must take drastic measures to immediately stop the flow of money outside the company. GM was losing hundreds of millions of dollars due to the financial crisis and other internal problems. The CEO must immediately implement a strategy that can reverse the negative trend. In the case of GM changes cannot be accomplished in the shortest period of time because GM is not an ordinary company.
During its heyday it was considered as the most profitable and influential business organization in the United States. Its global presence is something that must not be underestimated. Thus, it was difficult to initiate change but the organization was near the brink of bankruptcy and therefore it had to be bailed out by the government. However, the leaders had to be made accountable for the financial woes that GM had to deal with for many years.
It was just logical to fire Wagoner and Henderson. These men were supposed to lead GM to the next level of profitability and technological innovations. But the reality was that the company could no longer compete against imported brands that are more affordable and more reliable.
The company had to make drastic changes to its culture and supply chain management. These things had to be implemented with an eye towards the global aspect of their business but at the same time the company must also focus on the local level. The company had to be sensitive to the culture of the community where a factory is located. Furthermore, GM had to learn how to efficiently manage its resources because it is the only way to compete in a highly competitive world of auto-manufacturing.
GM News, “Company Information.” last modified, 2011 http://media.gm.com/media/us/en/gm/company_info.html
Kotler, Philip and Nancy Lee. Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. New Jersey: John Wiley & Sons, 2005.
Kurtz, David and Louis Boone, Contemporary Business 2009. OH: South-Western Cengage, 2009.
Merav Shoval, “Think Global, Act Local.” last modified February 2011, http://www.slideshare.net/leadinghr/think-global-act-local-7576086.
Welch, David. “GM Fires CEO Henderson.” last modified December 1, 2009, http://www.businessweek.com/
Merav Shoval, “Think Global, Act Local,” last modified February 2011, http://www.slideshare.net/leadinghr/think-global-act-local-7576086.
GM News, “Company Information,” last modified, 2011 http://media.gm.com/media/us/en/gm/company_info.html.
David Kurtz and Louis Boone, Contemporary Business 2009 (OH: South-Western Cengage, 2009), 161.
David Welch, “GM Fires CEO Henderson,” last modified December 1, 2009, http://www.businessweek.com/autos/autobeat/archives/2009/12/gm_fires_ceo_he.html.
Philip Kotler and Nancy Lee. Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause (New Jersey: John Wiley & Sons, 2005), 161.