Case summary

GM CEOs (Chronological Wise) 1937-56:- Alfred Sloan Jnr. 1956-1981:- 5 CEOs were changed 1981-1993:-Roger Smith 1993-1995:- Robert Stempel 1995 onwards:- Jack Smith

Continue
GMs position as Market leader started deteriorating in year 1980. World Wide Competition & Technological Advancement ( Asia & Europe). Changes in Organisation Structure Alfred Sloan:- Divisional Organizational Structure Roger Smith:- BOC (Strategic Business Units) & CPC( Matrix Structure) Robert stempel:- Slow in carrying out turnaround strategy that Roger Smith had begun.
Jack Smith:Centralization of purchase, Production & Product Design Decentralization of Marketing Unit of 5 traditional Division

Technological
Economic

Human Resources Inter national Suppliers

Customer
The Manager and the organization

Political, Legal regulatory Competitors

Cultural and Social

Logic of Organizing
Main Objective
To regain its leadership & acquire its lost market share of 29% by change in leadership, reconceptualization of its image in customer minds, divisional restructuring, and a rebuilding of market focus.

Sub-Objectives
To downsize the number of divisional portfolios to three from five(Chevrolet division for low incomemiddle, Pontiac and Oldsmobile for high, the Buick and Cadillac for premium class) To reduce autonomy and power of divisional managers.(Key decisions like launching new car to be taken by MD & Board) To ensure not more then 2 cars for same market segment(e.g. Chevrolet Malibu, Chevrolet Impala for lower) To ensure no price-band crossovers between the two divisions, or major brands within divisions. ( the highest-priced Chevrolet must be cheaper than the lowest priced pontiac) To ensure reduction in the number of vehicle assembly plants, mechanical option & outsourced parts suppliers

 Identify, Analyse & Classification of Activities:

Group divisions according to the market income segment of lower, middle & high
level group with One divisional Manager for each Division. Formulation of policy of top level management to be the authority of pricing &

launching of new cars in consultation with divisional Heads

Grouping of vehicle assembly plants (Pontiac and Oldsmobile vehicles, the Buick and Cadillac).

To adopt using one automatic transmission design to service all of Chevrolet/

Buick division and maybe even Cadillac. Producing earlier outsourced products in-house for reducing the cost of products

by reducing supplier base (4% every year)

Grouping of activities will be done on the basis of three created divisions.

Delegation of authority
Production Chevrolet Division(lowermiddle income) Marketing

Finance

Production

CEO

Pontiac and Oldsmobile vehicles Division ( High level)

Marketing

Finance

Production Buick and Cadillac Division (premium Class)

Marketing

Finance

Hierarchy

Product/Product Lines
CEO GM

Chevrolet

Pontiac

Oldsmobile

Buick

Cadillac

Design

Production

Marketing

Selling & Distribution

others

STRATEGIC BUSINESS UNITS

MD

Buick

Oldsmobile

Cadillac

Design

Production

Selling

MATRIX

CEO

Manager (Chevrolet)

Manager Marketing

Manager Production

Manager (Pontiac)

Manager Human Resource

Manager Finance

Manager GM Of Canada

Produce (chevrolet)

Produce (Pontiac)

Produce (GM of Canada)

Functional Structure

MD

Marketing (Cadillac)

Marketing (chevrolet)

Marketing (Oldsmobile)

Marketing (Buick)

Marketing (Pontiac)

Production

Product Design

Purchasing

Traditional Divisional Design(Sloans Model)

Massive Corporate support staff for expert advice and consultation & assumed authority of taking decision led to endless discussions.
BOC (Strategic Business Unit) & CPC (Matrix)

Turnaround was not followed properly by Robert Stempel also they saw lowest market share drop of 29%.
Jack Smiths restructuring

Reduced staff from 13500-2500 Reduced car models from 62-54 Combining 27 purchasing dept. to 1. Eliminating 16500 hourly jobs by early retirement.