This case study centers on the plight of modern General Motors, while discussing, at length, the ways in which its management philosophies evolved over time. The study begins by noting that GM, throughout its history, has employed a largely de-centralized power structure. That is, the company has been vertically integrated, encouraging various independent entities under its charge to compete with one another. This has often led to overlapping products and ideas, and it can sometimes lead to conflict, but it has provided GM with the results that it has wanted because of the way this structure promotes innovation within the company’s ranks.
The interesting thing about GM during those formative days was the fact that it operated like a bunch of small companies in one. The main company swallowed up a host of smaller companies, including ball bearing manufacturers and the like. From there, it treated its individual brands, like Cadillac, as their own separate companies all competing and thriving under one umbrella. There was a feeling of chaos within the organization, but somehow, it was organized chaos.
One of the things that GM ultimately realized was that if the company was going to be successful with such a loosely organized structure, it would need to have some provisions in place to make sure that decisions and rules were made by people with the knowledge to do so. That is why the company created a management committee to sit at the top and oversee operations. Mostly, this group was looking to ensure that all of the other, smaller managers were doing their jobs, as this was critical to the success of the business. In addition, the company relied heavily on policy groups. These were groups that met periodically to discuss potential changes in the way the company did business. They might deal with business contracts, human resource issues, or even issues with personnel handling. Whatever the case, they established uniform standards that could be used to make the company flow a little bit better. This became much more important for the company as it grew and as it moved into the modern era. While it might have been alright to operate with a loose structure for a short while, it became very important to have some standards as the company tried to compete on a global scale.
Between the period of 1960 and 1990, GM faced the changing world with its old, trusted strategy in hand. Specifically, the company used its structure to allow its sub-brands to compete with another in markets. This brought innovation to the highest, and it helped to rise up all of the company’s brands. While this was effective for moving the company into the modern era, some changes were needed as the company progressed past 1990.
Today, GM operates using a structure that combines a focus on regional decision-making and an acknowledgement of the importance of global decision-making. The Automotive Strategy Boards (ASB) are incredibly important to the future of the company, as they bring together regional presidents and those in charge of the global process councils. This entity sets overall policy and determines the basic strategy for the company. Should it expand into new markets? How should its brands interact? Does the company need to make any drastic changes to its manufacturing processes? These are things that might be discussed in any given meeting. This signals something of a shift for the company. While it still largely retains its identity as a decentralized company, there is now more control and oversight in the hands of the primary company leaders, a fact that is reflective of the changing market conditions.