Managing Organizational Change
Part 1: Topic Selection
The present business environment is very challenging and evolving. Each and every day several companies start their business with full efforts. The competition in any industry is very intense and Automobile industry is no longer an exception. Presence of multiple players is not only increasing competition but also increases the customer’s bargaining power. Customer has become more demanding than ever; he wants better quality, advance technology, all comforts at very reasonable prices. Companies are struggling to make their product attractive, cost effective and superior. In such a competitive environment, it is essential to have competitive advantages over competitors which can be achieved by adopting continuous and sustainable changes. Changes are essential to improve products, technology, and processes. General motor and Ford, two giant of automobile industry faced major financial challenges during year 2007-08. Their sales were declining and trust of customers was fading. Both companies went under various changes to deal with tremendous financial and competitive pressure.
This paper intends to discuss changes carried out in General Motors and ford during the trouble period. General Motors has gone through tremendous changes in terms of organizational structure, processes, resources and leadership. These changes enabled company to improve its market conditions and sales. Similarly Ford also carried out various changes in terms of planning, management, leadership and processes. The paper will detail out all changes carried out by both General motor and Ford. Further the paper will discuss how these changes were implemented and why the changes carried out by both the organizations are very interesting and effective.
General Motor was facing huge losses due to higher manufacturing cost, decreasing customer’s trust and legacy expenditures. The company faced intense competition from Toyota and Honda which resulted in huge losses. The company finally asked for bankruptcy protection in year 2009. The company reduced its expenses significantly, closed down unprofitable units, laid off manpower, and new management. New CEO White care introduced various changes to streamlined decision making process, strengthen organizational goals and made operational processes more efficient. The core areas of the company like development and production did not much impacted by these changes. The changes were more focused on bringing new healthy culture (Savage et al., 1991). The new management bridges the communication gaps and gets well connected with employees.
Ford organization went through leadership changes in the year 2001 when Bill Ford became CEO (chief executive officer) of the company. After five years in 2006 Alan Mulally join the board as new CEO and President of the Ford. Under new leadership guidance, Ford increased its borrowing capability by placing company’s assets as security. During the time of recession, Ford faced various challenges in terms of decreasing revenue and income. However company decided not to go for bankruptcy to take government money under TARP. Company brought various changes to improve its performance and to make its products more fuel efficient, cost effective, attractive and loaded with advance technology. The company also emphasized upon greener world to build positive image of the brand. The company emphasized upon reducing cost at all levels and brought final cost of product down. Ford did not file for bankruptcy which helped in building positive image. The company made certain settlements to improve its balance sheet for example Ford executed an agreement of settlement with United Auto Worker which allowed company to significantly reduce health care benefits and other care cost to its employees. Company formed independent, company funded trust named “Voluntary Employee Beneficiary Association”. This settlement improved cash position of organization significantly y transferring its liabilities to VEBA accounts. The losses faced by the company in year 2006 were recovered only by year 2009. The company became profitable. Financial restructuring in Volvo and sell of Jaguar and Land Rover were few major decisions taken by the company to improve its financial position.
Both the organizations went under major structural changes. GM and Ford both focused on bringing cost down, reducing expenses, effective organizational management and more efficient processes. However, GM filed for bankruptcy and Ford did not. The changes brought in both organizations were focused on improving financial position of the company. Few changes were common in both companies and few changes were different. The changes implemented in General motor were focused on improving organizational culture and imitating cost effective processes from competitors. Changes carried out in ford were more focused on improving financial condition and developing competitive advantages. Both organizations emphasized on developing cost effective, fuel efficient, and advance technology vehicles to attract customers.
The study of changes conducted in General Motor and Ford, is very interesting because it involves diversified changes. Both organizations introduced a chain of changes including leadership change, organization structural change, strategic changes, cultural changes and changes in manufacturing and operations processes.
References
Ford. (2010). One Ford:Ford Motor Company Annual Report. US: Ford Motor Company.
G. T. Savage, T. W. Nix, C. J. Whitehead & J. D. Blair. (1991). Strategies for assessing and managing organizational stakeholders. Academy of Management Perspective , 61-75.
Motor, G. (2011). Annual Reports: Vision in Motion. US: General Motor Company.
Schwartz, A. (1981). ecurity Interests and Bankruptcy Priorities: A Review of Current Theories. Hein Online .
