1. Drivers of high costs of General Motors production
According to the estimations of the market specialists, the usage of raw materials for the production of cars is the major problem of automobile industry resulting in the increase of the expenses and costs. In this regard, it is clear that some companies succeed to find cheaper raw materials with the purpose to save expenses spent for the production of the vehicles. However, in the majority cases this approach fails because of the problems with the quality of the production of the goods with the usage of new raw materials. Given the framework of the automobile industry, the experts confirm that it is not recommended to save expenses on the raw materials as it affects directly safety of the customers using these cars. Hence, the companies should find the balance in the reduction of the expenses and maintenance of the interests of the clients. Coming back to the issue with the General Motors, the company tried to cooperate with Toyota with the purpose to reduce high cost for the production. Although, this cooperation was not successful enough because of the development of the crisis management within the internal organization of the company ("Why Ford is more profitable than GM", 2016). In this respect, the main challenge that should be addressed by the GEenrla Motors is the increase of sales volume with the parallel reduction of the costs for the production of the vehicles and its supplementary parts. The company has already tried to launch numerous initiatives in order to heat the interests of the customers to the produced goods. Besides, it seems that the focus should be paid to the creation of new designs of the vehicles and improvement of the strengths of the company in order to benefit the position in the market. Therefore, the management of the General Motors has to remove the primary weakness of the organization in form of the extremely high cost structure. Among the other producers of the autos, the costs of the General Motors are dependent on the high compensation packages provided to the employees of the company, similar pension plans. The company has made certain positive shifts in the resolution of these problems. However, several improvements still should be made ("Insight: GM's Volt: The ugly math of low sales, high costs", 2015).
2. General Developments Affecting Negatively Performance of General Motors
Among several automobile companies, the situation with the General Motors is similar to the deep crisis. The challenges of this business unit started from the appearance of highest costs for the production of the vehicles that prevented receipt of the profit by the company in the desired volume. Afterwards, the initiative to cooperate with Toyota company expended the problem with the performance of the company because of the usage of raw materials of lower quality and increasing amount of the crash incidents. In this respect, it should be stated that the primary developments that cause adverse consequences in the company are the availability of the extensive management crisis on different levels within 10 years and culture crisis. The company did not take measures in order to alleviate these issues in timely manner so that the General Motors today should take care of its profits will all available capabilities. Meanwhile, this business unit has an objective to survive from this situation with the adoption of new developments. In particular, the company has already increased global sales volume while these indicators are seemed to raise further. This shift has been achieved through the improvements in the production and technology innovations inclusion. The General Motors pursues the desire to create flagship brand in form of independent company in order to hold certain share among luxury vehicles. Finally, the company recognizes its importance to expand business presence in Asian region. Certain initiatives have been made in acquisition of power and leadership in China while the company still intends to invest more than $3 billion till the end of 2018 in order to launch manufacturing processes in this region. By virtue of this approach, it is believed that General Motors will attain its competitive advantage and reduce high costs ("GM Outlines Strategic Plan", 2017).
3. Failure of General Motors is Management Crisis?
It is common practice that the companies may appear in the deep crisis that affects the quality of the goods and services provided to the customers. In case of such situations, the customers appear to be unsatisfied with the operation of the company in the market while the company is exposed to significant financial losses. The same is referred to the General Motors that has appeared in the crisis because of the flaws in the management practices of the leaders of the company and absence of efficient cooperation with Toyota. In fact, these two giants cooperated with each other in form of the joint venture. Besides, one of the major failure of these business units has become appearance of delays in responding to the dead injuries and other situation. The management of the organization fails to allocate resources that are necessary for the removal of defects in the operation and production of the vehicles. With that, some victims have appeared because of the deficient behaviour of the managers of the General Motors. Besides, this experience of the company proves that the CEP and other business leaders of any company should have reasonable approach to the management of the safety issues. Given the peculiarity of the automobile industry, the maintenance of safety regulations and requirements should be the top priority for the company. Although, the case with the General Motors shows that the reality differs. The leadership of the company lacked understanding on the importance of the proper safety management. Therefore, it is possible to state that almost all problems that General Motors has today, are caused with the long-lasting management crisis resulting in death accidents. In this respect, the company should improve its attitude and response to the appearance of any defects in the operation of the vehicles in order to support its commitment to the company values and goals. Hence, the managers should be personally accountable for the failures of the company in the relevant industry where the business unit operates ("The Crisis Management Lesson from Toyota and GM: “It’s Our Problem the Moment We Hear About It”", 2017).
4. Initiatives of General Motors in order to Improve Performance
During few recent years, the management of the General Motors contemplate and introduces several practices aimed to improve its business performance. With that, one of the dimension for the realization of this business purpose is referred to the attempt of the company to create strong strategic partnership in supply base with further establishment of trustful and transparent cooperation with the companies in the automobile industry (Colias, 2014). In addition to this fact, the company appears among range of business units that support sustainable development. The initiatives on the sustainable development should make changers in the organizational system of the company and improve its performance in the market. The initiative on the sustainable development means that the company aims to improve transparency in cooperation with state executives, consumers while certain actions should be brought to the promotion of the Millennium Development objectives referred to the addressing climate change problems. Moreover, the General Motors accepts its importance to promote human rights protection and development as it this activity affects positively the brand value and position of the company in the market. The experience of other business units related to the violation of human rights and labour legislation provided the leadership of the General Motors with valued lesson that the brand value of the company should be preserved under any circumstances. The power of the brand in the market will affect the business performance of the company. In this regard, the main initiative of this automobile giant is to follow strategy of the sustainability with the diversification of its vehicles, improvement productivity and removal of the management crisis ("The Sustainability Business Case for General Motors", 2014). In addition to this fact, it should be noted that General Motors has improved control over the actions of suppliers with the purpose to supervise quality of the services provided.
5. Analysis of Article and NUMMI
This particular piece of information is referred to the hard times passed by General Motors and the whole automobile industry. In fact, at the end of twentieth century the automobile industry was full of challenged where the companies had to find new strengths in order to hold competitive advantage in the market holding attention and heat the interest of the customers. For the purposes of the resolution of partial amount of these problems, General Motors opted out to launch joint initiative with Toyota in form of the New United Motor Manufacturing Inc. It was believed that this initiative would reduce the high production costs with division of the expensed on the equipment and purchase of raw materials necessary for the production of the vehicles. With that, it should be noted that his venture can be regarded as successful one. This conclusion grounds on the fact that the managers have achieved increased in productivity of staff members while the quality of the production of the vehicles of both companies have increased. Meanwhile, the workers evidenced their satisfaction with the existed working environment and conditions. The creation of NUMMI symbolized that flaws in any management can be removed in favour of the improvement of productivity and quality. In this respect, the focus should be paid not to the crisis management. Moreover, with the creation of NUMMI staff members have received an opportunity to take care of the creation of reliable designs of the products at their own discretion. Hence, the motivation of the workers have been defined as the priority for the company while the allocation of the proper aims and objective improved the overall performance of the business units in the automobile industry. This experience showed that the staff should be changed with the conduction of new hiring process. Moreover, the production process should involve relevant innovations and technologies in order to keep pace with the growing demand of the consumers for fresh products. Finally, the NUMMI brought several interesting discoveries for the management of General Motors and Toyota by flourishing their activities ("Time-and-Motion Regained", 2000).
References
Colias, M. (2014). GM takes next step to strengthen relationship with suppliers. Automotive News. Retrieved 25 January 2017, from http://www.autonews.com/article/20140226/OEM10/140229907/gm-takes-next-step-to-strengthen-relationship-with-suppliers
Kallstrom, H. (2015). Raw materials – the biggest cost driver in the auto industry - Market Realist. Marketrealist.com. Retrieved 25 January 2017, from http://marketrealist.com/2015/02/raw-materials-biggest-cost-driver-auto-industry/
GM Outlines Strategic Plan. (2017). media.gm.com. Retrieved 25 January 2017, from http://media.gm.com/media/us/en/gm/news.detail.html/content/Pages/news/us/en/2014/Oct/1001-gm-plan.html
Insight: GM's Volt: The ugly math of low sales, high costs. (2015). Reuters. Retrieved 25 January 2017, from http://www.reuters.com/article/us-generalmotors-autos-volt-idUSBRE88904J20120910
Time-and-Motion Regained. (2000). Harvard Business Review. Retrieved 25 January 2017, from https://hbr.org/1993/01/time-and-motion-regained
The Sustainability Business Case for General Motors. (2014). Deepblue.lib.umich.edu. Retrieved 25 January 2017, from https://deepblue.lib.umich.edu/bitstream/handle/2027.42/106571/GM%20Masters%20Project%20Report%20Final%202014.pdf?sequence=1
The Crisis Management Lesson from Toyota and GM: “It’s Our Problem the Moment We Hear About It”. (2017). Harvard Business Review. Retrieved 25 January 2017, from https://hbr.org/2014/03/the-crisis-management-lesson-from-toyota-and-gm-its-our-problem-the-moment-we-hear-about-it
Why Ford is more profitable than GM. (2016). Automotive News. Retrieved 25 January 2017, from http://www.autonews.com/article/20121106/BLOG06/121109911/why-ford-is-more-profitable-than-gm
