Introduction
General motors’ has been a leading car manufacturer globally for decades. The company was established as a mass-market car producer. Over time, the company market share dwindled with the introduction of cheaper Japanese and Korean cars. Thus, it was forced to retract its competition in the SUV cars. Other companies were able to harness the benefits of economy of scales owing to their structures. General motors’ structure was segregated and composed of twelve companies each responsible for its own production and distribution with minimum collaborations. The company crisis peaked in the year 2008 when it reported a loss of $30.9 billion, totaling to a cumulative loss of $82 billion. The company was thus forced to seek government intervention in order to stay in operations. As one of the condition for funding, the company was asking to seek Chapter 11 bankruptcy protection. In addition to that, restructuring of the management and as well operations was necessary in order to turn around the company.
Problem Statement
The company was forced to come up with new strategic management policies that were meant to revamp the company image, the brand power, cut production and operational costs, regain market share and ultimately drive sales high. A management overhaul was needed in order for Ford Motors to realize its new objectives. The company also focused on restructuring the number of brands and revamping the production costs in order for it to streamline production and reap the benefits of economies of scale.
Justification of problem statement
Ford need for a new strategic management was informed by the fact that the old strategy was not working for the company. Since the 1960s, the management had continued to use the old strategy despite the fact that new companies with ability to cut on the production costs had taken over large market shares from Ford. Japanese cars including Honda and Toyota and as well Korean mass brand Hyundai had managed to introduce their cheaper models into the market successfully. In addition, following the old model, the company had suffered huge losses and had no chance of turning around. The company share value had dropped from $70 in early 2000 to less than $4 in the year 2008.
In terms of operations, Ford Motors had created its market dominance through the creation of customized cars for specific market segments. The company had done so through a management structure that comprised various divisions. Each division had a specific brand that created unique cars for the targeted market. As competition increased, the company opted to share the designs and as well parts in order to lower the production costs. This removed the element of uniqueness that was the company’s largest sales preposition and thus further driving the market share down. The company strived to maintain the many brands that it operated under making their marketing and production an expensive endeavor. Some of the brands such as Saab, Hummer and Saturn had accumulated huge losses since their inception and thus an operational change was necessary in order to turn around the company. Analysts opined that the cutting down on the number of brands should have started in the 1980s as this would have enabled the company to stay ahead of the emerging competitions (McGee et al., 1990).
Another problem that the company was facing was an old management culture that had been outdated. The management culture was slow in the decision-making and thus making responses to the moves by the competitors slow. In the old system, a single decision would require a review of up to 70 executives. The processes was long and took a lot of time before the issue could get to the global committee and finally to the all-powerful automotive product board. Thus, a new strategy was paramount if the company was to turn around and recapture its leadership position. The new management also needed to create an open society where technical staffs can propose changes in the design and improve it to fit the target markets.
Propose solutions to the problem statement
In terms of operations, the Ford Motors needed to cut down on the number of brands in order to increase efficiency and lower the costs of production. The company management opted to reduce the number of participants in new design proposals and foster better working relationships between the designers and the engineers.
In regards to the management culture, the solution was a total overhaul of the management that will brings in new members who will come with fresh ideas. Old members were stuck in the traditional operational practices and thus changing that was a difficult endeavor. The company strategy was to start with the top management who included the chief executive and the board of directors. In response to the problems that were brought about by the bureaucracies that were in place, the new board needed to come up with a new structure that did not have such bureaucracies (Hill & Hill, 2012).
Justify solutions to the problem statement
The proposed solutions were meant to change the overall management, operations and increase the investor values. As reported in the 2011 financial statement, the company had managed to move from bankruptcy to glory commanding a 21.8% share of the market. Thus we can conclude that the proposed solutions were ideal and indeed they led to better results.
Leadership
The company lacked proper leadership structure who could forecast the company directions and propose changes to keep it in line with the objectives.
Identify the ethical risks associated with your proposed solutions as they included making decisions that had the potential to affect others. The Board and the top management were tasked with the roles of restructuring that would put the career of many individuals at jeopardy but at the benefit of the company. They had to evaluate and decide on what was more important.
References
Cadwell, C. M. (2004). Leadership skills for managers. New York: American Management Association.
Hill, A., & Hill, T. (2012). Operations management. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.
McGee, J., Segal-Horn, S., & Cranfield School of Management. (January 01, 1990). Strategic space and industry dynamics. Print
