Economic Decision Makers in General Motors Essay Example

General Motors (GM) is amongst the largest American multinational corporations whose headquarters are located in Detroit. The company designs, manufactures, distributes and markets vehicle parts, vehicles, among other financial services. Founded in 1908, General Motors is a giant American motor vehicle dealer where, as of 2018, it was ranked number ten in terms of the largest United States corporates in consideration to its revenue. Over the years, GM has managed to pool the resources and gain a worldwide market share which in most of the cases has been facilitated by the leadership and other management roles that are of major significance in corporate development. However, this paper will discuss the various milestones that General Motors has had to encounter and various changes fostered by CEO Ed Whitacre (2009-2010).

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Even though General Motors has been among the top American multinational corporations, it lost its position, market share, customers, among other competitive advantages to domestic competition and other foreign investors over the past years. For decades, General Motor management was looking and focusing on short-term profits, while it was drastically losing the market share shifting from 53% of the United States share market to 19% of the United States market. Moreover, entangled in the financial difficulties, General Motors failed to keep up with the market competition with other multinational corporations, customer preferences and demands, health care and pension to its union which later pushed the firm into crisis. General Motors was struggling to maintain that the quality and efficient way of practices and functions would help the company stay competitive and productive since it was increasing in debt along with a sales decline that resulted to the bankruptcy of the multinational corporation in 2008 (General Motors, 2019).

However, after two CEOs resigned from the company, everything changed rapidly after the appointment of Ed Whitacre as the CEO in 2009 by the Obama administration. Ed Whitacre who was renowned for transforming a small telephone company into a significant telecommunication corporation (ex-CEO of ATT) took over General Motors as the chairman and CEO. Immediately Whitacre began his journey of transforming General Motors into a modern automobile company that would regain its economic position and compete with other multinational corporation as well as reducing the debt load. Ed Whitacre went out of his way and promised that General Motors would repay its debts to the United States government within a few years and return into profitability within two years. During that period, other corporations like Toyota were outpacing in the worldwide sales and production along with Ford who was making drastic progress, especially in the global market while General Motors remains in the dark and losing the market share daily. Also, the local customers (American customers) had minimal trust in the company since they had their doubts about General Motors in terms of quality. On the other hand, other Americans felt that the tax payer's money was being utilized by the American government in the strive to ensure that the company did not collapse due the debt increase and other financial difficulties.

Ed Whitacre's Actions

After the appointment of Ed Whitacre as the CEO of General Motors, various actions undertook to ensure a successful and rapid turnaround for the company in strive to restore the corporation from bankruptcy, repay the growing loans, and ensure a growth towards the future. For example, Ed Whitacre made tough and strategic decisions.

In every multinational corporation, it is essential to ensure that all the internal decisions are strategic in line with providing shareholder satisfaction and realizing company goals. In this case, Ed Whitacre shed the unprofitable brands in General Motors (such as Hummer, Saturn, Pontiac, and Saab) which were consuming more funds than the profit they delivered. Through the cycle to maintain that the brands did not pull his plan behind, Whitacre eliminated various layers of management not providing various assigned tasks as well as other employees that are failing to meet the requirements of the company. Also, in making the strategic decisions, Whitacre ensured that he abandoned the corporation's fossil-like committee structure which did not fit the present structures of the automobile industry. In an attempt to ensure that the company did not acquire more loans and paid off the existing loans, he reduced the excess global inventory that was requiring more funds, mainly by closing 1350 underperforming dealerships. In as much as that was not an internal decision, it was amongst the strategic actions that we necessary and inevitable to ensure that General Motors shed its losses and shift away from the finance or money-driven "analysis paralysis) that had dominated General Motors and its management for approximately four decades (Senter & McManus, 2013).

Correspondingly, Ed Whitacre became the face of the company which was another way through which he turned General Motors around. Through public speeches, interviews, among various company advertisements, Whitacre aligned himself with the American customer. The Americans felt they needed a real leader at GM, and Ed Whitacre proved to be that person who helped in creating proper public relations. Additionally, Ed Whitacre regained the sense of trust in General Motors. Though the public presentation and making of the tough decisions for the sake of GM, Whitacre's personality in recreating the brand played a significant role in the conversion of the corporation, it is evident that Whitacre made promises to the Americans concerning his ambitions which he began fulfilling in no time about the quality of GM automobiles. For example, he introduced the "money back guarantee" which played an imperative role in creating and regaining trust as the customers felt confident in him and as a trustworthy leader trying to restore respect for a falling company (McDermott & Luethge, 2017).

Present General Motors Performance

Moreover, as Toyota was encountering quality issues in 2010, Whitacre moved the gear to capture the available market space which not only made sure that General Motors paid its loans to the United States government but has continued to improve consumer goods and services over time. The company's sales continue increasing as the company continues with its service and products delivery. With every passing year, General Motors is delivering new products and services to the customers who have been a proper step in the right direction and the target to gather profits (General Motors, 2019).

Conclusion

In conclusion, I think the turnaround is one of the historical turnarounds in the multinational corporations, particularly in the automobiles industry. In consideration to the prior performance of General Motors, the company was facing a drastic drop at the verge of collapsing; however, after the appointment of Whitacre as the CEO, there was a significant turnaround. Even though Whitacre decided only to serve the company for a year, the turnaround is still evident and functional today. Also, in the turnaround, GM made a profit of approximately $4.7 billion in 2010 which depicts the impact of Whitacre as the CEO of General Motors (General Motors, 2019).

References

General Motors. (2019). General Motors. Retrieved from https://www.gm.com/

McDermott, M. C., & Luethge, D. J. (2017). Anatomy of a reversed foreign divestment decision: General Motors and its European subsidiary, Opel. GSTF Journal on Business Review (GBR), 3(1).

Senter, R., & McManus, W. (2013). GENERAL MOTORS' ROAD TO RECOVERY. Michigan Sociological Review, 27, 1-24. Retrieved from http://www.jstor.org/stable/43150986