Strategic Management Assignment: Discussion on Challenges Affecting General Motors

Question

Task: Strategic Management Assignment Details: Individual Portfolio (3000 words)
1) Identify a multi-national organisation. Critically analyse the strategy of the organisation utilizing the range of strategy content. Please also identify the competitive advantage of your selected organisation.
2) Identify a significant event, challenge, transformation or merger/acquisition that affected the organisation. Please make sure you take into consideration the current pandemic and other contemporary drivers of change.
3) Analyse how the challenge was managed by the organisation, with a focus on leadership, culture and the human relations aspects of the context.
4) Discuss how the organisation’s strategy impacted the management of the chellenge. Furthermore, critically disuss the impacy of the chellenge on the organisation’s strategy.

Answer

Executive Summary
General Motors, selected in this strategic management assignment is the world’s largest automaker that holds a significant stake in the manufacturing of vehicles. The company has almost 50% share in the automotive market. It has been found that the COVID-19 pandemic has affected the business operation to a great extent. Moreover, there has been shut down of some of its production plants due to internal business management issues and thus it has led to the creation of strikes by the employees. In such a position, the employees along with the joint operation of the United Auto Workers Union have raised petitions to increase their wages and thus sat on a week-long strike. It was difficult for the management to handle the employees and agree to the petition raised by them as the company was in higher debt. However, it has been found that with the combined effort of the union, the employees, and the management, it was easier for the higher authority officials to arrive at a valid conclusion. There were also changes made in the culture and the human resource management in General Motors so that it becomes easier to lower the gap between the employees and the employers thereby carrying out the communication accordingly. This challenge of tackling the employee's petition has affected the strategy of General Motors to a large extent. It was the responsibility of the higher management authority to change the habits of the employees by understanding their intentions and demands to a great extent.

Introduction
General Motors is a US-based multinational organization that is headquartered in Detroit, Michigan. The company is specialized in the distribution, manufacture as well as distribution of spare parts of vehicles. The aim of the company includes the delivery of world-class experiences at every other touchpoint so that it is built based on trust and transparency. General Motors has 155,000 employees who are employed across different locations developing a passion for technology, engineering as well as design in the delivery of vehicles (General Motors, 2021). The research and development section of General Motors has been considered to be competent in tackling the new changes in the organization thereby resulting in an improved level of efficiency and power. This study will highlight the critical analysis of the strategy adopted by General Motors along with its competitive advantage, the varied challenges affecting the company, the management of the challenges with emphasis on leadership, culture, and human resources. Further, it will also discuss the effect on General Motors' strategy following the challenge as well as the impact of the challenge on the strategy.

Presentation and justification on the choice of General Motors
General Motors has been chosen to carry out this assignment because it has been found that the company witnessed human resource challenges in recent years. Moreover, General Motors has also been affected by the COVID-19 pandemic where the company has incurred heavy losses(Bohnsack et al. 2020). There has been the closure of the varied production plants of General Motors due to this pandemic and thus this has affected the profitability level to a great extent. Further, it has been found that the employees of the company have also made several protests after the layoff of the two plants due to the pandemic (Thomas, 2019). This can be considered to lay a higher impact on the employees as more than 50% of the employees in the repair and maintenance section in the US are likely to lose their jobs.

Critical analysis of the strategy of General Motors along with its competitive advantage
General Motors like other US automakers have been struggling its best to maintain the status quo. As the market share of General Motors continued to shrink due to the large number of consumers flocking to other Korean and Japanese brands. The management committee of General Motors has also faced difficulty in managing the strategic role of HR. The innovation and the R&D concepts of General Motors can be considered to be crucial in the investigation of new technologies that have been deployed in the automobile industry for since long. The company has adopted varied steps on finding out adequate ways to engineer the vehicles. This has been done under the pioneering dedication of the researchers who have tried their best to focus on the ignition as well as the HCCI engines. It has also tried to develop the welding system with the help of the latest technology as well as by carrying out the improved level of investment for the control of pollution.

Moreover, it has also been found that the executives of General Motors have tried their best to implement new changes in the company to improve the efficiency of automobile vehicles in the short run. This has been possible only when the company has set aside a portion of the budget for tackling the internal aspects such as the engine technology and the other cut-off systems.

The competitive advantage of General Motors includes the management of a large network of authorized dealers who are involved in the distribution of the products and the services to the customers round the clock (Kuiket al.2019). Moreover, it has been found that General Motors have also invested $6.2 billion in the research and the development section in 2020 thereby increasing the net sales of the company. With the improved level of efforts of the higher authority, it has been found that the company has also launched varied versions of the electric vehicles based on the choices and the demands of the customers.In this case, John Kay’s theory of distinctive capabilities can be cited as General Motors has tried its best to forecast what was unique to its business.Further, it has been found that General Motors has also developed the new app known as the myChevrolet app that assists the drivers in assessing the highest number of electric vehicles across the US(Dunn, 2020). The launch of this app has made it easier for the company to sell the vehicles and thus sustain competition. The company has also tried its best to collaborate with the varied network operators by providing the chance to access real-time data along with the desired networks. It is also involved in the development of the internal state of the art driving technology through the improved level of testing processes. This has assisted in the mass production and the manufacturing of vehicles in a pocket-friendly way.

Challenge affecting General Motors
After the announcement of General Motors to shut down its five idle factories in North America leading to a job cut of 14,000 employees, there have been strikes among the workers. The employees demanded higher pay, a larger proportion of the share, healthcare protection, and the greatest level of job security (Boudette, 2019). However, it has been found that the higher authority of General Motors declined to discuss or sort out the problems with the employees. On the other hand, one of the important aspects of this protest also includes the payout of the higher level of pension with the help of enhanced formula that could be managed accordingly (Rau, 2017). It has been found that this strike of General Motors incurred a cost of $1 billion thereby lowering the production of the company (Vinoski, 2019). This strike can also be considered to be expensive for the company as it has lowered the operating profit of the company by $3.5 billion. There has also been laying off of 177,000 members of the union of the company affecting the present workforce (Vinoski, 2019). This strike of employees has also affected the national economy by $250 per week and as this strike has lasted for some time of more than one weak, it has affected the entire automotive industry to a great extent (Vinoski, 2019). The local economy has also witnessed the challenge of this employees strike and thereby affecting the suppliers to a great extent.

COVID-19 pandemic has affected the operation of General Motors as it has suspended the production of the vehicles. The health and safety of the employees have been taken into consideration putting extraordinary precautions across the world to keep the environment safe (Olatunji, 2019). Due to this pandemic, there has been a shutdown of the 19th manufacturing plant of General Motors since the end of March. Further, the previous production of this plant needs to be re-evaluated and changes are to be carried out accordingly. On the other hand, it has been found that this pandemic has also led to the fall in the slowdown of sales because of the lower value of stocks (Arena et al. 2017). As per the annual; report of General Motors, it has been found that the stock of the company has hovered around the $35 mark per share, but it has fallen to $14 per share in mid-March, 2020 (Boudette, 2019). Moreover, it has been found that General Motors is also trying its best to find out the correct solution to assist the nation during the period of pandemic and thus support in the manufacturing of medical equipment such as ventilators. This will make it easier for the company to step up the correct solution through improved ways.

Management of the challenge by the organization with a focus on Leadership
As the employees of General Motors went on a strike due to their wage cut as well as the shutdown of some of the production plants, the higher management committee of the company played an important role. The employees were guaranteed a pay rise of 3%-4% in the alternative years (Wang and Dass, 2017). Although, this pay rise percentage has not been considered to be great by the employees as they negotiated a contract in 2015 rather than going for a strike. However, the vital difference that can be considered in this case includes the lifting of a $12,000 cap on the sharing of profit so that the employees do not receive any share of the company’s profit (Koenig, 2021). On the other hand, the higher management authority has also decided to make the requisite level of factory investments and thus the company has decided to invest $1 billion in the Michigan and the Tennessee factory (Herman et al. 2019). Further, the leaders of General Motors have also decided to make the temporary workers permanent only when they have completed three years with the company. There has been an increase in the wages of the employees from $30 to $32 and the new joiners were made mandatory to work for four hours rather than eight hours for receiving the full payment (Smith Allen, 2019). Moreover, under the leadership of the top officials, it has been found that the cost of healthcare remained the same even though the insurance company has announced to raise the premium by a large amount due to this pandemic. With the help of this form of negotiation, it has been found that the employees will be benefitted to some extent rather than a higher level of pay-cut by the company due to this strike.

Management of the challenge by the organization with a focus on Culture
Before the pandemic, the workers and the employees of General Motors have decided to call off a strike that has affected their salary to a large extent. Moreover, after a short gap, the COVID-19 pandemic has also affected the workplace culture of General Motors to a great extent. The management committee of General Motors has stated that they are prepared to tackle the workplace culture despite the chaotic environment (Albort-Morant et al. 2018). As the workers were losing their money, the United Auto Workers Union has been providing $250 to each of the workers per week who were demonstrating in their strike to support their families (KlaymanandShepardson, 2019). As it was a tough time for the employees of General Motors to live their livelihood based on their savings, but they were ready to fight for the truth.

In the due course of time, the management committee of General Motors has also understood the demands of the employees thereby making concessions during the crisis period. Although there were huge piles of debt and the slowdown of the sales of the car due to the pandemic, the management committee has tried their best to support the employees considering all aspects. Further, it has been found that the companies that are working with General Motors have also made sacrifices to tackle the strike and thus improve the revenue. This will also motivate the employees as it will improve the profit-sharing agreement and thus make the desired level of changes in the organization. Further, it has been found that the higher management authority of General Motors has also tried to change the consumer habits and behavior thereby improving the workplace culture and the environment accordingly (Shih, 2018). The higher officials of General Motors have also tried their best to improve the healthcare benefits of the employees through the restructuring of the companies’ hierarchies. As it has been found that the employees were not happy with their hikes and payouts, there have been several changes made in the management committee and thus this has assisted in the alteration of the policies in the company. There were also appropriate levels of steps taken in raising the compensation or the wages of the employees thereby enhancing the workplace culture to a large extent.

Management of the challenge by the organization with a focus on human relation issue
The United Auto Workers Union has played a crucial role in tackling the human relations issues arising in General Motors. This union has stressed the development of policies linked to compensation, hiring as well as benefits that are based on research and development depending on the determination or the business needs of the company. Further, it has been found that the line managers, as well as the human resources, also carried out conversations with the workers and the employees to understand their performances and grievances. The United Auto Workers Union also kept an eye on the interference of the employers in the rights of the employees by forcing or pressuring them (Muller, 2013). On the other hand, it can be said that as the employees of General Motors have tried to set on negotiate with the employers many times, it is the responsibility of the United Auto Workers Union to check the bargaining process and thus play a vital role in taking operational decisions. The managers and the higher officials must be trained to handle the strikes or the negotiation demand of the employees. In the case of General Motors, it has been found that the company did not bargain with the union but took the assistance of the union to raise their issue to the management committee. This has made it easier to keep a track of the wages and the benefits of the employees to a great extent.

As the employees have decided on going on a strike due to the closure of the production plant and no such rise in their wages, the United Auto Workers Union had to take an active role to work in coordination with the management directly to tackle the conflict. However, care should be taken that the actions taken are to be consistent along with the consistent bargaining agreement of the employees. There have also been important steps taken to manage the collective bargaining agreement that is necessary to pay the dues of the union from their paycheck.

Critical discussion on how General Motor’s strategy affected the management about the challenge
As General Motors have decided to increase the wages, make the temporary workers permanent, and provide some variable incentives based on the performance of the employees, it has been found that the management committee of General Motors has been affected to a great extent (Bashir and Verma, 2017). It was difficult for the management committee to understand the needs and desires of the employees and thus make the requisite changes in their wages as well as pay attention to their demands (Small Business, 2020). On the other hand, as it has been found that the sudden changes in the management committee of General Motors posed a larger burden on the company and the company needs to take careful steps and thus solve the problem accordingly. Further, due to the closure of the plants, there was a requirement for a lesser number of employees in the organization (Reuters Staff, 2019). However, the management committee has tried its best not to lose any of the employees and thus relocate them to other nearby production plants. Although this process can be considered to be difficult for the higher management as it was important for the company to maintain its profitability and thus pay the wages to its employees, it was successful in doing so with the supervision of the management (Small Business, 2020). The production process across all other plants has been re-evaluated by the management every week to keep a track of the employees’ performance, the production process, and all other related aspects to prevent any further strikes or issues. Further, as the stock of the company has also fallen to a great extent, it has affected the competitive nature of General Motors thereby creating pressure on the employees.

General Motors have also stated the disastrous effect of the strained relation between the management and the employees associated with business continuity. As there existed multiple layers of management in the organization, it is the responsibility of the higher authority to check that there does not exist any such evil communication from the bottom to the top of the organization (Small Business, 2020). This flow of information can be considered to be effective for the initial level of operation. Another important aspect that has affected the strategy of the organization includes no such improvement in the methodologies such as the Six Sigma and the Lean that is involved in breaking down the communication barriers and thus solve the problem accordingly. It is necessary to check that there has been using of the standardized tools and practices in the organization so that a level playing field is developed within the organization eliminating the breakdown in communication and trust (Small Business, 2020). On the other hand, it has been found that the higher managerial employees of General Motors did not feel the necessity to listen to the employees or to pay attention to their interests. This was one of the most vital areas of the gap that has led to the creation of such a problem in the organization without repercussions or retributions from above. It was essential for the management to focus on modern business technology and thus develop trust among the employees accordingly.

Conclusion
Thus, it can be said that the main vital challenge that has been witnessed by General Motors includes the efficient and effective reallocation of resources. This can be considered to be essential for the company to develop the assets and the capabilities that are essential in the delivery of the products and the services to such a market so that it becomes easier for the consumers to value them accordingly. On the other hand, it has been found that as the employees have decided to carry on the strike due to the shutdown of the production plants and the increase in the wages, it is the responsibility of the United Auto Workers Union to handle the issue from the initial instance so that it becomes easier to protect the workers and the employees. This act of the union can be considered to be a smart act that can assist in tackling the sustenance of the cash flow in an improved way. Moreover, there should also be careful steps taken in restricting the operations process and this is possible only through the outsourcing activity that will make it easier to handle the challenges faced by the employees and lower the gap accordingly. Therefore, it can be said that the development of a capable workforce along with up-to-date skills will make it easier for the workers to contribute to the growth of the organization.

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