General Motors Organizational Structure Essay

General Motors
    General Motors Corporation (GM) is an internationally recognized, global enterprise based in the United States. The company was founded in 1908, and has some of the most recognizable names in the world including; Chevrolet, Hummer, Buick, Cadillac, and Pontiac. Measured by global sales GM was the world’s largest automotive manufacturer for 77 years, until the 2009 financial collapse, and subsequent bankruptcy and government bailout caused major restructuring throughout the company. GM then lost the global sales title in 2010 to Japanese auto manufacturer Toyota, although both GM and Toyota are likely to be ousted this year by German manufacturer Volkswagen (Bloomberg, 2011). GM has had to reevaluate the company’s organizational structure for financial solvency, and to gain a foothold against strong competition expanding into the US and developing markets abroad.

The Company’s Traditional Structure
    The old GM historically had a Vertical organizational structure. The rigid hierarchy may have contributed to some of the problems they faced as globalization increased competition. GM had many different companies centralized and all tied to the GM name. This created many redundancies in management, and this reflected in the products. Both Chevrolet and GM each made a van, the Astro and the Sierra. For all intents and purposes these vans are identical, but they were manufactured by two different companies under the General Motors umbrella. The higher levels of management decided what was required for all subordinate levels, and that was a one way street. The CEO’s, CFO’s, and top executives made all decisions for middle management down to the individual dealerships. Executives even decided what customers desired, with no feedback from customers, dealerships, or operational level managers. When the economy began to slow GM did not reduce production in response. As the customer base shifted to smaller, more economical cars GM still pushed for...

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General Motors Company uses its organizational structure to support managerial decisions. The company also streamlines the business through activities flowing through its corporate structure. A firm’s organizational or corporate structure is the design or system that involves the composition and arrangement of business components, such as departments or offices. In General Motors’ case, the organizational structure focuses on regional markets. For example, the company has a managerial team for operations in North America. As a result, the corporate structure serves as a means for implementing strategies specific to regional market conditions. As a major player in the global automotive industry, General Motors must align the characteristics or attributes of the organizational structure with business needs relative to market conditions. This situation is so because the company’s business capabilities are partly dependent on the structural features of the organization. With a suitable and evolving corporate structure, General Motors can optimize its capabilities and performance in the international market.

The characteristics of the corporate structure determine some aspects of General Motors’ capabilities. In this regard, corporate managers must ensure that the structural characteristics of the business are aligned with strategic goals. General Motors must include flexibility as a defining factor to maintain competence and resilience despite tough competition from other firms like Toyota (Read: Toyota’s Organizational Structure and Its Characteristics). With rapid technological advances sweeping the automotive industry, as shown in the case of firms like Tesla (Read: Tesla’s Organizational Structure and Its Features), General Motors must maximize the benefits of its corporate structure as a way of strengthening the business.

General Motors Company’s Organizational Structure Type and Characteristics

General Motors Company has a regional divisional organizational structure. This type of organizational structure involves grouping business activities according to geographical segments or areas of operations. For example, General Motors’ operations in Europe are grouped as one segment. This corporate structure type is usually employed when there are significant differences among regional markets. Considering these factors, the following characteristics are notable in General Motors’ organizational structure:

  1. Regional Segments (primary structural characteristic)
  2. Business-Type Divisions
  3. Corporate Functional Groups

Regional Segments (Primary Structural Characteristic). Regional market conditions vary across the global market for automobiles. General Motors addresses such variation through managerial focus based on geographical divisions in its corporate structure. These geographical divisions are reported as regional segments in the company’s annual filings with the U.S. Securities and Exchange Commission. An executive, such as a president or executive vice president, heads each division in General Motors’ corporate structure. This structural characteristic enables the company to implement strategies that best suit regional conditions. General Motors’ organizational structure has the following regional segments:

  1. GM North America (GMNA)
  2. GM Europe (GME)
  3. GM International Operations (GMIO)
  4. GM South America (GMSA)

Business-Type Divisions. Business-type divisions are a secondary structural feature based on the businesses of General Motors. For example, GM’s automotive business operations are grouped as one division. This characteristic of the organizational structure allows the company to effectively manage each business, considering that different businesses have different needs. Thus, top-tier managers are able to strategically align the business with General Motors’ mission statement and vision statement. In spite of a low degree of business diversification, the following business-type divisions are used in General Motors’ corporate structure:

  1. Automotive
  2. GM Financial (Auto financial services)

Corporate Functional Groups. General Motors Company’s corporate structure has corporate functional groups as a secondary feature. The company uses these groups as a means to integrate all business operations. For example, all automobile and parts manufacturing operations of General Motors are integrated through a corresponding corporate group called Global Manufacturing. Through this structural characteristic, the company ensures consistency and continuity in overall organizational development. General Motors’ organizational structure has the following corporate functional groups:

  1. Office of the CEO
  2. North America
  3. GM Financial
  4. Global Manufacturing
  5. Global Communications
  6. Cadillac
  7. South America
  8. Legal and Public Policy
  9. GM International
  10. Tax and Audit Services
  11. Information Technology
  12. Europe
  13. Global Human Resources
  14. Global Product Development, Purchasing and Supply Chain
  15. Finance and Treasury
  16. Accounting Services
  17. GM China

General Motors Company’s Organizational Structure: Advantages & Disadvantages, Recommendations

An advantage of General Motors’ regional divisional organizational structure is the flexibility of the business in responding to regional market variations. For example, each regional segment can implement a set of strategies suited to the conditions of the regional market under consideration. Another advantage of the corporate structure is its support for General Motors’ ability to separately focus on its financial services business and its automotive business. These advantages optimize the company’s effectiveness in growing the sales of its automobiles in the global market.

Despite such advantages, General Motors’ organizational structure has the disadvantage of limited support for branding consistency at the international level. This disadvantage is based on the focus of the corporate structure on regional markets, leading to reduced consistency in branding and marketing throughout the global automotive market. A recommendation to address this issue is to develop a suitable marketing campaign that establishes consistency in General Motors’ branding. This recommendation can improve the company’s brand strength. For example, through a unified and consistent marketing campaign, General Motors can build stronger brands that attract target customers worldwide.

References
  • Ashkenas, R., Ulrich, D., Jick, T., & Kerr, S. (2015). The boundaryless organization: Breaking the chains of organizational structure. John Wiley & Sons.
  • Gaba, V., & Joseph, J. (2013). Corporate structure and performance feedback: Aspirations and adaptation in M-form firms. Organization Science24(4), 1102-1119.
  • General Motors Company – Leadership – Corporate Officers.
  • General Motors Company, Form 10-K.
  • General Motors Company – Corporate Strategy.
  • Polat, R., & Nisar, T. M. (2013). Financial crisis and changes in firm governance, corporate structure, and boundaries. Managerial and Decision Economics34(6), 363-378.
  • U.S. Department of Commerce – International Trade Administration – The Automotive Industry in the United States.
  • Withey, M. J., & Gellatly, I. R. (2015, January). Organizational Structure, Situation Strength and Employee Commitment: Test of a Process Model. In Academy of Management Proceedings (Vol. 2015, No. 1, p. 14587). Academy of Management.

Automobile Industry, Automotive Industry, Case Study & Case Analysis, General Motors Company (GM), Organizational Structure

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