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Information Technology & Business
College
DEPARTMENT OF BUSINESS ADMINISTRATION
POST GRADUATE PROGRAM (MBA)
Case Study –Organizational Change: Case study of General Motors
Submitted to: Kahsu Mebrahtu (Assistant professor)
Submitted by: Berhane Gebreselassie#MBA/00264/16
Abraham Reda
Girmay G/Yohannes
Mahari Berhane
04/08/2017
Abstract—
The main purpose of this article was to elaborate and bring to light the core concept of the
organization change, how it works, diverse factors which moves organization to change, steps for
change, resistance for change, change forces, change management approaches and last an
example of General Motor (GM) has given that how change was taken place in the organization
and what was the strategies for change management.
INTRODUCTION
The business world today is going very fast and new technology new methods of production and new
taste of customers and new market trends as well as new strategies for best control of the organizations
and motivation of employees are emerging and taking place from old to new methods, because the
customers are the emperor of market and most of the company now spending billions of amount on
research and development in the organization, by keeping in view all these things the managers and
experts of the today businesses now compel to decide about the change management in the organizations,
because business activities now are globalize, and every organization strive to sustained the loyal
customers, trained the employees, introduce and adopt new methods of production and best control the
activities of the organization, so from here the concept of change management or organization change
starts. When the company feel that the activities which they are doing, the management, the way of
administration, the use of technology, the human resource policies, the culture of the organization, the
liking and disliking the contents and context of the organization by the employees, organization structure,
group concept ,the product quality are continuously destroying the image and reputation of the
organization the question arises that how will change the organization in present scenario, so when the
expert specialist decides about all the situation and preparing for changing the organization it leads to the
concept of organizational change or change management. In the word of coetsee he said that it is the
ability of the management that how they can get maximum benefits and support form change which
reduces resistant from the side of employees and encourage appreciate acceptance and support. The
process of changing the activities of the organization as well as the implementation of the procedures and
technologies to achieve the desire objective of the organization, in simple words to change the
environment of the business organization and to achieve a high profit from that change, usually change
management includes different aspects such as control change, adaptation change and effecting change.
The final goal of the change management is the long term sustainability of the organization.
organizational change simply means to change the activities of the organization concern it may include to
change the culture of the organization, technology, business process, change of employees, rules and
procedures, recruitment and selection, design of jobs, method of appraisal, and human resource
techniques, physical environment of the organization, methods of training and development, job skill and
knowledge etc. when the change of the concern organization is fundamental it is called organization
transformations. Change management means when all the needed actions are taken to improve the present
situation for future to implement the change strategies to get the maximum advantages and also see that
the objectives of the organization is achieving or not.
A. Factors Behind The Organization Change
As we have mentioned before that organization change occurs due to some factors that may be
external or internal, such factors may also bring change in the activities of the organization and
may also create problems to harder the change process, as every know that change creates
resistance, and this resistance may create huge problems, resistance to change is also from the old
employees or middle level managers or people as they always appose to the change strategies due
to their own way of thinking and perception regarding the change concept, this may be due to
lake of knowledge about the situation or due to the self-interest of the old employees but
whatever may be the reasons but it is fact that change always bring resistance, now it is up to
mangers that how they reduce the intensity of the resistance and implement the whole change
strategic business model in the organization.
B. Change Forces
The following are the main forces which bring change in the organization. These are as under but
it may depend on the organization environment and the context of the organization. Change in
new government policies and legislation, Change and development in new materials, Social and
culture value change, Change in national and global economic condition and trade policies and
regulation, Technology development, Change in customer taste and requirements, Development
and innovation in manufacturing process, New products and services design innovation, New
ideas about the products that how to deliver customers value and satisfaction, Office and factory
relocation closer to customers, suppliers, and market, nature of the workforce, technology ,
economic shocks, completion, social trends, and world politics
C. Resistance to Change
Change creates resistance to change in every organization; it is the react response from the side of
the old employees. When change strategies have implemented in the organization the employees
quickly respond by voicing complaints, engaging in work slowdown, threatening to go on strike,
etc. but care should be taken by the change management expert to overcome the resistance.
Major force for resistance to change: resistance to change forces categorize into two main
heading 1) individual sources and 2) organizational sources
1). Individual Source
Resistance to Change Includes the Following. Habit, security, selective information
processing, economic factors, fear of the unknown.
2). Organizational Sources
For Resistance to Change Include the Following.
Limited focus on change, organization structural inertia, threat to expertise, threat to established
power relationship, group inertia, threat to established resource allocation.
3). Overcoming to Resistance to Change. Overcoming to resistance to change means to use the
tactics to reduce the intensity of the resistance to change, the change agents have the ability to use
these tactics Are as under.
a) Implementing change fairly.
b) Selection people who accept change
c) Education and communication
d) Participation
e) Building support and commitment
f) Manipulation and cooptation
D. Organizational Change Managing Approaches
When change management taken place in the organization, now the question is how best one can manage
change. There are four approaches to change management. Lewins classic three step model of change
process, kotters eight step plan, action research, and organizational development. According to the lewins
model the organization must follow three steps for successful change management, which are.
Unfreezing: the status quo, changing to overcome the pressure of both individual resistance and group
conformity. Movement; desire end state, a change process that transforms the organization from the status
quo to a desired end state. And refreezing the new change to make it permanent, stabilizing a change
intervention by balancing driving and restraining forces.
Lewins three steps change model.
Unfreezing Movement Refreezing (Source Stephen, 2005)
1). Kotters Eight Step Plan. To more elaborate the lewins model kotters have develop eight steps which
can be adopted to implement change. These are
1) Establish a sense of urgency that why a change is needed.
2) Form enough power to lead the change
3) Create a new vision to direct the change and strategies for achieving the vision
4) Vision communication in organization
5) Empower others to act on vision by removing barriers
6) Plan for, create short term reward to move the organization toward the new vision
7) Continues improvement and make necessary adjustment in new programs.
8) Reinforce the change by demonstrating the relationship between new behaviors.
2) Action Research
Action research is also a change management approach in which systematically data collected and then
change is taken according that data indication.
3) Organizational Development
Organizational development plays an important role in the change management no change be best
implemented without organizational development, it can be define as a collection of planned change
interventions, built on humanistic democratic values, that seek to improve the organizational effectiveness
and employees work performance and wellbeing.
4) Organizational Development Techniques the change agent considers the following technique to
bring organizational development. Sensitivity training, team building, process consultation, survey
feedback, appreciative inquiry and inter group development. These are the important technique which
should adopt by change specialist to bring effective development in the organization, because
organizational development is vital for organizational change.
5) Change Management at General Motor
General motor established in 1908. that time the company was the sole carmaker dealer in the region, e.g.
Michigan, first it was a holding Buick company, till 1920 it was becoming the world largest motor
manufacturing company, the company got a tremendous success in time of Alfred salon, due to his
leadership the company was producing new style and design car every year, and he had given such
concept to the company. The other brand of the company is Chevrolet, Pontiac, Buick, and Cadillac.
These were the different brand cars which were producing by company that time, and this way there were
no other competitors to compete in the company different cars. But with emerging of the japans
automakers the company felt threatened, specially the emerging of Toyota Japan, who with great extent
disturbed the profitability of the GM, especially in the North American market. In 2001 the sale graph of
the GM was in declined trend, because the Toyota had captured the market, this way the GM received
loan form American government and Canadian government to support the company in that crises period.
During 2009 the company had faced a bankruptcy and had closed several brand and sold out to china
based company. Now the company again got his position in market by restructuring and making change
in the company. Now the company is again operating business in the core brands in America such as
Chevrolet, GMC, Buick, and Cadillac.
II. REASON AND FORCES FOR CHANGE OF GM
In this section we will highlight the reason and forces behind the change in general motor
1) Forces for Change.
The following are the main forces which affected the general motor.
2) External Forces.
In external forces the GM which was greatly affected by the japans based company Toyota was the
emerged competitors in that time, the north America is still the biggest market place for GM where the
company sold out in recent year round about 2.9 million and the nearest competitor is Toyota and china
based companies, these competitors with great extent disturbed the total profitability of the general motor,
and the second external forces which the company faced a huge problem was financial crises which with
great extent collapsed the cash flows of the company.
3) Internal Forces.
The another force for change to GM was the high wages cost to employees as the company was paying
$74 per hour as compared to Toyota $44 per hour, because GM was an agreement with trade union. And
the GM was compelled to run the plant with minimum 80% capacity whether it was needed or not, these
things play an important role in the bankruptcy of the company.
A. Types of Changes
By keeping in view the above discussion the company ultimate decided to bring or make change in the
company, so the company decided to bring changes on some areas of the business, these were included,
structural change, cost change, process change and cultural change
B. Steps in the Change Management Process of General Motor.
While going on change management the GM, the company took some steps to adopt change these are the
most recent change which the company had taken.
1) Cost Cutting.
The first steps which was taken by the GM is about cost cutting, the company has reduced its cost
of some brands to maintain the profit level, such as the Saturn and hammer, by keeping the other
company cost. Similarly the company also cut pay of employees which was the major problem to
company. The company has achieved the target of cost cutting up to 15 billion in recent year.
2) Cultural Change
The general motor also changed the culture of the company, the GM removed it automotive
product board, and automotive strategy up to 8 men board decision making team which were
responsible to report directly to CEO. The main objective of such change is to speed up the day to
day decision making process. The GM also changed the culture to improve the efficiency of the
employees and make accountable and responsible one.
C. Problems to Change Process In change management process the GM faced a variety of
problems
1) Problems in Cultural Change
The cultural plan was based on top down approach, which ignored totally the involvement of the
employees as compared to other companies , some suggested that the company has not down top
approach, in which employees feel satisfaction, so this regard the company empowered the
employees by introducing in tailoring the down top approach. Rather than merely telling to
employees what they do.
2) Problem with Cost Cutting
As the cost cutting has an important place in the change management but it was faced great
problem from the agreement of trade union, as the company was an agreement with not lowering
the pay of the employees and maintain the capacity level.
D. Results of the Change Process As we have discussed that the GM had adopted changed
previously also but these changes are recently those changes which adopted by the company in
the year 2009. The results of the changes are as under.
1) Result of Cost Cutting The result of cost cutting of GM seems from its employment figure of
98 to 2009, it was reduced from 226000 to 101000 workers, and now the company is
concentrating on sale rather than to further cut off, and also the company is deciding to reduce the
worked force of the factory from 6oooo to 4oooo. And it will certainly lead to cost saving to the
company.
2) Result of Cultural Change
The general motor had also achieved good result from cultural change, and the employees now
becoming aware about the responsibility and accountability, as well as the company also
empowered the employees to give better productivity.
D. Effectiveness of the Change Strategies
As we have discussed above that the general motor adopted two main strategies for change
management, recently one was cost cutting strategy for change management and other was
cultural change management strategy, the company adopted two other change strategies but these
are the most recent, by developing such strategies the company has achieved its market shares in
north America again, as the company was threatened by the emerging of competitors in the
automakers industry but the company decided to bring changes and now the company again in
better position and he again maintained the brand of core products, beside of these the company
also achieved the cost benefits by implementing these change strategies in the company
III. RECOMMENDATIONS
we have seen that how the GM has made changes in the company for smooth running the
company and increased in sale volume and maintained market shares around the world but it is
not enough changes which was brought by the general motor, the company needed more attention
and adopt several others changes to cope with the situation and to maintain the position of the
business and compete in the international market. The following are the some suggested
recommendation for the general motor that it can pursue GM might be reached the turnaround
goals and can increase in sale and market shares.
A. Production of the Right and Fuel Efficient Automobiles/Poor Product Lineup
As it was the criticism in the brand of the GM product or cars that these are not fuel
inefficient automobiles. The company was in top sale in 1990 when the oil was at cheap price
but when the price roused in the international market the company brand had lost it reputation
in the general market, the company must produce such automobiles which have fuel efficient;
the company must also focus on the battery volt cars and hybrid one. So it will maintain the
company sale increasing as well as the loyalty of the customer and market shares.
B. Public Perception Improving
The general motor must improve the product quality and customer services. Because the
public perception is most important thing, if the company improves the public perception
than the public will certainly believe that the money of their not going in the wrong way, and
they will great full in the eyes of the public.
IV. CONCLUSION
After facing the intense competition and bankruptcy the general motor now improved again the
company activities, and still the world largest car manufacturing company, the company has
gotten a change recently which has also improved the working condition of the company, but the
company will must see the weakness and public perception to increase the sale and market shares.
Before formulating any type of strategy the GM should make SWOT analysis to gain competitive
advantages in the market place.
REFERENCES
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interventions for organizational improvement, 5th edition, Prentice Hall International.
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