Executive Decision Making

at General Motors

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 1908 - 1920
In 1908 Billy Durant Created the first automotive conglomerate and
first vertically integrated company in the industry.

Poor management decision because internal competition and

duplication were tolerated and often encouraged.
 1920 - 1956
CEO Alfred Sloan
Reorganized GMs structure and management processes to be in
line with its strategies
Strategy: Three major strategies included an ingenuous marketing
policy, a commitment to innovation, and international diversification
Structure: Multi-divisional structure called decentralization with
coordinated control
Policy and Decision-Making Processes: Coordinated control in the
decentralized organization came from Management Committee
and the Policy Groups.
Policy Groups: Met monthly to set standards and policies to provide
recommendations to Management Committee, while they had no
funding authority.
Ranked #1 of Fortune 500 (in 1955) in both sales and net profits.
 1960s & 1990s
Increased competition and oil crisis in 1970s tested GMs prevailing
strategy, structure, and senior management process. However,
GMs internal focus and its not invented here attitude didnt help.
Strategy: With focus on market share, the divisions compete with
each other. Top managers became more focused on cost than
revenue.
Structure: The effectiveness of decentralized organization began to
break down as operational complexity and internal competition
increased. Each division and global region had its own functions
and lacked of the economics of scale.
Decision-Making Processes: Slowed down decision-making by
adding a new layer of required review, and managers focused on
lining up needed votes before meetings. The staff kept executives
from knowing what going on with customers and employees.
GM was branded a dinosaur by the early 1990.
 1992 - 2004
CEO Jack Smith (1992 2000), Rick Wagoner ( from 2000)
Jack Smith eliminated Policy Group, abolished the two vehicle groups, and
replaced the Management Committee with Presidents Council
Strategy: Reduced overlapping product lines, developing common systems for
product development, focused on speeding up to decision-making process, and
eliminating the interdivisional competition
Elimination of the 2-vehicle group structure
Consolidated automotive engineering
Establishment of single Automotive Strategy Board
Elimination of GM International Operations organizations and strategy board
The Automotive Strategy Board

The decision was taken by the senior members as well as with the
involvement of other members.

Wagnor only listened to the whole process and came up with a

decision at the end the debate he reached some decision.

If someones opinion differs from the general opinion he gets

chance to make his/her point & then decision is taken.
 Future

In spite of substantial progress, GM had continued to wrestle with the

challenge of maintaining the right balance between local interest and
the need for the centralized coordination to ensure economics of
scope and scale. The reasons were : -
Lacked a single global plan
Regionally based product development lead to duplication
Sharing among the regions was not happening naturally
 Basketweave Structure

Need to maintain right balance between local interests and the

need for centralized coordination.

Centralize responsibility in Product Development, Planning and R&D

Instead of four plans stapled together there will be one integrated

plan
 Issues
Lack of freedom for Regional Presidents to take short term decisions

Lack of accountability on part of the Regional Presidents

Dual Authority

Time Consuming
 Strategic
Single global product plan
Brand Focus
Chevrolet Low to Medium range cars.
Buick Luxury vehicles positioned above GM's mainstream brands
Cadillac flagship luxury cars
GMC Trucks and Utility Vehicles
Boujan, FAW-GM Focused on Chinese market
Holden Focused on Australian market
Ravon Focused on middle eastern Asia

Increase in product differentiation reduces inter-brand competition.

Senior global management to make the Broad Marketing
Guidelines. Regional Heads to make the actual marketing strategy
for their regions
 Organizational
Hybrid structure
Main Divisions Global, Geographic, Product Based
Global CEO, CFO, COO, Board of Directors.
Geographic Headed by a Regional president
Product Based Headed by a general manger
https://go.gliffy.com/go/share/sgiuxf3yoskseafk5nwa
 Decision Making
Regional Mangers should be given the freedom to implement their
decisions for short term needs like increasing workforce or
purchasing small amount of raw materials
Marketing plans to be made by Regional Presidents as they know
the place better
Decisions like introducing new product lines & budgeting to be
done by the senior global management