My Years at General Motors
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General Motors experienced very significant organizational changes at the beginning of 1920-s. This process was caused by economic stagnation and internal control problems faced by the company. As GM grew and comprised more diversified business, it became impossible to consider performance of every functional manager without establishing a central control function. Therefore, Mr. Sloan reorganized the company’s management structure, dividing the top management body into Executive Committee (with only four main managers) and Advisory Operations Committee (which included all functional managers). In this way, GM was not completely centralized, had the central decisive body, and could make confident and flexible decisions in due time.
Another crucial change in GM concerned the production policy of the corporation. New management developed three main principles of this policy. First of all, GM should have introduced its cars in each price niche, including the previously ignored low-price level. Secondly, these lines of cars should have been highly diversified from each other excluding any duplication possibility. And, finally, the company’s divisions should have taken advantage of large quantities of production. This policy allowed GM to cut costs and enter larger markets by selling its cars to consumers with various levels of income.
The company was constructed as a highly decentralized corporation. It was difficult to coordinate all its divisions, departments and offices at the same time. Growing larger and becoming more diversified, GM needed to develop strict procedures to coordinate its business lines effectively and more authority given to the management body.
The example of General Motors has shown the importance of correctly chosen management and product policies in a corporation. Company’s structure can influence its success and survival in business environment providing the system of more timely and effective decision process. Besides, corresponding communication and coordination policies should be developed. The story of GM proves that a successful business entity should sometimes consider revolutionary changes and be ready to implement them when needed.