Free Custom «Business Reorganization » Essay Paper

General Motors was for a long time the biggest auto making company of the world. It did not just lead in innovations in automotives, but also helped in defining the new breed of massive, bureaucratic multinational corporations that molded the post war economy. It led in making cars for many years until it was overtaken by Toyota in 2008. This essay is going to look at the analysis of the changing operations of the company over the years. The essay will carefully analyze the progress the company has made over the years with special interest paid to the challenges which the recent hard times in the economy have presented to the company. The essay analyzes the strategies that the company has taken to ensure that it remains in business and competes effectively with other companies in the same industry. General Motors Company is among those companies which were started on a very high profiles and knew their markets well. In the initial years of its inception, the company embarked on revolutionalizing the auto making field by concentrating on satisfying consumer demands. It had 46% of America's auto market in the 1950's with its brands of Chevrolet, Oldsmobile, Pontiac, Cadillac and Buick. It transformed the lives of many around the world. A G.M. plant was a ticket to prosperity for many communities that were lucky to land one. This continued into the 1960's where it owned almost half of United States car and truck market. But as competition came in, coupled with the company's failure to provide its customers with trustworthy cars, its luster and sales began to diminish (Constantin, 2010).As stated above, competition and failure to meet the demands of its customers was the beginning of G.M.'s fall. But these were not the only causes; failure to innovate was one of them. Its efforts to cut costs in the 1980's by sharing its capital across different brands only blurred its distinctiveness. The company then resorted to a practice called "launch and leave" wasting billions in bringing vehicles to market but failing to support them with sustained advertising. By 1994, its market share had fallen to 33 percent; this led to the dwindling attention to its multiple brands and car models giving way for other companies to attract its customers. The company also started to loose interest in those vehicles that needed time to find their audience. Another cause was the rising price of gasoline which led to the dramatic shift of its customers towards the smaller, more fuel-efficient cars and away from the pickups and sporty utility vehicles that were G.M.'s mainstay (Vlasic & Bunkley, 2009).

 

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Measures taken to counter the fallThis led to the company cutting its 2007 fourth-quarter production by 10 percent, and sales fell to 20 percent in July. The high gas prices almost ground sales to a halt as the Wall Street meltdown scared consumers and cut of many from credit. This forced the company's top management to seek help from the government in order to survive. Despite the bailout bill being blocked by the senate republicans, an emergency bailout for G.M. was announced by President Bush. That was still not enough and therefore the company resorted to cutting jobs, closing some plants and reducing their brand lineups (Vlasic & Bunkley, 2009).The company started looking for other measures including downsizing which was also being looked at by the Obama's auto task force. It was looking into all aspects of the company's downsizing plan as well as looking into its designs for new products. Its chairman resigned as one of the conditions from the government to continuing giving the company financial aid, and most of the board was to be replaced slowly. Bond holders were also forced to convert two-thirds of what they were owed into the company's stock. To reduce dealer ranks, the company announced in May that it will eliminate 2,600 of its American dealers, or 40 percent by 2010. Also affected were the laid-off workers as U.A.W. had done away with a program that guaranteed paychecks to them (Vlasic & Bunkley, 2009).

The company later on filed for reorganization in a bankruptcy court and began to restructure its troubled operations under the control of the government. This was the only way to avoid an economic calamity. The company's Saturn unit also followed suit, filling for bankruptcy, in fact G.M. announced that it will phase out the Saturn brand by 2012. The company needed desperately to get back on its feet, but to reach there needed more investment by the tax payers in the company. Whether the investment will be recovered remains a matter of waiting for the outcomes. Legal paper work between the government and the company was completed on July 10^th and the company's assets were transferred into the new company named Vehicle Acquisition company to be later renamed General Motors Company. As part of the changes, the company is also selling half of its India operations and a bit of its China business to its main joint-venture partner in China (Vlasic & Bunkley, 2009)This year in Feb. the company announced that it will shut down the Hummer brand after a deal to sell it to a Chinese manufacturer collapsed. But all is not lost, the has started to show signs of recovery if the 2010 May results are anything to go by, they show that the company is on track to become a public company again. It has allowed the company to recover some of the money it had used to prevent its collapse. The company also intends to have a public offering as soon as the fourth quarter of 2010. The optimism is even higher as the company is considering re-entering the auto financing business, something that could significantly increase the volume of sales by expanding the consumer pool by offering attractive loans (Bunkley, 2010)General Motors having been the biggest company in the most important industry in the world was abruptly brought on to its knees and therefore this made it lose this distinction. The company found itself on the brink, reduced to begging the government for the cash it badly needed for its survival. The government on its part heeded their call but with conditions. These included downsizing the company, lying of some workers and the general restructuring of the company. It was required to transform itself into a leaner, smaller company and win deep concessions from its unions, suppliers and bond holders. The new company accepted and implemented the government's conditions; it has downsized, sold or closed of brands like Saturn, Hummer and Pontiac. It has cut down thousands of its dealers reducing its sales network. Its market share has also fallen, as rivals have benefited from its troubles. But this seems to be a soon to be forgotten problem, this is because as per April 2010, the company had repaid a government loan and posted improved quarterly results, signs that its operations are turning around. In May it announced that it had earned $865 million in the first quarter, this being its first profit since 2007.