... | |Submitted to | |Prof. A Srinivasa Rao | | | Contents INTRODUCTION 2 DOWNSIZING 3 RESTRUCTURING 4 PRIMARY ISSUES 5 How to Downsize Effectively 5 COMPANY BACKGROUND 8 PRIMARY ISSUES - II 9 GENERAL MOTORS: RESTRUCTURING 10 RECOMMENDATIONS 14 CONCLUSION 15 REFERENCES 16 INTRODUCTION Over the past eight years, our country has experienced a whirlwind of economic slowdown that has led to the restructuring of the way companies do business today. Gone are the days when corporate mergers, acquisition, downsizing, and restructuring were few and far in between. The economic slowdown coupled with ongoing economic uncertainty has led many companies to adjust their organizational operations to a new level of efficiency. Words such as downsizing, rightsizing, restructuring, and reengineering are common vocabulary to corporate businesses of today. Other changes are brought on by the globalization of businesses and changes in the industries and markets. Regardless of the reasons, mergers and acquisitions are likely to continue into the next century (Boockholdt & Service, 1997). In this case study, we will discuss the organizational...
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...transition of their specialized workforce into alternative forms of employment. The following is a description of how The Boeing Company successfully completed this effort at downsizing. Downsizing is thought to be an effective human resources strategy to increase global competitiveness. Labor costs, generally one of the largest costs for most organizations can be reduced through downsizing. In many cases the downsizing process includes outsourcing or subcontracting jobs previously performed within the organization. Although organizations often consider downsizing necessary in order to remain competitive, this strategy does not always result in increased organizational profitability and performance. One recent survey conducted by the Society for Human Resource Management reported that only 26% of firms reported productivity improvements while 58% said that productivity was flat or had declined after downsizing (The Washington Post, 1996). In addition, the study found that approximately 54% of companies surveyed cut jobs in 1994 but only 25% expected any further downsizing. Whatever the future course of downsizing, many companies have utilized this business strategy to meet the demands and challenges of U.S. and global competition. Why Companies downsize One of the primary reason that downsizing occurs is that jobs are subcontracted out, both domestically and internationally, to reduce corporate overhead. The Boeing Company is no different than many other multinational...
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...2009 “After years of losses, the troubled automaker is forced into bankruptcy. GM is set to close a dozen facilities and cut more than 20,000 jobs” (Isidore, 2009, para. 1). After the Second World War, General Motors (GM) conquered the American automotive market capturing 50.7% of its market niche in 1962 (Holstein, 2009). Whether GM was late introducing a new feature or design was irrelevant, Bob Lutz (cited in Holstein, 2009) was quoted as saying "we had such enormous power that we could always steamroller everybody else." In 2009 GM’s stock dropped below that of the minimum price required to trade in the New York stock market and closed at its lowest in 76 years at 37 cents (Sandler, Green & Ramsey, 2009). GM therefore was obligated to file for bankruptcy protection. The aim therefore of this paper is to do the following: * Review the General Motors bankruptcy that occurred during 2009. * Identify the type of bankruptcy and the decisions which went into the bankruptcy declaration. * Review how the creditors of GM and workers and related businesses at GM fared in the bankruptcy process and the positives and negatives of this bankruptcy making use of examples and * Discussing whether there is a moral hazard in allowing companies that make bad decisions to survive bankruptcy. Brief Review of GM’s Bankruptcy According to Business Week in 2005, the Chief Executive of GM G. Richard Wagoner Jr. decided to publish an internal memo to all employees seeking...
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...loss of $30.9 billion. GM needs to create a good plan in order to keep working in the automobile industry and become a great competitor. Strengths: * It has assembly, manufacturing, distribution, office and warehousing operations in 55 other countries * General Motors Brand is well rooted not only in America but also throughout the world. * GM shares still aggressive in China * GM experiences for nearly a century will help them come back in the competition * Variety of different brands help them to reach all target markets Weaknesses: * They are behind on alternative energy movement * They are on debt with the government * Poor organizational structure since there is lack of communication between employees from the top to bottom * Profitability is decreasing * Downsizing thousands people Opportunities: * They can use its competitors ideas to get back into the race * They still have loyal customers * Increasing demand for hybrid/electric vehicles * Opportunities in emerging markets * Changing consumer demand for new model types and styles Threats: * Gas prices are increasing rapidly * Competition is developing new car styles and efficient * Rising raw materials prices * Environmental emission standards * The crisis affects the USA, Europe, and Asia Findings: * Net income was as follows: * 2006 – (1,978,000), 2007 – (38,732,000), 2008 – (30,860,000) * GM cars styles were not updated...
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...Fundamentals of Macroeconomics ECO 372 – Principles of Macroeconomics University of Phoenix Facilitator: Kenneth Lethere July 10th, 2012 Fundamentals of Macroeconomics Intro: In the vast universe of economics, making sense of the different terminology used regularly in the business can be a difficult and time consuming task, but it will eventually improve one’s chances for success with the different paces that the purchaser’s interest will peak and bottom out, and how that can affect not just the particular retailer, but the economy as a whole when customer interest is at all time lows and money is harder and harder to find. Gross Domestic Product or GDP: Gross Domestic Product, or “GDP,” is the official measure of goods and services that are produced in a specified period, within a country. Real GDP can measure the value of goods and services that are shown in the price graphs of a base year. Nominal GDP can measure the value of goods and services that are shown in current prices. The unemployment rate is the average percentage of people living on unemployment benefits when put against the percentage of people employed. The inflation rate is a measurement of the percentage rate of price level changes or increases of price indexes, usually over a period of one year. An interest rate is the rate that is set by a lender to pay back money that the borrower has requested. Real GDP: There are many economic activities affected by different areas that impact...
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...founded in September of 1908 by William Durant. Durant was a leading manufacturer of hoarse drawn vehicles in Flint Michigan. At its inception GM held only the Buick Motor Company, but in a matter of years would acquire more than 20 companies including Oldsmobile, Cadillac, and Oakland, today known as Pontiac. By the 1920’s the demand for automobiles had grown unexpectedly. General Motors was setting the pace of production, design, and marketing innovation that other manufacturers would have to follow if they were to survive. General Motors began to diversify by adding sever different names to the General Motors name, Chevrolet, Vauxhall, and Opel. These lines made added to the reach of GM. The GM motto was “a car for every purse and purpose”( http://www.gm.com/company/historyAndHerit age/acceleration.html). By becoming so diverse, GM proved to the world that the automobile was more than just a means of transportation. By the 60’s GM was facing new challenges and new changes. Environmental concerns were becoming more apparent, and the foreign market played a role in GM’s downsizing of its automobiles. In order to stay diverse and competitive GM was forced to reengineer many of its models. By the 1970’s, GM once again proved diverse and cutting edge ability by introducing the first engines to run off low lead, or un leaded gasoline. GM was beginning to understand that in order to stay diverse and competitive it had to keep up with the market. By being so revolutionary in the...
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...Abstract This paper explores six articles from the Wall Street Journal about issues in human resources in some organizations. “GM Nears Pact to Cut Hours at German Plants” is co-written by Jeff Bennett and Nico Schmidt. It is about the American automotive corporation General Motors that is in the process of reaching an agreement with labor representatives to shorten the workdays at some of its German plants. The article discusses the impact of this decision on the company and its employees. “Google to Slice Motorola Mobility’s Staff” written by Drew Fitzgerald is about Google’s discusses the downsizing that Motorola Mobility Inc.’s workforce suffered. “Groupon Staff Feel the Heat” written by Shira Ovide is about Groupon’s employees suffering from increasing demands, tougher compensation calculations and a lack of opportunities for promotions. The article analyzes Groupon’s high turnover rate. In recent years, frauds and financial crises have tarnished the public’s faith in business all across the United States. The business world seems to have a “crisis of trust.” HR decisions should result in the greatest good for the largest number of people. The general public is in a constant trust battle with American businesses. With trust being a critical element in boosting and helping restart our economy, business leaders and HR managers should understand what trust is, how to create it, and how to maintain it. Bass Pro Shops is a well-known shopping outlet for rods and reels, camping...
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...Ford and the World Automobile Industry Ford and the World Automobile Industry In 2008, the Ford Motor Company and the world automobile industry as a whole, was struggling financially. The slumping economy had a significant effect on US automobile sales, with a 50% reduction year over year, negatively impacting company earnings. (Grant, 2010, p. 46) Reduced sales, emerging markets and increased competition created a changing landscape and financial sustainability issues amongst the market. These forces and Ford’s growth created excess capacity beyond consumer demand resulting in inefficient use of resources. Synopsis of the Case Ford and the collective automobile industry were faced with challenging times due to a US recession, resulting in reduced demand. This decline caused a focus shift from existing markets to new growth markets, such as Asia, Europe and Latin America. (Grant 2010, p. 48) Companies partnered with outsourced providers and adjusted operational methods in an effort to reduce costs. This growth partnered with a decrease in consumer demand resulted in high carrying costs across the industry. Relevant Factual Information about the Problem or Decision the Organization Faced The US automobile industry experienced a boom in the early-mid 1900’s, resulting in Ford and the industry growing rapidly. (Grant, 2010, p. 48) In order to meet the demand, capital investment in manufacturing capabilities was occurring. In the late 1900’s the industry began to see...
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...General Motors General Motors (GM) has been in business for nearly a century, and in the last four decades, there business has undergone tremendous structural change. In 1962 they had 605,000 employees around the world but now in 2005 they only have 335,000 employees world-wide. Over those 43 years, new technologies and downsizing resulted in a much leaner GM, producing more vehicles with far fewer employees. GM lost $10.6 billion in 2005 and its executives have not announced when the company will become profitable. GM announced plans to cease 12 U.S. plants by 2008, and reduce their workforce by 30,000 positions. They also announced that they will cap the company’s contribution to salaried retiree health-care cost at the end of 2005, which will reduce their obligation by almost $5 billion. In 2005, GM laid out and began to aggressively implement a four point turnaround plan aimed at strengthening their competitive position and achieving strong business results for the years to come. The four elements for the plan are: • Keep raising the bar in the execution of great cars and trucks. • Revitalize their sales and marketing strategy. • Significantly improve their cost competitiveness. • Address there health-care and pension legacy burden. General Motors is offering hourly workers as much as $140,000 each to leave the troubled automaker as it extends to push to cut labor costs and put an end to billions of dollars on losses. GM came to an agreement with...
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...Topic 1: Introduction to Change Management Case Study Format for GM Powertrain Develop a history of the company. The case study covered the GM Powertrain Unit of General Motors as it existed in the mid-90’s, and specifically that period (1996 – 1998) when it was managed by Joe Hinrichs. The Division was beset by a variety of issues and resulted in an inability to manage to a budget, and that was problematic to management. Budgetary and ineffective or inefficient functions of the plant occurred due in part from numerous factors including continued use of old machinery, denominator management, i.e., management of human capital by attrition, inappropriate use of incentives, collective bargaining limitations, and a general lack of managerial creativity. These effects were felt throughout the GM organization during the ‘90’s , as a new chairman was installed in a “bloodless coup,” barely four years earlier, when in late October of 1992, John Smale, the chairman of the GM`s executive board, forced GM Chairman John Stempel to resign by issuing a statement that did not give chairman a vote of confidence. "Boardroom Coup At GM, A Chilling Message For U.s. Execs." Mateja, J., and Franklin, S, October 27, 1992. http://articles.chicagotribune.com/1992-10-27/news/9204070415_1_gm-directors-gm-chairman-robert-stempel-john-smale Things appeared to be looking up as a take charge guy in John (Jack) Smith assumed the position of CEO in November of 1992, and eventually Chairman in 1996. ...
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...Development & Growth of General Motors General Motors (GM), a company that was once the largest and most profitable industrial company in the world, is now identified as the giant automobile company that suffered bankruptcy in 2009. Taking a look at the company’s history is key to identifying how GM went from birth to bankruptcy. The company was founded in 1908, by William C. Durant, who brought 25 independent car companies together, under GM, which simply operated as a holding company. GM focused on producing hundreds of models of cars that targeted wealthy customers. That same year, GM’s major competitor Ford came out with the Model T car, which introduced the idea of producing cars through mass production. As a result, car manufacturing costs dropped, Ford got rich, and GM suffered major losses. Ten years later, Alfred P. Sloan became GM’s CEO, and changed the structure of the company, by grouping their 25 companies into five major self-contained operating divisions, which all imitated Ford car mass production idea. He also reorganized GM into five different car divisions. By the mid 1920’s, GM was at the top, and taking away Ford’s market share through Sloan’s new business model. In the years leading up to the mid 1970’s, GM continued to grow and became highly vertically integrated, while also controlling on average 65% of domestic sales in the U.S. car market. Unfortunately in 1973, the oil embargo damaged GM and...
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...General Motors: General Motors Corporation (GM) is a multinational automobile manufacturer created in 1908.its headquarter is in the United States. GM is the world's largest automaker as measured according to the global industry sales. GM is the proud sales leader in the automotive industry for the for the last 77 years. As of 2008, General Motors employs about 266,000 people around the world. It manufactures its cars and trucks in 35 different countries. The famous brands under the umbrella of GM are Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall, and Wuling. In 2008, General Motors was the ninth largest publicly traded company in the world. In recent years the company has faced significant financial turmoils, including a 38 billion dollar loss in 2007. General Motors Today: From 1908 to 1976, it had grown expansively. But today its market share has gone down and together, with challenges posed by economic conditions, in the form of increasing healthcare costs and fuel costs and cut throat competition GM is facing a tough time in maintaining its profits. GM is deriving its 100% profits from financing cars and not from the sales of vehicles. Internal factors that account for this decline are the failure of the company to adapt to the changes in the environment such as the consumer preferences and technology, lack of differentiation applied to products and lack of effective cost leadership strategies to efficiently manage...
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...interests of our employees, stock- and bondholders, dealers, and our suppliers and customers." In other words, Wagoner was calling bankruptcy unthinkable. And for a long time, that's exactly the way it seemed. GM has $34 billion in cash and could free up roughly $15 billion more selling various businesses. That alone should be enough to keep the company running for a few years. What's more, its cash-burn rate of $2 billion a quarter will slow down as a recent restructuring, which will eliminate nine factories and 30,000 workers over three years, takes hold. But despite Wagoner's protestations, investors are clearly starting to ponder the unthinkable. The price of GM's credit-default swaps, which are insurance in case the carmaker can't pay back its loans, have soared in the past month. They now cost a premium of 12 percentage points of the value of the debt that they insure, four times what they cost in January. Few people believe that Washington would help bail out GM, as it did with Chrysler. Investors, suppliers, and employees, meanwhile, are starting to imagine how a GM bankruptcy would unfold and taking steps to defend themselves if it should happen. Some suppliers, for example, are trying to get shorter payment terms from GM in exchange for lower prices. What would a GM bankruptcy look like? It probably would be the most massive Chapter 11 filing of all time -- a...
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...Strategic Issue Facing GM: Avoiding Bankruptcy 5 The Economy Today 6 History of the recession 6 Economic Climate 7 Stimulus Package 7 Gross Domestic product 8 Inflation Rate 8 Unemployment Rate 8 The Auto Industry Today 9 GM’s Strategy 11 Threats Affecting GM 12 Threat of Rivalry 12 Threat of suppliers 14 Economic Threats 16 Threat of Substitutes 17 Threat of Buyers 18 Threat of Entry 20 Weakness of Internal Cost Structures 21 Government Intervention and the Restructuring of GM 22 GM’s Outlook/Recommendations 23 Works Cited 25 Executive Summary General Motors (GM) is one of the big three auto makers of the world (GM, Ford, and Chrysler) and has historically been the largest and most successful. They have built some of the most famous and classic vehicles on the road which have portrayed messages of both modesty and display of class for a market of consumers who range from working class to music superstar; as Alfred P. Sloan, CEO of the 1920s put it, GM makes “a car for every purse and purpose.” In recent years however, GM has taken an unexpected turn for the worse due to the changing economic climate that is affecting the world. Many economists argue that the US has been pushed into a recession that had started with the housing crisis of 2008. From this crisis stemmed a major banking crisis that has lead to financial institutions implementing tighter lending guidelines for business and personal consumers. This has greatly affected GM since the company,...
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...Ethical Analysis of General Motors Ignition Switch Scandal Organization Review General Motors was founded by William Durant on September 16, 1908. At its inception, GM owned only the Buick Motor Company, but acquired Oldsmobile, Cadillac and Pontiac within ten years of its formation. Demand for automobiles heightened between 1910-1929, allowing General Motors to set the standard for production, design and marketing innovation. GM diversified their selection and opened more than a dozen new plants outside of the United States. In 1927, the head of GM's design studio, Harley Earl, designed the LaSalle which marked the beginning of true automotive design as it was far less boxy than the Ford Model T. "In 1940, former GM President William Knudesen was chosen by President Roosevelt as Chairman of the new Wartime Office of Production Management." During WWII, GM supplied the Allies with more goods than any other company, delivering more than $12 billion worth of materials including airplanes, trucks and tanks. Between 1960-1979, environmental concerns led to a downsizing of vehicles across all GM lines, making it the largest reengineering program ever undertaken in the industry. The emphasis on environmental responsibility ushered in an age of lighter, more fuel-efficient vehicles. GM was the first to offer an air bag in a production car, and they introduced the catalytic converter to reduce emissions. This technology is still used by the entire auto industry today. After Germany...
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