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This report presents an analysis of the mission statement of General Motors as well as its key business processes. It also illustrates how the key business processes integrate with the information systems and our suggestions and recommendations to those processes that would better suit General Motors.
The report also identifies the environmental factors which affect the company in terms of political, economic, social, ecological and technological factors and the impact that these factors have had on General Motors and the strategic diversity the company has had to adopt to accommodate these changes.
Finally the report explores ways on how new information systems can help General Motors create great efficiency by automating and streamlining parts of its business processes. The report concludes by incorporating our recommendations of appropriate information systems for each department within the company.
General Motors is the world's largest automaker with 386,000 employees in over 50 years. Despite this sheer size, its auto sales have declined from about 60 percent of the U.S. vehicle market in the 1970's to only 28.3 percent today. This decline is attributed to stiff competition from Ford, DaimlerChrysler and the Japanese all of whom enjoy lower production costs, have a reputation for cars with better styling and quality than General Motors.
General Motors adoption of a vertically integrated corporation which at one time manufactured up to 70 percent of its parts, as a power source of competitive advantage, enabled the company to build cars at lower costs than its rivals. However, over time, these policies worked in favour of General Motors competitors who were then able to make motor vehicles at much lower costs because they could purchase their vehicle parts from outside vendors and also bargain on pricing.
For the past 15 years, General Motors has struggled to overcome the above legacy, inefficient product processes and thousands of outdated information systems that could not communicate with each other. Although the company has now become much leaner and more efficient by shedding off tens of thousands of workers, closing dozens of plants and squeezing costs of motor vehicle parts by scouring the globe for the lowest prices much still needs to be done.
It is our recommendation that General Motors use Internet and other leading-edge information systems technology to reconstruct its entire value chain, transforming itself into a customer-focused business that provides many different electronic services to consumers as well as motor vehicles.
General Motors mission statement states that "GM is a multinational corporation engaged in socially responsible operations, worldwide. It is dedicated to provide products and services of such quality that our customers will receive superior value while our employees and business partners will share in our success and our stock-holders will receive a sustained superior return on their investment".
We analysed the above mission statement using Druckers five questions namely:-
What is our business?
Who is the customer?
What is the value to the customer?
What will our business be?
What should our business be?
We arrived at the conclusion that there was a need to modify General Motors mission statement since the above questions were not fully exhausted. The current mission statement does not indicate that GM is a producer of motor vehicle; neither does it take into consideration the Global Sullivan Principle. As a marketing tool, it does not mention that it is dedicated towards providing products and services to customers who are targeted in 200 different countries.
Our recommended General Motors mission statement should read as follows:
"GM is a multinational producer of motor vehicles engaged in socially responsible operations worldwide and committed to achieve the best in every facet of our business. Under the aspects of Global Sullivan Principles, GM is dedicated to provide products and services of such quality that our customers who are targeted in 200 different countries will receive superior value while our employees and business partners will share in our success and our stock-holders will receive a sustained superior return on their investment".
Key Business Processes
Key business process is defined as the execution of a series of activities that work together to produce a well defined set of products and services which leads to the achievement of a measurable business result. They also represent unique ways in which organisations coordinate work, information, and knowledge, and the ways in which management chooses to coordinate work.
Integration between Business Process and Information Systems
Although each organisation has its own set of business processes, many other business processes are cross functional, transcending the boundaries between sales, marketing, manufacturing, research and development. These cross functional processes cut across the traditional organisation structure, grouping employees from different functional specialities to complete a piece of work.
Information systems can help organisations achieve great efficiencies by automating parts of these processes or by helping organisations rethink and streamline these processes. By integrating these processes, organisations can become more focussed on efficient management of resources and customer services.
Suggestions and recommendations of key business processes
Manufacturing and Production
Assembling the product, checking for quality, producing bills of materials
Sales and Marketing
Identifying customers, making customers aware of the product, selling the product
Finance and Accounting
Paying creditors, creating financial statements, managing cash accounts
Hiring employees, evaluating employees' job performance, enrolling employees in benefits plan
There are three factors which had made General Motors in this situation. Firstly, the United States economy is not progressing cost their U.S. sales projections for 2008 have been too rosy. "GM had been expecting more than 16 million vehicles, including trucks and buses, to be sold this year" (Taylor III 2008). Secondly, intense competition from their global competitors such as Honda, Nissan, and Hyundai which had produce better fuel efficient engines, stylish at a much lower price compared to any GM brands. Thirdly, the world's fuel price had increased to USD 120 per barrel in the market had made consumers not to purchase vehicle and using public transport or smaller vehicle. In the United States, "consumers want to abandon their less-fuel-efficient vehicles for smaller cars, and that's illustrated by all sorts of trends, said David Tompkins, executive director of industry solutions for Edmunds.com, parent of Auto Observer" (Buss 2008) (refer appendix 2).
1.0 Strategic Human Resource Management Theory
1.1 Balance Score Card
Balance Score Card is a performance measurement indicator that can be used to measure the financial and non financial situation in General Motors. There are four parts; financial perspective, internal business perspective, customer's perspective, learning and growth perspective. Balance Score Card is like your cars dash board where there is indicator on as you drive, you can look at the dashboard to obtain real-time information such as how fuel, speed and the distance you've traveled or even any faulty system etc. "It's known to help companies and implement the changes required to meet their business goals" (Pangakar & Kirkwood, 2007). The balance score card enables the companies to develop a more comprehensive view of their operations and to better match all operating and investment activities to long- and short-term strategic objectives (Punniyamoorthy & Murali, 2008).
The loss of USD38.7 billion is a huge financial loss which in fact will affect the internal business process, the customer, and growth of GM. The huge loss was largely contributed from deferred tax charges and drop in sales. Currently, the organization financial perspective appears to the share holder is in a decline where "GM shares fell nearly 5 percent, or USD1.67, to USD34.48" (Bunkley N. 2008). Thus to manage this losses, thousands of workers are laid off from duty. This will affect their internal business process and may lead to dissatisfied customers. For example, usually General Motors takes 1 week to deliver a car to a customer. When they decided to retrench workers they will lose their competitive advantage where now it takes 2 weeks to deliver a car. This will cause dissatisfaction to consumers because they have to wait an extra week to obtain their vehicle. In the end, the learning and growth perspective cant' be achieved because the lack of resources will disable them to compete in the turbulent environment result to decline in sales.
To ensure that General Motors can effectively achieve its balance score card in the future, they must handle their external environment issue concisely. They have to improve thru their internal process and learning and growth to overcome their competition issue. General Motors have to come out with new design and technology to increase the product line. Research and Development expenditure have to be spent so that they could create better vehicle then their competitors. How to create better vehicle than the competitors? This can be accomplished by purchasing the technology from their competitors or similar industry. For example Proton had acquire Lotus in the year 1996 had made them competitive at that point of time. When this happen, employees will have to be train thus it can increase the knowledge of the workers. In certain cases, workers will be sent oversea for such training to acquire technology. Workers will be more effective and consequently increase productivity in General Motors.
Like a well oiled machine, every part in the organization performs best when all of them work towards a common goal. All of the four perspectives in the balances score card works hand in hand thru their substantial objectives, measures and initiatives. As mentioned above, to make sure that General Motors can make profit to cover the huge amount of losses they must increase productivity, more expenditure on research and development etc. In General Motor's case, financial perspective is the key strategy for the other three perspectives. For General Motors, the learning perspective can work together with the sales department to train and coach the sales staff or even developing new efficient production, training equipment. To improve on the customer scorecard they could do research by surveys from their existing customers on how to improve customer relationships. Customer retention is important factor ignite buyers to increase sales. It ensures repeat purchase, increase positive word of mouth and reduce cost to find new customers.
Balance Score Card will "ensure human capital development, improving employee satisfaction and increasing employee motivation" (Kaplan & Norton, 1992) in General Motors.
Link of each perspective in the Balance Score Card (BCS)
High Performance Work System
High performance work system (HPWS) is also another method to explain the situation in General Motors. Autonomous work teams, open systems and performance-based pay are known collectively as high-performance work systems (Rouse, 2000). HPWS have also "come to be known as high involvement work systems, flexible work systems and high commitment work systems" (Aghazadeh & Seyedian, 2004) In other words, they are simply work practice that can be deliberately introduced in order to improved organizational performance The main focus of HPWS is organizing work so that the employees participate in decisions that affect the everyday operations of an organization. There are three potential factors that can affect high performance work system in General Motors; retrenchment of workers, technology used and layout design.
A worker is the key success to any organization. Retrenchment will cause General Motors to lose talented workers subsequently lose competitive edge. To survive in the changing environment, a company must rely on their workers creativity, ingenuity problem solving ability and strong team work. Workers are able to make their own decision on the best way to accomplish their work. The knowledge and skill shared will create a high performance work system. For example, an engineer in General Motors is developing a fuel efficient engine. Engineer A may need assistants from Engineer B, however when GM decided to retrench workers, Engineer A will face difficulty in developing the engine. Performance of employee can be boost thru team works. A study by Thompson, Baughan and Motwani indicates that company such as General Electricity, Proctor & Gamble, Xerox Corporation had huge increase productivity as high as 250 percent and double their profit (1998).
The use of technology is another feature in High Performance Work System. All managers in every department of General Motors must be able to identify the technology they use in their organization. The application of Human Resource Information System that can store information on workers that can assist managers in deciding which employee is performing and which is not. The use of technology without human operating it is also meaningless. Managers in General Motor must identify whether the qualified workers are able to operate the tools or not.
Layout of General Motors production plants and office be required to properly design in order for them to increase workers performance and productivity. This involves careful job designing by HR managers. According to Aghazadeh and Seyedian, layout plays a role to ensure success by using space, people and equipment effectively, increasing the flow of information and materials, boost employee's morale and utterly encourage flexibility (2004). Managers in General Motors may have to come out with proposals to change the existing layout to a improved, sustainable working layout.
If all of the three factors are taken into account, General Motors can recover from their huge financial losses just and can avoid retrenchment of employees. Although to implement HPWS is costly, uncertain success and time consuming but in the long run this can benefit General Motors.
Recommendation for Human Resource Activities
Training and development programs should be given to employee to ensure increase in productivity. Offshore training in Japan car manufacturers to learn various methods to make better cars.
Mangers are required to make research and human resource planning on the best methods to do a particular task.
General Motors would have to find a partner to form a strategic alliance to recover from the huge financial loss. From this alliance, both companies are potential to learn from each other on the technology and trade secrets.
Develop a module which to help retrench workers to find a new job. This will avoid them from paying more money for their compensation of retrenchments
Outsource to countries like China or India. Cheap labors will benefit companies to recover them from financial loss.
Create a reward programme where employees are rewarded by their managers based on their ability to work in a group
Create a talk to all employees at least once in 3 months to explain the company's vision, strategy and objective. This will make employees feel a sense of belonging and may be able to work extra for the company.
Sheer size and market share make new entrants an unlikely to be a threat
Vertical integration of GM does not encourage purchases from suppliers hence they lose out on price bargaining
Ford, DaimlerChrysler and Japanese manufacturers have better styling and quality; an approach which GM should consider adopting to sustain its competitive edge
Cost of GM motor vehicles is perceived as being too high
Buyers are nowadays inclined to buy sport utility and pickups which are not manufactured by General Motors
GM enjoys a healthy product line and segmentation in pricing and functions
Using information systems at each part of the organization creates great efficiencies by automating and streamlining parts of the business. We recommend the following information systems at each department within General Motors:
Human Resource Information Systems
These are systems that maintain employee records, track employee skills, job performance and support planning for employee compensation and career development.
Track employee training, skills and performance appraisal
Designs career paths for employees
Monitors the range and distribution of employees wages, salaries & benefits
Human Resources Planning
Plans the long-term labour force needs of the organization
2. Finance and Accounting Systems
These are systems that keep track of the firm's financial assets and fund flows.
Track outstanding debts
Designs portfolios investments
Prepares short-term budgets
Plans long-term profits
3. Sales and Marketing Systems
These are systems that help the firm identify customers for its product or services. They also assist to develop product or services that meet customer needs, promote and sell them as well as providing ongoing customer support.
Enters, processes and tracks orders
Identifies customers and markets using data on demographics, markets, consumer behaviour and trends
Determines prices for products and services
Sales and Forecasting
Prepares 3-5 year sales forecast
4. Manufacturing and Production Systems
These are systems that deal with planning, development, production of products and services and controlling the flow of production.
Controls the actions of machines and equipment
Designs new products using the computer
Decides when and how many products should be produced
Prepares and decides where to locate new production facilities
In addition to the information systems mentioned here above, we also recommend the following office automation systems:
E-mail System: Improve GM's internal and external communication, creating an effective and efficient service
Word Processing System: Office system technology that facilitates the creation of documents through computerized text editing, formatting, storing and printing
Document Imaging System: System that converts documents and images into digital form so that they can be stored and accessed easily by the computer
Timesheet System: - Enables employees to fill in the timesheet forms online so that management can approve and track the timesheet online.
Whilst it would be make a lot of business sense for a company like Ford to close down more plants and accept a smaller portion of the U.S. market this strategy would not work in favour of GM because then the company would produce and sell fewer vehicles, meaning less income for those big pension and health-care costs. GM has to maintain its cash flow to cover these costs until a future date when it is hoped that the elderly retirees diminish in number whilst also making improvements in quality, efficiency, design and brand appeal.
Although GM has cut the time to assemble a vehicle from an average of 32 hours in 1998 to 24 hours in 2003, Japanese competitors are still faster in getting new models into the market. Honda's new vehicle development cycle is only 14 months and the company is working towards compressing development time down to 12 months. GM should look at this as a challenge to embrace and strategise with a view to improve its development cycle to match its competitors if not exceed them.
Whilst these recommendations provided are meant to help GM sustain its market share, they cannot be fully appreciated until they have been put to test and the results obtained critically analysed to create room for adjustments where necessary and where applicable.