Gm's Organization example essay topic

Case Study: The Internet and the New Information Technology Infrastructure 1. Describe the competitive business environment in which GM is operating General Motors, while they are the largest automobile maker, are currently going through a decline in sales. Their competition is extremely stiff. With competitors such as Ford, Chrysler, and other Japanese vehicles that have lower production costs and include better styling issues and quality in mind, this makes for a difficult struggle for GM. o GM remains a far-flung vertically integrated corporation o Makes 70% of their own parts While GM makes their own parts, other companies, such as Daimler-Chrylser purchases their parts from other vendors with whom they can haggle over their prices. With such advances in the automobile industry, this brought about a race for companies surrounding GM to produce more vehicles quicker and allowed for faster sales. While some may say that GM still builds quality cars, they are by no means keeping up with the competition in production areas.

2. Describe the relationship between GM's organization and its information technology infrastructure. What management, organization, and technology factors influenced this relationship? GM's organization found that its system as a whole was falling behind in technology. Their design group could not relate with other sectors of the company, as each division of the company was on their own software and hardware database.

No one particular system communicated with another. In the early 80's GM tried to integrate their system by using EDS (Electronic Data Systems) and they were able to streamline their computers together. Their current CIO Ralph Szygenda has managed to bring the company to its feet once again by bringing in several new changes. o Replaced many systems with standardized software for all computers which in turn was networked to other system so Created programs that would correlate with one another and enabled data sharing o Consolidated legacy systems and databases Management realized that without sharing the data and having a system that could run smoothly they would soon fall to their knees. When they began realizing that their inventory, manufacturing, and financial data systems were all different for each division they began to notice a problem.

The organization stepped in to take care of this issue, by streamlining the data systems under the direction of Ralph Szygenda. They took the many systems that were each running on separate databases, and varying hardware and software and consolidated them into 21 uniform information processing systems. With the implementation of EDS (Electronic Data Systems) they consolidated 100 separate GM networks into one the world's largest private networks. The EDS system got rid of the old way of networking operating systems and replaced them with one integrated system that would run the inventory, manufacturing and financial data systems.

The new system was found to interact more smoothly with not only other users but PC-to-PC data sharing was eased. 3. Evaluate the current business strategy of GM in response to its competitive environment. What is the role of Internet technology in that strategy? How successful is that strategy? GM added a new division in August 1999 that was devoted entirely to the use of the Internet - it was known as eGM.

Mark Hogan was appointed the head of this division and named corporate group vice president. Wagoner, CEO of GM, placed four main goals among his priorities for the company, among which was to focus on innovative products and services and the development of e-business. His team believes that if the integration of the Internet within the company of GM can take place, then technology will cut design, engineering and manufacturing costs to almost half. The implementation of this new plan would also increase traffic to the GM website, bringing in increased spending and more customers, thus cutting inefficiencies.

The Internet technology plays an important role. Its role is to turn the business into a customer-focused business that will provide many differing electronic services to consumers as well as vehicles. With the integration of the new Internet technology in GM, it has moved a myriad of things from a paper system to a wireless and paperless system. Not only did the new system integrate applying for mortgages, cellular service and vehicle loans online, but it provided for customer interaction with their company online.

The new service is believed to be the most successful strategy. Thanks to the new system, GM is currently: o Selling vehicles online o Building vehicles to order Filling customers' needs 4. What management, organization, and technology issues do you think GM has had to face and will need to solve in implementing its Internet strategy? GM has had to face many management issues one of which I am sure was arrogance. They let arrogance stand in the way of their corporation because they felt that they were the leader in the automobile industry. They have always dominated the industry, and while their glory days ended in the late 1970's they didn't actually go belly up until the early 1990's.

The organization should be asking itself questions such as: "what did we do so well in the 50's and 60's that we didn't accomplish in the 90's?" The company must realize that they must adapt quickly to change. Their adaptation to change must take place for the company to reach a global economy. GM is not exactly an agile company, in that it could not adapt to meet the competition in a timely fashion when they went from a regional market to a global economy. While technology is always a key element to every business, I am sure that GM had probably one of the hardest times in the transition from their old, disjointed systems to the move into EDS. I am sure that the consolidation process of taking all of the old un-integrated systems must have been quite the task, as all the current systems were so poorly networked. The integration of new systems brought about a streamline information technology that was unparalleled in its rise for connectivity.

I am sure that without the consolidation of the systems and databases, this change to a new and more connected business would have been impossible. 5. How will GM have to redesign its business process to be able to compete successfully and achieve a leading role in the new economy? GM will have to redesign its business in several ways. With the integration of the following ways they will become the great leaders again that they once were. o Integration of On Star in the new vehicle so Building vehicles to order Locate-to-order GM has spent nearly $1.6 billion dollars in streamlining its IT infrastructure and architecture along with varying e-commerce venues. Due to the new plans, GM's budget costs have been cut to nearly $800 million dollars each year since 1996.

GM has been losing money: they are falling behind in production in the competition with Ford, their market shares are falling in Europe, and they are still struggling to make a profit of more than 3 pennies on the dollar. Despite all the odds of cutting budget costs, laying off workers, they are still falling short of the competition. If GM wants to compete successfully they must reach a leading role where they focus on boosting their profit margins to a level that is satisfactory. They will need to come up with a strategy that will have to design their business to market to everyone, and will have to come up with a game plan that will allow for more customer interaction. The more the people can have input, the more likely the product will sell. It has always been proven if you build what the customers want they will buy it.

6. In GM's drive to sell cars on-line and to build-to-order, what are some of the problems that technology cannot address? Fairly recently, GM experimented with different ways to sell their vehicles on-line; however they are being met with opposition from the dealers. The dealers are concerned that GM is trying to bypass them, to make a buck, and hence sell the vehicle direct from factory. Build-to-order is not quite a reality yet, and the immediate problem is quickly finding the car that the customer wants, which is a strategy better known as Locate-to-Order.

To reach this goal, GM must create a regional inventory of the vehicle pool that will be shown on the Internet so that regardless of the vehicles' location, potential buyers can find "their" vehicle. There is one flaw in the system that manufacturers and dealers must deal with in the business. They must realize that customers will require varying styles, colors and other options and they (the company) must be ready at the drop of a hat to have the product readied. The inventory must be stocked and ready to be sold. Internet technology could be the catalyst for GM to reconstruct its entire value chain, transforming itself into a customer-focused business that provides many different electronic services to consumers, as well as cars. "Built-to-order" has been around the auto industry for a long time, but only for very expensive cars, and it required a waiting period of two to three months before delivery.

This system would greatly reduce finished vehicle inventory costs as well as generate other production cost savings, potentially saving GM $20 billion per year.