Leadership and Performance Management - Essay Example

In addition to that, recession also added to their demise. Heavy operating costs allowed other competitors with lower costs to capture North American market which was GM’s territory earlier. While assessing some of the decisions taken by GM’s leadership, it was found that closure of GM’s hybrid cars unit along with layoffs and prior faulty acquisitions added to GM’s expense list which had no means to be satisfied. 1.1 Key Findings GM has faced problems due to its highly bureaucratic culture and sluggish approach towards development and innovation.

Its slow performance in the recent years has its roots in its earlier catastrophic decisions that were taken in 1970s and 80s but had a long-term impact on the organizational performance which ultimately leads to a government bailout in 2009. GM has made several bad investments in the vehicle models that were not answering consumer’s requirements and also were competitive to each other which further resulted in slow growth of the company. GM had various brands at its portfolio which required major expenses in terms of research and development for proper brand management.

Failure to keep up with consumers’ demands ultimately lead to slow sales of these brands which affected cash inflow in turn (Maynard, 2009). Instead of ensuring that consumers’ demands for compact and energy-efficient cars is met, GM under the leadership of Wagoner, shut down EV1 electric cars program. With lower vehicle sales, the operating expenses and manufacturing costs increased greatly as a result of which GM was forced to increase its prices. The burden was passed onto the consumer which act as a deterrent for GM’s sales.

As a result of this program’s shutdown, billions were lost in terms of research and development. Furthermore, there was a major recall from the roads which made GM compensate the lessees for the losses incurred. The already manufactured models were crushed which not only failed to recover original manufacturing costs but also added to it due to extra expenses incurred in terms of amortization. Failure to capture the niche market on timely basis allowed Japanese cars to capture a major North market share which was the territory of GM earlier (Hartung, 2009).

Shutting down hybrid cars program had a major impact on GM’s profitability. But most importantly, it affected the brand image greatly. It strengthen GM’s persona of being a giant and slow enterprise incapable of understanding consumer’s requirement and respond to it accordingly. Due to global recession and GM’s series of bad decisions especially poor brand management, faulty investments and shut down of hybrid cars, GM filed a loss of over $ 30 million dollars. These losses include major amounts in terms of lowered share prices and also exceptional operational expenses.

After filing these losses, GM filed for bankruptcy and was later bailed out by US government. 1.2 Evidences One of the major evidences that indicated GM’s catastrophic decision making failures was GM’s financial statements and other reports published on the subject matter. According to Hargreaves (2008), “General Motors reported a huge second-quarter net loss Friday of $15.5 billion, after restructuring and other charges, as the automaker's run of troubles continued. The automaker lost $27.

33 per share in the quarter, compared to a