General Motors Crisis - Essay Example

General Motors was in the end dethroned from its position as the world's top automobile manufacturing company to Toyota. Several factors played a role that resulted in the crisis that led to General Motors ultimately losing out its position as the world's number one in auto manufacturing. These factors include union relationships that led ion the differentials in payroll between some of the foreign transplants and General Motors, legacy in some costs, and programs within the job banks. Other factors include poor strategies in management and decision-making in the development of products and the gap issues in qualities between the General Motors automobiles and what its competitors produce. Finally, a major crisis developed from the foreign competitors through the importation of automobiles from japan, manipulation of currency by the Japanese government, and the foreign transplant in the United States (Klein 2000).

General Motors for many years has made several strategic errors. As it has been noted, General Motors build an automobile in Asia, Europe, and some South American countries as the market power demanded it, but they resisted building small automobiles in the United States. The company did not fully come to understand the relative importance of building such automobiles in its market. Therefore, this caused the general motors to try to dominate the small segment in the market attributed to the overall cost incurred and the profit margins in building smaller vehicles as compared to the larger ones.

Their main competitors who are mainly the Japanese Toyota company were in a better position since they were well prepared to gain a foothold in the United States market where they were to make significant growth and expand to even more segments in the market. More problems emerged in the nineties when General Motors started manufacturing electric cars just to come and completely scrap the project and destroy all of its vehicles since the company felt that the project was not to bring meaningful returns. The company made this very huge mistake, even though it may have had some truth in it, but the true value in its ingenuity laid in the knowledge it brought to the company in terms of technology and a bit of experience in the overall market.

The value of the yen had created a major competitive factor and a huge shift of balance in the entire automotive industry. The value of Yen gives them a major windfall in terms of advantages in cost to all the imported vehicles from japan over those manufactures in the United States and other competitors in the count another reasonings to why the General Motors lost their crown as the work world-leading mobile manufacturing industry was because the unions had strengthened its power. The unions were too powerful and had made some profitable contracts that failed to cope with the ever-changing domestic, as well as the global market (Bernaciak 2013). In general, General Motors allowed Toyota Company to strengthen itself with fuel-effective vehicles whose quality and standards were high. The general motors biggest mistake was its lack of innovations thus its major competitors failed to recognize any threat in the market.

What would have been conforming a quality perspective

There is still hope for the once known American icon in automobiles. The many mistakes done by the general motors that led to its ultimate downfall are avoidable. The General motors could indulge in thorough research before starting a project. The research would have found out whether the product would suit the interest of the consumers and save a lot of costs maintains the company status. The company also should have invested more in innovations and ideas. The consumers’ interest lies in the ever-changing taste that is still within their brand. A good strategic team was necessary for the general motors. The team would have laid down a strategic plan for the company to improve its market competition, as well as its products in the market. Finally, the company should restructure its financial ability and consolidate its brand in the market.