1

GM Real Share Price in 1982 Dollars

0

20

40

60

80

100

120

140

160

Year

$

Early 1980s – US is the largest market.

•GM the largest firm by market share >30%.

•High tariffs (import taxes) on foreign cars.

Late 1990s – Stock market bubble.

Today – not profitable.

•Losing market share to Toyota, Nissan and Honda.

2

Environment

1. Introduction: GM2. Environmental Domain3. Environmental Uncertainty4. Consequences for Organisation Structure5. Conclusion

• To be an effective organisation the structure has to fit with the environment.

3

Environmental Domain• Domain: environment chosen by organization• Task environment: organization interacts directly• General environment: indirect influence

Task GeneralIndustry Sector Government SectorRaw Materials Socio-Cultural SectorHuman Resources Economic ConditionsMarket Sector Technology SectorInternational Sector Financial Resources

• Example: Industry Sector for GM – the rise of Toyota.• Example: Government Sector for GM – Tariffs on Imported cars;

Emissions Regulations.• Example: Economic Conditions for GM – US still the main market.

4

Environmental Uncertainty

Two Dimensions

Stable-Unstable

Simple-Complex

5

Consequences for Organisation Structure

• Fashions in cars are changing faster than they used to.

• Lower import barriers has meant more competition.

• Customers have become more demanding.

• Technology changed: Total Quality Management pioneered by Japanese firms (“Toyota Way”)

Source: Economist

6

Consequences for Organisation Structure

• Interorganisational linkages.• Control the environmental domain.

What has GM tried to do?

• Interorganisational linkages: Saab

Daewoo et al.

• Control the domain: Lobbying for higher tariffs (late 1980s)

Source: Economist (8 September 2005)

7

Conclusion

• Summary.

• Managers need to try to anticipate changes in the environment – and change their firms to propser in the new conditions.

• GM’s problems are all down to bad luck - discuss.