Word: gm
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Dates: during 1990-1999
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...more than just symbolic terms, GM's crisis ranks as the most dramatic culture shock in the transition of American industry from the fat years of the postwar era to the lean years of today. During the 1950s, GM's gas-hogging V- 8s and exuberant tail-finned sedans reflected the confidence of a nation newly arrived at superpower status, with seemingly unlimited resources and skyrocketing productivity. "With GM, you were really talking about a bold vision of America," says Harley Shaiken, a professor of work and technology at the University of California at San Diego. Former chairman Charles ("Engine...
While Big Business has become far more circumspect since then, it has also become more global. The fate of GM (1991 revenues: $123 billion) has an impact on millions of people around the world. With more than 715,000 employees in 35 countries, GM meets $22.5 billion in payrolls from Prague to Kuala Lumpur and buys supplies from 28,000 companies. GM's U.S. auto business accounts for roughly 1.5% of the American economy, down from about 5% in the 1950s...
...sheer size, however, is one of GM's greatest burdens. Because of arrogance and inertia, GM has fallen out of touch with its customers. Except for products of GM's Saturn and Pontiac divisions, young drivers increasingly spurn the company's cars for Japanese makes or other U.S. models. The median ages for buyers of GM's bread-and-butter midsize lines are 45 for Chevrolet, 55 for Oldsmobile and 60 for Buick. By contrast, the ages of U.S. buyers of Japanese cars range from 35 to 40. GM has foundered while the more nimble Ford and Chrysler, which...
...GM has consistently ignored showroom signals about its cars. The company failed, for example, to develop a new sports utility vehicle like the Ford Explorer, which represents one of the hottest market segments. When buyers yearned for minivans, GM simply slapped new plastic panels on a seven-year-old chassis and rolled out the Chevy Lumina All-Purpose Vehicle. Result: while GM has made steady improvements in car quality, its selection and styling have tended to lag far behind its U.S. and Japanese rivals. "GM hasn't listened to its dealers," says an Atlanta Buick dealer. "They haven't paid...
...GM, whose charismatic leader Alfred Sloan pioneered modern corporate management, get into this fix? In large part, the company has been a victim of its past success and an insular culture that has refused to change. For 70 years, GM has operated along lines that Sloan first laid down in a 1919 memo to top managers of what was then a struggling company. Sloan separated the firm into operating groups and divisions, which were presided over by executive committees that set corporate policy. This blend of top-down control and decentralized execution helped GM build cars at lower cost than...