General Motors in Free Fall - A Case Study with Purposeful Action
A brief comparison on GM and Toyota would be helpful in discussing the four principles of purposeful action.
GM: After World War II there was big demand for each and every product that was introduced in the market. There is reason for this was rationing of product usage came to a halt. Two of the major industries emerged out of this boom one is housing and automotive. GM took advantage of this market. In order to be the competition GM focused on producing cars at the least cost. The concept of manufacturing cars at least cost helped GM to evolve into a mass manufacturing company. In mass manufacturing system of production raw materials are purchased at the lowest price. The raw materials and finished products will have high inventory. Whether a car has demand in the market or not still the inventory of the car will be high. It is the job of the marketing team to come with ideas to sell it. In this business model GM quickly transformed from visionary to a goal oriented company. The only goal of GM was to be the largest producer and seller of cars, which sacrificed its vision and mission. Every action taken inside the company had no purpose to benefit the society. There was no ethical balance in the form of producing cars that consumed lot of gas without any forecast for environmental impact at later stage. Executives and leaders were happy as for as the goals were accomplished. The desire that motivated these goal oriented action were in the form of: financial numbers, bonus package and salaries for the executives. The company gave the least importance on the desire to serve the welfare of the employees, society and environment. Hence company lost to listen the voice of internal and external customers, which resulted in low quality cars, low employment morale, lack of visionary leadership and motivation and poor financial planning. The only thing that was helping GM these days is that customers were enticed by emotional market strategy as “GM is the car built by Americans for Americans” and selling to rental car companies. Even rental car market share fell to other Japanese and Korean car manufacturers in the millennium years. On the whole GM got locked in the ego and arrogant pride as the largest car producers and lost the humbleness in its action.
Toyota on the contrary: After World War II Japan economy was in shambles. The quality of all the industrial products developed in Japan was not up to the international market. Toyota was producing car that was least desired by consumers around the world. Moreover the company was in deep financial shambles. Most of the financial institution did not want to give any kind of financial support to the company. In this crisis, there was one company that provided financial support to Toyota with a stipulated condition. The stipulation was that Toyota can only borrow when it sells a car and the amount must equal to the selling price of the car. This means if Toyota sells one car the company can borrow the money equal to the selling price of that particular car. Toyota accepted this challenge. The management was looking for ideas to produce and sell the car. This created the leaders in Toyota to develop the concept Kaizen meaning continuous improvement (Phase III of Purposeful Action), which later became Toyota production system. Kaizen was applied at every level of the company from the top leadership to the bottom management, from shop floor to dealership place. This became the vision of the company. Every action applied by the employee had to evaluate how it continuously improves the process. This led to employment empowerment. There was open communication at all levels. Toyota saw the company as integrated system not separate entity from the environment, which was not in the case of GM. Every action taken inside company was customer focused. The company sent its executives to see how other companies around the world were manufacturing their products. The executives went to developed nations in the west from Germany to USA. They were open-minded to benchmark companies from other than companies that were producing cars. The benchmarking process did not lose customer focus. Toyota developed the concept called quality circles which gather information to improve the overall quality for each and every process of the company from both its internal and external end user. In this process the company paid every attention to the welfare of the employee. This boosted the morale and motivation of the employees. One important thing was Toyota maintained high ethics of commitment. It never layoffs employees to cut cost instead every aspect was focused on improving the quality of the product without losing its vision on customer focus. Toyota maintained product line was customer wanted for its needs and necessities. Also made sure the cost of maintenance of the car was at the least cost related to were and tear of the vehicle due to operation.
One the whole Toyota’s action had a purpose at every aspect of its business; ethics to stick to its commitment and were not driven by financial goals; desire to serve the customers, employees and society better.
Sources from www.businessweek.com
For example Toyota-General Motors sold 9.37 million vehicles worldwide in 2007 and lost $38.7 billion. Toyota sold 9.37 million vehicles in 2007 and made $17.1 billion. That was the second best sales total in GM’s 100-year history and the biggest loss ever for any automaker in the world. For Toyota, that was roughly $1,800 in profit for every vehicle sold. For GM, it was an average loss of $4,100 for every vehicle sold.
2. What kind of a leadership is required for the present scenario of GM.? Please provide your views, with justification.
As mentioned in the first question on the comparative analysis of GM and Toyota. GM should focus applying purposeful actions in their operations. The company should develop and implement Kaizens at all levels. Eliminate bureaucracy in the management and involve everyone to seek better solution for both welfare of the company and society. In the recent years GM has improved its quality of cars both in design and performance. It is time for the executives to listen to both internal and external customers. The company should develop health welfare programs for its employees to boast and improve the well being of its employees. One way is to help its employees to eliminate unhealthy practices like smoking and consuming alcohol. Providing incentives for people improving their health which will indirectly reduce the health care cost. The reason for this is the number of employees working for GM is more than 100,000.
Sources from websites: www.businessweek.com and yahoo.com:
Health care, pensions and other benefits -General Motors isn’t bankrupt, but the once-great firm is on the rocks, having lost nearly $4 billion last year alone through September, recently announcing 30,000 layoffs. And at first glance, its long decline would seem to be GM’s fault. Consider perhaps its foremost headache: Its hulking health insurance costs for which workers pay nothing out of pocket, and retirees very little. They have about 145,000 employees, active employees, and we have health care coverage for 1.1 million retirees, independents and family members. Last year we spent $5.2 billion on health care coverage for all of our employees in the U.S. basically. It equates to about $1,500 a car.
That’s more than the steel in an average car and $1,500 that GM’s foreign rivals, with government health insurance, that don’t pay. GM’s got another cost disadvantage as well: full pensions after only 30 years of service, regardless of age. To pay for this largesse, tack on another $1,000 per car.
The lushest benefit of all, however, may be GM’s jobs bank. Workers whose plant closes can transfer elsewhere in the company or, if they choose not to, take classes, do community service, continue to get full pay and never retire. So in Baltimore, when a GM plant closed recently, the jobless weren’t exactly distraught.
When you add the jobs bank to the pensions and health care tab, GM has a total cost disadvantage, compared to non-U.S. rivals, of $2,500 or more per car — before it even starts making one.
Questions and background information for this case study discussion were prepared by Chandrika, Discussion Leader.
This discussion will continue for the next three weeks, through midnight on April 21. Each student will discuss in depth the two questions posted above, applying the specific principles assigned to each student. Assignments of principles will be posted under Assignments in Blackboard. Posts should be based upon research, with appropriate references and links.
This discussion will carry more weight with respect to course grade than a weekly discussion.
Good luck.
General Motors has inspired generations of managers in industrial enterprises all over the world. He took charge of a disparate group of floundering automobile companies, put them together to form General Motors and built it up to become the largest automobile company in the world.
It has remained so with the Japanese companies hard on its heels. Sloan also was a thinker on the management of larger companies. There has always been a close relationship between the Massachusetts Institute of Technology and General Motors. He endowed the MIT’s Alfred Sloan School of Management.
GM’s models like Chevolet, Oldesmobile and Cadillac were the most well-known. In the early 1960s GM controlled over 50 per cent of the US car market and set standards for the world’s manufacturing industry.
Yet today this giant is on the brink of bankruptcy. Its domestic market share is down to 25 per cent. It has slid back into losses because of high wages and generous healthcare benefits promised to its existing and former employees. These were extended to them in prosperous times.
Another damaging concession made by GM to the United Auto Workers’ Union was that it could not close down factories or reduce wages even in straitened circumstances. GM today is like a Gulliver tied down with his own consent.
Plus, GM has lost its flair for innovation and creating new products. Innovation is difficult in a large corporation unless the top management devotes extra attention to this aspect. A company in distress can innovate if the top management is creative and willing to take risks. In the absence of new products, GM now has to resort to price discounts to maintain volumes. It is losing market share to Toyota, Nissan and Honda for normal cars and to BMW and Mercedes for premium models.
Standard & Poor’s has downgraded GM’s debt to junk status. It has said the company will have to restructure its debt and labour contract. GM lost $4 billion in North America last year and cut 30,000 jobs by closing down 12 plants.
Although the company denies the possibility, analysts believe GM’s losses will continue to mount and it may be forced to seek Chapter 11 protection as a case of potential bankruptcy.
And, GM’s erstwhile subsidiary Delphi (the auto parts manufacturer which it had spun off as a separate company) has gone into Chapter 11. This may negatively impact GM finances up to $11 billion on account of pension and healthcare coverage for Delphi workers, who are eligible to return to GM under the terms of separation of Delphi from GM. Due to the cutbacks in previous years GM today has to support three retirees for every active worker! This is an unsustainable position for any company.
The only places where GM is moderately successful today are Brazil, South Korea, and China, with a slight recovery in Europe. But this will hardly compensate for the debacle in its home base in North America, the largest market in the world. In short, GM is wobbling towards bankruptcy.
It is not that the management of GM is of low calibre. On the contrary, GM has had one of the most admired management teams from the time of Sloan. Therefore, it is worth analysing the causes of such a decline in fortunes at GM.
First, the fundamental mistake made by GM was to underestimate for quite some time the effect of higher oil prices on demand for the cars it made. While GM continued to manufacture its range of gas-guzzling models, its Japanese competitors had designed and launched fuel-efficient vehicles.
The second mistake was while GM concentrated on upgrading sports utility vehicles, its competitors upgraded their range of normal cars and increased their market share in this premium segment.
Third, GM had to pay $2 billion earlier last year to wriggle out of a potential commitment to buy out Fiat, the sick Italian car company in which it had invested $2.4 billion some time ago.
The latest problem confronting GM is the investigation into its accounts by the Securities and Exchange Commission nd a restatement of its accounts for 2001. This has eroded the confidence of investors. It is burning cash at the rate of $5 billion a year.
Who will invest in or lend to such a company? To meet immediate needs of cash it is planning to sell a part of its profitable finance company, General Motors Acceptance Corporation.
It has sold at a loss its stake in the joint venture Subaru to Toyota, which is now emerging as the world’s largest carmaker. To make things even more difficult for the GM management, Kirk Kerkorian, the octogenarian nemesis of US companies, has taken a nearly 10 per cent stake in GM and is seeking a seat on the board.
He could make himself visible and active if things do not improve at GM. GM chairman Richard Wagoner is in a most unenviable position not entirely created by him.
What are the lessons to be learnt from this debacle at GM? The first lesson is that size does not make a company immune to decline and even extinction, just as its size did not save the Titanic.
If GM as one of the world’s largest companies can be pushed into bankruptcy, what about smaller companies? The second lesson is that while a company and its products are doing well, it should invest even more in innovation to improve product performance and to create new products. It is natural in those fortunate circumstances for a company management to become complacent and over-generous with employees, as GM managers did. This temptation has to be consciously resisted.
The third lesson is that it is sometimes necessary to stand up to excessive demands from trade unions and face the challenge of strikes and disruption rather than mortgage the future of a company, by yielding to extortionist demands, which could ruin the company.
Fourth, it is wise to shift manufacturing operations increasingly to low-cost countries rather than expose a company to the risk of high costs. But this has to be done with a great deal of planning and preparation in a gradual manner, to minimise the risks of discord and disruption. Lastly, a company must avoid the temptation of being misled by its own success (and size) into believing that it is indestructible, as the captain of the Titanic did. Management must cultivate a sense of vulnerability and the potential risk of mortality. That is part of the formula for the survival and growth of a company.
Now Mr Kerkorian may bring in new management, which could negotiate successfully with unions to reduce costs. They could perhaps inspire enough confidence in investors and lenders. If that happens it will be the largest turnaround story in the history of business and there will be many volumes to be written on the recovery of Gulliver!
source:http://www.rediff.com/money/2006/jan/27spec4.htm
Without the THREE U.S. automakers combining into one there is no rationality to bailing out GM. GM’s cash burn is triple the street estimate and has lost all control over its sales, its product development and its future. The executives and the unions have the company hostage to government capital infusion. Bankruptcy is a viable answer that can push off creditors and force unions and management to make concessions that are impossible unless a loaded gun is at their head. There is too much capacity, too many models, too many plants, too many employees producing products that are more easily produced by others. The VW bug was the first indication that the Big Three did not have a clue to the needs and long-term preferences of the U.S. consumer. And today we have a glut of SUV’s that will ultimately have to be sold at a first-ever half-price sale. GM has already built them, they have already paid for them and no one wants them. You need cash, blow them out the door ½ price or less and they are out of inventory and cash hits the balance sheet.
But to infuse GM with cash to keep it afloat without bankruptcy is no answer because next in line will be Ford and Chrysler. These three should be forced to combine and re-form to use their talents and capacity to building something we all need and that is energy independence.
There is one industry that has a payback that cannot be overlooked as a place to re-train and invest and that is in renewable energy. Train those people, insist that the manufacturing capacity of GM be converted to energy and produce, once and for all, a source of energy that once in place CAN NEVER GO UP IN PRICE. In World War II Ford built a massive number of B-24’s in their new Willow Run plant in Ypsilanti. That change in production and product proved that it can be done and Ford did a spectacular job producing that airplane to the considerable consternation to the Nazi war machine. Fast forward to 2008 and our enemy is our own waste and inefficiency; energy independence is crucial to our national safety and we can actually budget part of our national defense budget to this end.
I am not against giving money to GM…but I am against giving them money to build products that have no measurable or important upside to our economy long-term. I am against giving money to GM with Ford looking like that doggie in the window. Force them into solar, wind, wave and nuclear. Support them in their endeavor to re-tool and you got my money. Absent that, you will not get me to suggest giving them, their workers or their bloated retirees belly-aching about their co-pay when millions have no health care a single dime.
The side benefits are obvious: our defense structure is enhanced because we no longer have to depend on a cartel of Bedouins in the Middle-East to determine for us how much oil we are going to use and our environment actually can become healthy in L.A. vs. choking
source:http://www.usnews.com/blogs/flowchart/2008/8/22/how-bankruptcy-would-wreck-gm-and-chrysler.html
GM has $34 billion in cash and could free up roughly $15 billion more selling various businesses. That alone should be enough to keep the company running for a few years. What’s more, its cash-burn rate of $2 billion a quarter will slow down as a recent restructuring, which will eliminate nine factories and 30,000 workers over three years, takes hold.
But despite Wagoner’s protestations, investors are clearly starting to ponder the unthinkable. The price of GM’s credit-default swaps, which are insurance in case the carmaker can’t pay back its loans, have soared in the past month. They now cost a premium of 12 percentage points of the value of the debt that they insure, four times what they cost in January. Few people believe that Washington would help bail out GM, as it did with Chrysler. Investors, suppliers, and employees, meanwhile, are starting to imagine how a GM bankruptcy would unfold and taking steps to defend themselves if it should happen. Some suppliers, for example, are trying to get shorter payment terms from GM in exchange for lower prices.
What would a GM bankruptcy look like? It probably would be the most massive Chapter 11 filing of all time — a watershed moment in the history of American business, with far-reaching consequences for all of GM’s stakeholders. While the direct impact on the national economy would be relatively modest, the Midwest would be hit hard by the combination of job losses at GM and its suppliers and benefits cuts for the company’s retirees.
Plenty of observers believe that this suffering would be worthwhile, of course, if a stronger company emerged from bankruptcy. As airlines and steelmakers have done, GM could use Chapter 11 to rewrite union contracts, potentially enabling it to slash retiree benefits and close plants without having to pay furloughed workers. The auto maker could even dump tarnished brands and get bankruptcy court protection from dealer lawsuits. “Bankruptcy could do great things for GM,” says William J. Rochelle III, a bankruptcy attorney with Fulbright & Jaworski LLP. But, of course, Chapter 11 is no sure bet. History is full of examples of companies that have emerged from bankruptcy simply to return in a few years. Here’s a quick overview of how a GM bankruptcy might unfold for some of the key players:
Customers
One big risk of a bankruptcy filing is that it would cast such a pall over GM that sales would plummet. Consumers will buy airline tickets from a bankrupt company, but cars are a long-term commitment. Many buyers would worry (unnecessarily, in all probability) that GM wouldn’t be able to honor its warranties. No U.S. carmaker has filed for bankruptcy in decades. But retailers such as KMart (SHLD ) and Hechinger and carmaker Mitsubishi all saw sales fall when their financial problems became widely publicized, notes Thomas T. Stallkamp, former Chrysler (DCX ) president and now the industrial partner for private equity firm Ripplewood Holdings LLC.
To stem eroding market share, GM could eventually use the lower costs achieved through bankruptcy to drop prices and lure more buyers, says Diane C. Swonk, chief economist with Mesirow Financial Services in Chicago. But cutting prices further could just exacerbate GM’s already severe revenue problems. Its per-vehicle revenue of $21,000 is $3,500 less than rival Toyota’s.
Rental car companies, purchasers of about 15% of GM’s volume, would get nervous, too. They often sell their used models back to the auto maker. They’re worried they would have to liquidate the cars themselves if GM went bankrupt, says Maryann N. Keller, a longtime GM watcher who sits on the board of Dollar Thrifty Automotive Group Inc. (DTG ). And, of course, if the company’s retail sales are down, the value of used GM cars would fall, too. “GM should do everything it can to avoid bankruptcy,” says Keller.
Suppliers
Big players like parts maker Tower Automotive Inc. and American Axle & Manufacturing (AXL ) rely on GM for a large chunk of their business. If its market share slid more quickly, they would suffer declines in revenue. The carmaker would try to keep the disruption to key business partners to a minimum, but many smaller parts makers could topple into bankruptcy, predicts Stallkamp. He says Ripplewood considered buying one thriving parts maker recently, a company with about $500 million in revenue. But it was too dependent on GM. If the auto maker stopped paying suppliers even just for a few weeks after filing, that company and a handful of others could end up in bankruptcy, he says.
That’s why some parts makers are starting to open talks to get paid sooner. GM has already stretched payment terms out to two months in most cases. Suppliers are also trying to diversify their sales with other auto makers, relying less on a GM that will be downsizing for the foreseeable future.
Pensioners and Employees
If GM went belly-up, retirees, workers, and taxpayers could all take a hit. Right now, its $90 billion pension fund is fully funded on an accounting basis. But the government-backed Pension Benefit Guaranty Corp., which acts as a safety net for corporate pension plans, says GM is underfunded by $31 billion.
How that would play out in a GM bankruptcy would be complicated. The PBGC could be on the hook for billions in pensions. The agency also could force the Detroit giant to keep funding its own pension plan even in bankruptcy — though the company could make the case that it should pay less. Still, GM’s 450,000 retirees would get hit: They may end up with smaller pension payouts, and their medical benefits, as well as the health-care plans of existing workers, would most likely be whittled back.
Investors
GM’s creditors would also stand to suffer. The company has $31 billion in long-term debt, most of it due in 2023 and beyond. Of $34 billion in cash, $15 billion is in a fund earmarked for health-care liabilities. Who knows how much will be left in a few years? Fitch Ratings analyst Mark Oline says GM will have to spend some cash to pay for its announced restructuring and could still have to pitch in to help its former auto parts arm, Delphi Corp. (DPHIQ ).
That raises the possibility that creditors won’t recover their whole investment, as was the case in the bankruptcies of United Airlines (UALAQ ) and telecom firms Winstar and Teligent. By the time of a GM filing, however, many of the company’s debt holders may be risk-savvy investors like Wilbur L. Ross. Turnaround whizzes like Ross buy distressed debt to get a voice in restructuring plans and then seek an equity stake when a company emerges from bankruptcy.
Stockholders, however, usually get wiped out. That fact may also play a big role in keeping GM out of bankruptcy. Even if it wanted to file, billionaire Kirk Kerkorian would do everything to fight the move. His 9.9% stake is already underwater by about $350 million. Kerkorian and other large shareholders — many of whom have suffered longer — could band together and force management to fix the business without bankruptcy. One source familiar with Kerkorian’s tactics says he wants to see a deep restructuring plan done quickly, and outside of the courts.
That would be the best for all concerned, so long as the company faces up to the enormity of its current mess and executes a plan that finally stands a chance of working.
source:http://www.businessweek.com/magazine/content/05_50/b3963114.htm
It was the best of times for Fiat, it was the worst of times for General Motors. It was the age of wisdom for those with 20/20 hindsight, it was the age of foolishness for anyone who had bet GM would be forever investment grade. It was the epoch of belief that the Punto was finally fit for drivers other than Italian farmers, it was the epoch of incredulity that the world’s largest automaker could commit suicide quite so quickly.
Six years ago, Fiat, based in Turin, looked ready to get out of the business of making cars. Net income slumped 43 percent to 353 million, or $423 million, in 1999 compared with the previous year. It sold a 20-percent stake in its auto unit to General Motors for $2.4 billion in March 2000, securing an option to offload the rest of the division to GM between 2004 and 2009.
In the first four years of this decade, Fiat shares lost 80 percent of their value. In the past year, though, they have rallied by 40 percent, reaching a three-year high of 8.63 on Jan. 19. A year ago, GM agreed to pay Fiat about $2 billion to disentangle their alliance
Last week, Fiat posted a fourth-quarter profit of 38 million, snapping a string of 17 consecutive quarterly losses. In September, 11 of the 22 analysts covering Fiat rated it a “sell,” with just two saying investors should buy the shares, according to Bloomberg data. Today, the company has six “buy” recommendations from analysts versus 10 saying “sell.” So what happened to Fiat? The chief executive, Sergio Marchionne, is what happened to Fiat. He has taken an accountant’s scalpel to the company since taking charge in 2004, fired the head of the auto unit, the guy in charge of the Maserati sports car division and half the work force to slash annual costs by more than 500 million.
It is not just about financial engineering and changing the nameplates in the boardroom. Marchionne also oversaw the redesign of Fiat’s most important model, the Punto, which helped pump up Fiat’s January sales by 23 percent from a year earlier. It also increased Fiat’s share of its home market to 30.8 percent last month from 27.7 percent in January 2005.
While GM said in November it would eliminate 30,000 jobs in North America and close 12 plants, no one seemed to have handed in the keys to the executive washrooms to take the blame for the net loss of $8.6 billion in 2005. Even when it moved Fritz Henderson to be chief financial officer from chairman of GM Europe, GM hung on to the former chief financial officer, John Devine, keeping him as vice chairman and paying him an unchanged base salary of $1.55 million
Sad to say, the biggest personnel shake-up at the U.S. automaker is the replacement of its top spokesman, Tom Kowaleski.
Never mind that Asian automakers have increased their share of the U.S. market to 37.5 percent from 36.3 percent. Never mind that GM’s share of its domestic market dropped to 26.2 percent in 2005 from 27.5 percent the previous year. And never mind that GM’s credit rating at Standard & Poor’s is B, two steps lower than Fiat’s BB- and five levels below investment grade.
Fiat is confident enough about its financial improvement to hire four banks to underwrite its first bond sale in four years. GM, which has to repay more than $21 billion of debt this year, has shied away from the public debt markets.
The next time Kirk Kerkorian, who owns almost 10 percent of the company, meets with Rick Wagoner, the GM chief executive, he might care to take along a copy of “A Tale of Two Cities,” by Charles Dickens, and direct Wagoner to its closing paragraph: “It is a far, far better thing that I do, than I have ever done; it is a far, far better rest that I go to, than I have ever known.”
source:http://www.redorbit.com/news/business/382977/fiats_rise_gms_fall_a_tale_of_2_carmakers_investing/
The fact that its management team clung to the illusion of perpetual growth and refused to acknowledge the irrefutable business cycle demonstrates gross incompetence, the result of which should be annihilation. That’s what’s going to happen regardless of how much money is pumped into General Motors or the economy in general. It is the excess liquidity in the system that exacerbates the peaks and troughs of natural business cycles, and so pouring more and more into the system only confounds the economy’s natural ability to repair itself through an unfettered continuation of the cycle.
Bear in mind that all that GM represents is not going to disappear in a puff of smoke if they declare bankruptcy. The assets will merely be re-allocated to other automotive corporations, and the industry itself will become slightly more efficient, and contract as it needs to. Autoworkers who are skilled and reliable will have to add resourceful to their repertoire to stay viable in a contracting economy. There are just too many autoworkers and zippo demand for their product.
Since everybody’s had access to all the cheap liquidity for nearly a decade now, and has got two cars and a parking lot full of brand new recreational vehicles (if they haven’t yet been located by repo man), pumping capital into GM is like trying to continue filling up a bathtub with water after its already full. It only makes a big mess, the water is wasted, and the more you continue trying, the bigger the mess gets and the more the resource is wasted.
The situation we’re in should be a plain signal to the world’s leaders that over-capacity across all industries, fuelled by years of near-zero cost credit, is the result of excess liquidity. The economy, contrary to modern economic theory, simply cannot expand ad infinitum no matter how cheap money is. This only causes overproduction of resources, overproduction of products, and volatility in the business cycle.
On the off chance that isn’t clear enough, hear it is again:
Perpetual economic growth is impossible.
I think this is the fundamental flaw in all of our G8 leadership’s assumptions. If we were to allow the economy to undulate in terms of growth and contraction in a uniform wave pattern, much as nearly all natural systems in biology and physics do, then our existence perhaps becomes sustainable.
The current economic policies cause artificially high concentrations of demand because the net result of excess speculation on the long side in any market creates the illusion of physical demand, which in turn promotes productivity. We end up consuming our finite natural resources prematurely, and the truly destructive effect will be felt more acutely as generations progress. Imagine your grandson or granddaughter trying to buy real estate or gas or gold after decades of increasing real demand (population expansion) and diminishing production of everything due to shortage of raw materials. Imagine the prices.
Trying to force continuous and perpetual economic growth through credit and monetary expansion is just plain suicidal, in the long term. It aggravates peaks and troughs into angry jagged lines that inflate the casualties both human and economic obscenely. The revision in economic policy required to facilitate that reality does not, at this time, appear to be forthcoming. At least, not while George Bush is still flapping his gums and swaggering around the podium playing president.
His address to the G20 meetings makes it clear that he is still preoccupied with asserting U.S. unilateralism when it comes to joint foreign policy decisions. I don’t know what the G20 leaders were hoping for. This meeting should not have happened until Obama was in the driver’s seat. I’m sure they all realize that now. It’s clear that Bush seeks to establish credit for initiating the recovery that also is not yet forthcoming.
source: http://news.goldseek.com/GoldSeek/1226933564.php
General Motor in a Free Fall
(1.) Evaluate GM in comparison to the four principles of purposeful action:
First Principle: Act with Purpose & Pursue your Journey with Purposeful Action.
The purposeful action must create the desired state that one hopes to attain or achieve at the conclusion of the action. When a company’s CEO is ethical and uses the five core values the resulting action is purposeful. It is the action that becomes purposeful when the core values are utilized in the process. GM took advantage of the market focused on producing cars at the least cost. This led them to evolve into a mass manufacturing company without an emphasis on the production not the consumer. It was this transformation into a goal oriented company that led it away from the vision of the organization. GM sacrificed it vision and mission therefore it had no benefit to society. With out this ethical balance the mission was doomed to failure. The focus was on financial numbers, bonus package and salaries for the executives. This lack of visionary leadership and motivation led to poor financial planning. The only thing the GM has going for it is its motto “GM is the car built by American for Americans”. Oddly enough GM is doing better in its overseas markets than it is doing in its own country. Therefore this company has done a poor job overall of acting with purpose. The employees ran the cost to operate up and the executives focused on bonuses and profit margins. Wagoner being a finance executive focused on profit margins and allowed the operations to remain stagnant with out holding product development responsible for limiting production models to meet the demands of the American public.
Fourth Principle: “Understand and Relate with others because progress is affected by the actions of others as we are all in it together” Visions of the CEO must be shared by the workers and GM has lost communications with its blue collar workers due to the separation of management and the workforce by Union intervention. The leader must remember that he is not alone in this project therefore he must include the general population of employees to gain trust and cooperation. The executive choice was to ignore the market changes and look at the profit potential demonstrated in past sales analysis. GM is suffering because they failed to relate to the demands for higher gas mileage and lower cost vehicles therefore they have created their own tragedy. It was GM’s arrogant pride and ego that has led to the economic downfall of one of America’s greatest auto manufactures.
(2.) What kind of leadership is required for the present scenario of G.M.?
It would require a very special type of person with great leadership shills to take over this present scenario. A leader would have to get the employees to adopt the same goals and mission the organization has to build the inner strength needed to promote the success of this troubles organization. Inspiring teamwork throughout the organization would have to be one of the top goals of any new organizing strategy. It would require a selfless dedication to the systematic improvement of the entire process to bring this company back to a thriving manufacturing facility.
• Brook master assessment of Rick Wagoner’s archetype
Professional Archetype Profile
Leader 23 : 15%
Entrepreneur 32 : 21%
Manager 36 : 19%
Trustee 17 : 7%
Intellectual 33 : 19%
Consultant 27 : 15%
Grand Archetype Profile
Giver 12 : 33%
Taker 18 : 66%