Organization Theories and the GM Crisis: A Case Study

This presentation explores organization theories and analyzes the root cause, effects, and steps for mitigating the GM crisis. It discusses the resourced-based, industry-based, and institution-based views, as well as corporate governance and stakeholder management. The case study focuses on poor communication, prioritizing profits over safety, and failure to recall faulty cars.

Organization
management
Case study

Organization theories
 The resourced-based looks at the internal environment of an
organization in establishing a competitive advantage (Day, 2014).
 The industry-based view is used in determining the strategy and
performance of an organization.
 The institution based view focus on the range and dynamic relations
of institutions in the organization.
 Corporate governance is a set of rules and practices that determines
how an organization is ran.
 The stakeholder management view hold that the stakeholders of the
organization are anyone affected by the operations of the company.

The root cause of the GM crisis
 poor communication and putting profits ahead of safety.
 GM lead engineer, Ray DeGiorgio had approved the change in sizes of the
ignition switches and springs
 the change led to a faulty ignition system that did not meet torque
specifications.
 The company was also reluctant in following the recommendation of
investigators.
 General Motors failed to consider the needs of the consumer by selling
faulting Chevrolet Cobalt cars(Cheng, 2016).
 failure to take responsibility by recalling the cars early.
 The dragging of class action law suits by the lawyers of the company and
poor investigation into the non-deployment of the airbags.

Effects of the crisis
 The General Motors at first denied the impending ignition.
 The middle level managers also failed to raise the issue with the top management.
 GM nod, hampered the process of addressing the ignition issue.
 Additionally, the issue passed through many committees but no solution was forthcoming.
 General Motors had to reconsider its culture and ethics.
 The company shifted from cost culture and embraced customer culture.
 Regular communication between employees and the management was advocated to prevent future
problems.
 The company had to set up a mechanism to compensate the victims of the faulty cars.
 The company sought the services of compensation expert Kenneth Feinberg who was tasked with
overseeing.
 The full financial impact of the crisis had cost the company over 1.7 billion US dollars with
unspecified value charged as penalty by the US department of Justice.
 GM CEO Mary Barra had to dismiss 15 employees and discipline others who were directly involved in
the crisis

Steps for mitigating the crisis
 Accepting the liability of the problem.
 Being open, transparent and honest in my submissions
 Issue a public apology to the victims
 Meet with the stakeholders to discuss the effects of the crisis.
 formed a communication team to handle all offline and online
communications
 Review the guidelines and specifications requirements in the
production process.
 Form training and development programs for the employees.

references
Cheng, Y. (2016). Who is leading whom in the General Motors recall:
Understanding media impacts on public relations efforts, public
awareness, and financial markets. Research Journal of the Institute for
Public Relations, 3(1), 1-25.
Day, G. S. (2014). An outside-in approach to resource-based
theories. Journal of the Academy of Marketing Science, 42(1), 27-28.