Lessons from Saturn’s Fall
The organizational structure at General Motors (GM), with its emphasis on separate Oldsmobile, Pontiac, Chevrolet, and Cadillac products, affected Saturn’s business negatively, which ultimately lead to its demise. Saturn Corporation, a subsidiary of General Motors, had the intentions of creating a new brand of cars which they hoped would catch the ascendant Japanese. GM wanted to incorporate the best practices of the automobile industry to become competitive and be the most successful automobile manufacturer.
One of the main causes to Saturn’s demise was its lack of organizational structure. A successful organizational structure is one that consists of static relationships between individuals and units that create the outputs. Saturn’s organizational structure lacked effective and sufficient leadership. The automobile industry is a hyper-turbulent industry and for Saturn to have survived, they needed to adapt quickly to the changes.
Saturn’s organizational structure of choice was departmentalization. Departmentalization refers to” the degree to which work units are grouped based on functional similarity or similarity of work flow”. In comparison to centralization, this refers to the “degree which decision-making authority resides at the top of the organizational chart”. The issue with GM in comparison to other companies was its leadership. It had too many managers and not one distinctive strong leader. Other companies such as Toyota and Honda, was able to adjust to changing markets and make their products attractive. The president of GM led the company to its demise by not leading the company in the right direction. Saturn’s organizational structure was also functional departmentalization because its individual units had a weak conception of the overall organization’s mission, which ultimately led to the company’s demise.
For a company to successfully reach its goals, it must have an effective top management....
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