Organizational Change

Topics: General Motors, Management, Foreign Corrupt Practices Act Pages: 10 (2582 words) Published: April 14, 2015
The two companies that have undergone similar, and fairly substantial, changes in recent years are Wal-Mart and General Motors (GM). Both are established publicly traded companies that are typically considered blue chip stocks. However, both have made the major decision in recent years to undergo corporate restructuring. In 2009, an organizational change was announced by Wal-Mart. It was the restructuring of Wal-Mart’s global sourcing team to leverage the scale of its global merchandising operations. The purpose was to reduce costs and improve quality within its supply operations. At the same time it also announced the formation of a global dot com organization. Wal-Mart’s US operations were also reorganized. The three divisions (Logistics, Real Estate, and Store Operations) were united and reorganized into geographic divisions: Wal-Mart West, Wal-Mart South, and Wal-Mart North. According to Wal-Mart, this transformation was brought about in order to help unlock opportunities for customers, associates, and shareholders. Since the organizational change, Wal-Mart has performed extremely well. Its operating income has increased from $22.7 billion in 2009 to $26.5 billion in 2012. Its net income has also increased from $13.38 billion to $15.7 billion during the same time period. In 2009, General Motors received a “bailout” from the United States government because it promised that there would be a substantial change within the company. The organizational changes that General Motors brought about were corporate downsizing. There was drastic restructuring within General Motors so that it became less bureaucratic. In fact, several layers of management were removed. These decisions saved money and improved the speed of decision making. Further, General Motors’ culture was changed to one of building cars that directly satisfied the needs of customers. Already, there have been positive effects within the company. It had incurred a net loss of $30.9 billion in 2008. However, in 2011 it earned a positive net income of $9.2 billion. In 2008, GM’s operating income showed a loss of $21.2 billion and it showed a positive figure of $5.67 billion last year. The changes that occurred in Wal-Mart during 2009 were to unite three high-performing functional departments and reorganize them into geographic divisions. The purpose of this reorganization was to improve the alignment among its merchandising, marketing, and operations groups. Wal-Mart carried out this change to give strength to its price leadership strategy, to improve product assortments, and to improve the shopping experience of the customers. The geography-based teams were expected to develop new segments across the United States. Wal-Mart also restructured its field-reporting structure that has three geographic business units in the west, the south, and the north. The change in General Motors was dramatic, between 2009 and 2012 there were 24 new vehicles launched of which 22 were fuel-efficient cars. There were reductions in manufacturing costs and other fixed costs through reduction in the number of employees and a substantial increase in productivity. Liquidity was obtained from Federal government assistance. General Motors reduced the number of brands, nameplates, and retail outlets to concentrate available resources on profitable operations. At the same time General Motors achieved full compliance with the 2007 Energy Independence and Security Act. General Motors changed its employment in such a way that its’ labor cost once again became competitive with foreign car makers within the United States. The similarity between the changes occurring at both Wal-Mart and General Motors is that each has become significantly more customer oriented and both companies have also focused on cost reduction. In order to bring about this change, Wal-Mart and General Motors changed their organizational structure. The companies focused on attracting customers from new market segments....

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