Prereading Question:

1. What should a company do when it struggles in one market but finds success in another. Should it change its design to focus on the potentials of the new market? Should it try to maintain a hold in the old market? Should it try to balance out investments in both?

ChinaThe Future of General Motors?

Its been a rough ride for General Motors. In 2008, GMs remarkable run of 77 years as the worlds largest automaker came to a crashing halt. In 2009, after a decade of mismanagement and declining sales, the company declared bankruptcy and needed a massive government bailout and thorough reorganization to stay afloat. During that time, more than 2,000 dealers were closed for good, and almost 23,000 employees were released. There is some hope that the new, streamlined GM, featuring new models, will regain its once-dominant position in the U.S. auto market. However, it is becoming increasingly clear that GMs future may lie in China.

In 2009, there were 13.6 million cars sold in China, an increase of 46 percent from 2008, and nearly 3 million more cars than were sold in the United States at the same time. In 1977, there were just 1 million cars in China; as of 2008, there were 51 million, and its conservatively expected that the Chinese auto market will grow 1015 percent every year. Unlike in the United States, GM hasnt been stuck on the sidelines in China. It sold 1.83 million cars in 2009, an increase of 67 percent over the previous year, and has a solid record of 15 consecutive months in which its sales have grown by double digits.

Currently, GM operates in China as part of a joint venture with the SAIC Motor Corporation. Through the partnership, GM owns a minority stake in two companies, SAIC-GM-Wuling and Shanghai General Motors. Increasingly, however, youve heard your GM colleagues argue that new organizational design is needed, one that will give the company a stronger presence in China and decrease its dependence on the U.S. market. A group of these managers has come to you to seek out your opinion on how GM can organize to best take advantage of shifting conditions in the global auto market.

Questions:

1. The text describes a number of different departmentalization approaches concerning organizational structure. Which do you think would be ideal for GMs success in China? Which of the structures would help GM expand to other foreign markets? What would be the benefits of this type of approach?

2. What are the advantages and disadvantages of promoting decentralization in GMs operations in China?