SECTION A- CASE STUDY (ANSWER ALL QUESTIONS 30 MARKS)

Of the many important dates in automotive history, September 16, 2008, marks both the end of an era and a bold new beginning. On that historic Tuesday, eager crowds packed the Renaissance Center in Detroit, Michigan, to celebrate a once-in-a-lifetime event: the 100-year anniversary of General Motors (GM).

Following months of centennial-themed pageantry and parades, the American automakers towering headquarters had taken on a museumlike aura. On the ground floor sat immaculate showroom classics from the companys fabled past: an orange 1963 Corvette Sting Ray, a pistachio 1952 Saab, a shiny black 1955 Chevrolet Bel Air coupe, an apple-green 1973 Opel GT. Auto enthusiasts, reporters, and GM employees alike gazed nostalgically on the rows of vintage cars as the clock turned back to a glorious, bygone era in Americas history.

Despite the irresistible charm projected by these solid-steel visitors from GMs legendary past, it was a concept vehicle from the companys future that had the crowds engines revving on the main floor. For years, management at GM had talked of introducing alternative-energy models that excite consumers and protect the environment. Now, at this momentous celebration, the talk was over, and GM pulled back the curtain on what it says is the future of the auto industry: the Chevy Volt.

With its aerodynamic design and 40 miles of emissions-free driving on a single electric charge, GMs first-ever plug-in electric vehicle is a far cry from the gas-guzzling trucks and SUVs that delivered the companys greatest financial successes in recent decades. Indeed, the Volt represents a sea change for the worlds largest auto manufacturer. Unlike hybrids that use electric power to improve the mileage of their gasoline engines, the Volt uses a gasoline generator to assist the range of its battery-powered electric drive unit. According to GM, driving the Volt will save owners $1,500 annually in energy costs. Its no wonder company officials cite the concept as proof of GMs intention to lead the reinvention of the automobile.

But the arrival of the Volt comes at a pivotal moment in GMs history. Ripple effects from an international mortgage crisis in 2008 triggered the industrys worst sales slump since 9/11. Soaring energy prices in the same period forced management to abandon Hummer and other super-sized models that once represented hope for a financial recovery. But the list goes on. GM also faces slumping shares, stupefying quarterly losses, ballooning debt, steep competition from Toyota, precarious dealings with labor unions, and almost insurmountable fuel-efficiency regulations from the federal government.

If history is any indication, GM will tackle these challenges head on, displaying the same innovative spirit that gave the business its first 100 years of manufacturing excellence. Since its founding in 1908, the automaker has repeatedly demonstrated its strong capacity for innovation and change. From speedometers (1901 Oldsmobile) and electric headlights (1909 Cadillac) to automatic transmissions (1940 Oldsmobile) and mass-produced V-8 engines (1914 Cadillac), GM teams have given the world hundreds of innovative firsts.

Whether its big-idea concepts that reshape the future or smaller innovations that improve existing products, CEO Rick Wagoner and his management teams are developing the strategies that will guide the company successfully for the next 100 years. In his speech introducing the Volts historic unveiling, Wagoner underscored the remarkable times in which we are living. GMs centennial comes at an incredible time in our industry. The entire world is watching, hoping for a breakthrough in personal transportation that will address the very real energy and environmental challenges facing the globe.

The stakes have never been higher. If GM is to avoid becoming a museum of Americas great automobile manufacturing past, management must deliver breakthrough ideas that once again stoke consumers passions. With the Chevy Volt in production and a large cache of renowned brands including Cadillac, Chevrolet, Pontiac, and Saturn, there is every reason to believe GM will succeed.

Questions

1. Identify and explain three management functions that GM performed in the case. Make reference to the case. (6 Marks)

2. Identify the four macro external environmental forces that affect the auto industry and the practice of management at GM. Make reference to the case. (16 Marks)

3. Identify and explain how four principles of management espoused by Fayol, contributed to the story of GM. (8 Marks)