The five-division structure of Alfred Sloan (former chairman) became obsolete around 1965. Whether what they’re doing right now is right, I don’t know, but at least it’s a step away from what had become a straight-jacket.--Peter F. Drucker, The Concept of the Corporation, a classic study of GM’s management organization in the 1950s

When bonus time rolls around every year, there is a big fight over who is responsible for what. Division managers argue that they aren’t responsible for an increase in cost because it was passed on from another division. Successes are always your idea and foul-ups always someone else's.--The Wall Street Journal, quoting a  GM official

 

In a historic decision in mid-January, GM's Board of Directors approved a far-reaching plan of reorganization that will undoubtedly change many career lives in the company. Described as a corporation program designed to bring greater efficiency to engineering, manufacturing, and product development, it translates into a mass move to lower costs and attain greater profits.

While obviously a momentous decision with complex implications not entirely outlined at this writing, it is known that GM is aligning their car divisions into two groups: Chevrolet and Pontiac (plus GM of Canada), now dubbed the "small-car group," and Buick, Olds, and Cadillac (B-O-C), dubbed the "larger-car group." The gist is that the individual car divisions will become sales and marketing arms for the predictably stronger and centralized corporate structure. No expected change will be visible to the public for three to five years, since these divisions will be selling, advertising, and holding their dealer contacts. And all dealers will continue to market the same cars that they now offer within their franchise.

The real speculation for immediate white-collar melding comes at the Fisher Body and GM Assembly division staff levels where individual identity may be rapidly lost to the corporate core.

One area to watch in coming months and years will be Lloyd Reuss' moving to head the "small-car" group (he's ex-Buick). There he will inherit: the futuristic Saturn program for GM's 1988 mini-car , Chevrolet's joint venture with Toyota in California, other confirmed import deals bringing in 80-90,000 Suzuki Cultis mini-cars and Isuzu compacts (120,000 R-cars), plus Pontiac's expected confirmation of importing some 50,000 Daewoo Motor (South Korea) small cars (no restrictions here). He faces this at the same time the Department of Commerce expects a continuing trend of fewer sub-compacts; predictions are for 300,000 less in 1984.

We are also not likely to see any significant changes for three to five years, since there is solid commitment to the now-announced C-body cars in mid-'84, the new GM-20 in '85, the new B-bodies in '86-'87, and the new E-body in '86. Somewhere in '88-'89, you might well notice a break from the individual division product continuity of shared body styles and technology. Vehicles might become semi- or totally proprietary to help provide an edge in marketing over sister divisions. Crystal-ballers speculate that Chevy might concentrate on sub-, mini-, and compact cars along with 4WD versions of light trucks and vans. Pontiac might focus on sports and two-seat cars with high performance. Olds may elect to strengthen their diesel and new-power-source alternatives. Buick may opt for turbo-charging, while Cadillac might revert heavily to larger-wheelbase cars in luxury classes.

One thing is certain, and that is that each division will remain strongly competitive with its sister divisions and with "outside" competition. GM insists that this broadscale reorganization will effect economies, and it looks like an excellent bet to succeed, not only providing greater GM profits but better buys within their showrooms. The industry will be watching closely.

 

 

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