General Motors as Multinational Organization

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Table of Contents

Introduction
Managerial situations
Conceptual framework
The case of general motors
Achieving understanding
How to achieve mutual understanding
Education
Cultural sensitivity
Conclusion
Reference list

Introduction

Multinational organizations are those organizations that have globalized their operations. Such organizations have branches in many countries around the globe. Some of the branches are given some aspects of autonomy although they are still answerable to the headquarters. A good example of such organizations includes the General Motors Company.

This company has branches in almost all continents on the globe and also enjoys a good fraction of the market share. Intercultural management is a style of management that is sensitive to the different cultures represented by employees from different countries and languages (Information Resource Management Association 2002).

Due to the large extent of its operations, the company, just like any other company has personnel who come from different countries. These personnel speak different languages and also have a different culture from that of Americans. For these reasons, the company is forced to deal with issues typical of an intercultural organization.

This is because various forms of misunderstanding usually arise in such kinds of workplaces as a result of differences in culture and language interpretation. It is worth noting that such kinds of language and cultural differences are the main factors that cause international alliances and mergers to fail (Holstein, Not Dated).

This is also because there is no corporation that can operate in an environment full of misunderstanding caused by language misinterpretations and differences in culture. This paper discusses how several issues cause misunderstanding and subsequent failures of globalized business organizations.

A case study of General Motors is given as a good example to show how the culture of the business management, misunderstanding and cultural differences in the factories overseas caused the failures of the automobile company in the year 2008 (Adair 1997).

Managerial situations

Managerial situations require exceptional skills that are actually aimed at controlling, predicting and adapting to particular situations. Traditional planning techniques are important in any managerial situation because it helps an organization to become more prepared and more responsive to changes that are hard but the organization can go through if it is well prepared.

Managerial situations require a leader to plan on how to deal with practical circumstances that rock an organization. The four orientations of planning are therefore very important when a manager is faced with challenging situations. These strategies include reactive, inactive, preactive and interactive. A reactive strategy is a sought of flashback whereby things tends to return to previous state.

This strategy deals with things separately. The inactive strategy tends to deal with issues at the current or prevailing situations. In this kind of situation, the management seems to be satisfied with things as they are (Rossiter 1998). The management therefore tends to muddle through the situation. The preactive strategy is one that believes in change. This strategy has the ability to predict the future.

Prediction of the future allows the management to be more prepared for the situations. Last but not least, managerial situations require an interactive gesture.

This strategy has a perception that the past, the present and the future are different although they are quite inseparable. This suggests that for any bad situation that happened in the past, the organization will feel its impacts both at the time of its happening, in the present and even in the future (Krolicki 2011).

Conceptual framework

The conceptual framework of this paper tries to give a master plan of the way intercultural management can be achieved in a globalized organization. This is a good starting point because it acts as a guideline to effective management. Communication is one of the most important aspects of management in any organization.

It is coincidental to find out through a study done by Joshi and Lazarova, that an average of 97.5% of leaders and team members highlighted communication as the most important thing that makes leaders competent (Spencer-Oatey, Not Dated). This is why some of the biggest problems in an organization are caused by poor communication. Most of the communication problems arise from the lack of a shared language.

This is especially so in a multicultural globalized organization. For instance, an American copyrighter will experience difficulties in interpreting the meaning of some aspects of Japanese language when working in a Japanese company. This can happen even when his manager is pretty good in English (Sypher 1990).

This situation suggests that there are various misunderstandings that may arise when a person tries to explain something to people who are not natives of the language that person is using. Such situations will cause subtle differences especially during communication and may make people to have various interpretations of the message which may vary in context and even in the meaning.

Although this situation is more common in multicultural international organizations, it also occurs to some substantial levels between native speakers of the same language. Communication is therefore very important in developing a good relationship, mutual understanding and intercultural competence.

Communication also helps in adjusting to language proficiency and in understanding the importance of intercultural management in a globalized organization (Spencer-Oatey, Not Dated).

The case of general motors

In the year 2008, General Motors was faced with a managerial problem that was related to financial issues. These financial issues arose from decades of abuse of power by the top management. Analysts proposed a $25 billion bailout in order to keep the automobile company afloat the market.

Other analysts were however skeptical with this bailout because they though that it will only take care of the financial issues and yet the roots of the problems that the company faced emerged from a cultural trend (Transcultural Synergy 2011). This is because the problems are believed to have developed for the past fifty or more years as a result of money minded Chief Executives.

Thus, the $25 billion bailout will only make the company stay in the market until when the money runs out. General motors opted for expensive health care programs for their personnel instead of looking down on the union. This is because the management thought that staring down the union will cause strike among the employees.

The option that the management took was however detrimental because it brought the company to its knees in terms of competitiveness. As a result, the market share of General Motors has continued to decline over the past forty or so years (George 2008).

The lack of a competitive General Motors is therefore attributed to the high employee costs as well as inflexible work rules. For this reason, it needs a new leadership with new culture (Adair b. 2007).

Many analysts have come up with new proposals aimed at helping the company to improve its competitive nature in the market (World- Traveler 2011). Some of the analysts suggest that dividing General Motors into two companies will help it diversify its products and make them more efficient. Others suggest that a new management needs to be installed in the company.

The new management will help bring in a new culture for all the employees that will empower them and make them become more independent thinkers and hence more innovative. New employees also need to be negotiated so that the company can use a new wage scheme that will help it continue to operate effectively in the market.

A new culture will also help the company’s management to embark on an aggressive development of new products out of innovation. It has also been suggested that the company should only retain those factories that are most productive both in the United States and foreign ones.

All the above factors should help the company to operate with cash balances that are enough to make it stay afloat the international market (Zeromillion.com. 2011).

In relation to innovation and culture, the company needs an all time effort to manufacture different kinds and shapes of automobiles for the market. The cars should range in size from small to large according to market demands. GM also needs to come up with a different plan for their products.

This plan should take care of various aspects in the motor industry such as fuel efficiency. For instance, Chevrolet, one of the lightest cars with the smallest engine had poor fuel efficiency. Such kinds of mistakes in the automobile company should be reviewed with an aim of improving the fuel efficiency.

In addition, the company needs to borrow a leaf from the Japanese automobile industries whereby General Motors should build batteries in the U.S. This is to help them gain independence from battery making companies that are always rocked with troubles. Some of the problems of the battery companies include manufacture of defective batteries.

At one time, a battery company that was being outsourced by the General Motors was forced to recall six thousand battery units. A good solution to this could be a joint venture with a first rate battery manufacturing company like one from Japan (Flint 2008).

General Motors needs a complete overhaul of the century old corporate culture. This is because the current corporate culture is dominated by managers whose main focus is to chase the next deal in order to reverse its market decline. There is also a problem in the middle management sector.

The problem is that most middle managers are still operating with comfort and they are not dedicated to offering extra efforts to the company. This situation of the middle managers staying in their zone of comfort has been there for quite a while thus, prompting the need for change.

The management of General Motors has helped bring up a lot of bright minds. However, among the people the company has developed, there are those whose minds are uncultured. Such kinds of minds are the ones responsible for dragging the efforts of others. The management should therefore set up a mechanism that will check and minimize the number of individuals who have uncultured minds (Adair a. 2007).

The other thing that General Motors should be wary of is the conception that it is a big company and that it is a proxy of the world. As a matter of fact, such kind of thought is one of the reasons that make the company suffer from the troubles it is currently experiencing.

Achieving understanding

The process of achieving a mutual understanding between people is actually based on the way senders and receivers of communication can encode and decode signals respectively, exactly in the same way. Miscommunication therefore is as a result of a mismatch between the messages sent and those that are received.

This means that there must be a sort of familiarity of the language between the senders and the receivers of that language (Aurifeille 2006). This is the reason why some books describe communication as a way in which the meaning of a message is transferred from the sender to the receiver.

The case of General Motors is not an exception to this because in this scenario, various aspects of communication are responsible for the decline of its market share. Correct interpretation of information from the company’s top management to the middle managers, both in the local U.S. factories and foreign factories would help the company stay afloat in the market (Fine 1969).

Barriers to communication can cause difficulties in understanding the message being conveyed. There are so many barriers to effective communication. Some of them include physical barriers such as location of the sender and the receiver and faults in the system design. Attitudinal barriers are also deterrent factors for effective communication (Arnott & Raab 2000).

They come about as a result of problems between the employees and managerial staff of an organization. Such problems include poor management and lack of consultations especially when undertaking sensitive tasks. In addition, psychological factors such as the state of mind of the staff and the linguistic ability of the conveyor of the message can also be barriers of communication.

Noise can also cause lack of effective communication. In a globalized international multicultural organization, the biggest problem in effective communication is the language factor. Cultural difference is therefore included as one of the noise factors that inhibit effective communication in an international organization. It can interfere with effective transmission of the meaning of a particular message.

How to achieve mutual understanding

Mutual understanding in any multicultural organization depends on the knowledge of terms and the language proficiency (Brome et al. 2005). If people are to collaborate with each other, even in a globalized multicultural organization, they have to come to terms with each other’s meanings especially if they speak different languages.

Effective management of an organization requires the leadership of an organization to attune to indirect signals so that everything can be understood. Mutual understanding is enhanced by selecting leaders who are aware of the different cultures of the environment that they lead.

Thus, it would be prudent enough for a company like General Motors to come up with strict mechanisms that will enable it to select effective leaders or managers who will spearhead and control the company’s operations in foreign factories. This is because as discussed earlier, multinational alliances and mergers fail mainly because of lack of understanding of the different cultures in which the companies operate.

A good strategy is to train leaders from the foreign countries who will then have the ability to run these factories in their own countries and represent General Motors effectively (Hogan & Stubbs 2003).

Another option is to train the company’s leaders in the culture that they will be operating in. This will help them to familiarize with the different culture and hence make them more effective in managing the company’s foreign factories.

In a multicultural society, business organizations thrive by finding common grounds across cultural and ethnic groups. However, homogenous cultures, such as those found in most European countries, business organizations in these countries maintain their local value systems.

It is worth noting that the entire concept and principles of management in all cultures may be same. The only distinct difference comes in the way the practice of management is done (Bowe & Martin 2007).

In multicultural environments, things change constantly because there is a sort of competition between the different cultures in the society. This means that there is a lot of improvement which is contrasted with most homogenous societies that do not easily discard their long and proud histories.

Homogenous societies tend to run their organizations in a conservative way because they believe that patience as well as an established way of doing things are virtues and not weaknesses. Multicultural organizations should not be managed in such a way that they target each group separately (Farber 2002).

The problems that managers in multicultural organizations face are that few people within organizations understand all areas of organizational ethics, cultural and legal systems in transition. A good example is when senior managers in Intel concentrated on global strategy and structure. As a result, there were complaints from the middle managers.

These managers complained that they faced resistance from various aspects of the corporate culture. The resistance actually prevented them from globalizing their operations. The human resource department focused on building better interpersonal and cross cultural skills (Facts on Files 2009).

Managing multicultural corporations needs a comprehensive approach of corporate cultural, ethical, and legal value systems. It is important to understand that members of international, globalized and multinational organizations enter the organizations with different cultural backgrounds and leave corporations very rapidly. For this reason, managers should try to leave corporate cultural and ethical value systems intact (Davis 1999).

It is also worth noting that the primary motive for managers heading multicultural organizations is based on the promise that a good organizational structure will increase profits. The profits will therefore stimulate growth of the corporations. It must be understood that these concepts work hand in hand with cross cultural relations between producers and consumers (Dogramasi & Adam 1985).

Education

It is therefore very important to educate managers so that they may become more cultural sensitive. Currently, there are many programs that require courses across a broad range of business functions such as marketing and strategy.

The development of responsible global business leaders requires significant amount of the course content in the core courses or in elective address international business, leadership and social and environmental responsibility issues. This will create a strong foundation of global knowledge (Doh & Stumpf 2005).

It is worth noting that unskilled and semiskilled workers are increasingly becoming less and less needed. This implies that countries must put more and more effort into developing high-quality education systems in order to prepare students for more skilled jobs in the future (Marquardt, M. et al 2004).

Education and vocational training is important especially in contemporary world where there are changes in global market dynamics, technology, and the structure of labor. This has created a much complex work environment that has increased the number of jobs that need high level skills like problem solving, interpersonal, and other work place skills.

It is therefore very important for leaders to utilize organizational development skills to sustain an environment in which professional education can work effectively and students can learn successfully in order to become effective global leaders (Marquardt, M. et al 2004).

Therefore, knowledge, rather than physical assets should define competitive advantage. This will make the administrative and managing process an easier task to undertake in a business environment that has diverse culture.

Since societies are transitioning from the industrial era to the global knowledge era, job requirements are becoming more challenging. It is also not surprising to see the importation or exportation of knowledge through hiring of expatriates in a globalized business environment.

It is therefore the duty of the management to come up with an administrative framework that will assimilate the diverse cultures arising from hiring of foreign employees (Custom Essay 2011).

Cultural sensitivity

Cultural interests and sensitivity, self awareness, and global mind-set act as solid foundations of international business skills. This is a set of competence that leaders ought to develop in order to accommodate diverse cultures and remain competitive in the global market. The development of these competencies can be initiated through foundation courses that focus on cross cultural management issues and skills (Doh & Stumpf 2005).

In addition to the above, leaders need to be exposed to a variety of experiential assignments, that address not only cross cultural sensitivity but also self awareness. For instance, some business schools like Wharton School require some of their students to participate in out-of-class experiences such as treks in the Himalayas or Patagonia.

The reason behind this is to develop decision making skills under stressful conditions. It also serves to expose the students to different countries and cultures at the same time (Doh & Stumpf 2005). Other universities are known to offer in-class simulations to practice leadership skills, and also assign leadership autobiography to develop self awareness (Flint 2008).

Global leadership skills can also be obtained through learning from other people’s experiences and reading comprehensive surveys. Some books are known to provide diagnostic surveys, learning objectives, cases, practice exercises and experiential activities to enhance self awareness. The books are also good especially because they give important ideas and opinions that are important for global business leaders.

Thus, leaders can find ways of managing personal stress, problem solving, coaching and counseling, motivating, managing conflict, empowering and delegating, and building effective teams with diverse cultures (Doh & Stumpf 2005).

In addition to the preceding methods, business schools can benefit from the inclusion of specific country or area studies and diverse out-of-class activities like speakers, events, and competitions that address culture and leadership (Clark 2003). Honesty, integrity, ethics and social and environmental stewardship is also an important factor that leaders should have.

Some countries such as Philippines offer good courses that are designed to produce social responsible leaders who are experts in Asian culture and management styles. The contents of the courses in the curriculum reflect these underlying values (Doh & Stumpf 2005).

Business leaders of a globalizing business organization should bend on recruiting only those professionals who can cooperate effectively. The professionals should also be able to interact with each other with minimum amount of risk. It is quite natural that the situation where a leader hires employees who share the same set of values, rules and cultural norms is ideal.

However, this situation is not ideal in the modern business environment. Since the modern workplace environment is multicultural, the leader must work to enhance the smooth operations of the business with employees from India, China, Germany, Poland and Philippines working together with minimum conflicts.

Thus, the organizational culture should be neutral and without any bias to any set of cultural norms and values (Custom Essay 4). This is why emphasis must be placed on recruiting employees who can easily adapt to the multicultural business environment (Caroselli 2000).

The international customer relations have continued to receive major boosts from the globalization of the economy. Increased cross border alliances and the initiation of e-commerce can also be some of the factors that have contributed most in enhancing globalization and intercultural diversity management.

Many companies can now appreciate the role of effective management of intercultural diversity in the day to day operations of the international organizations. As the issue of globalization gains momentum, many companies find themselves getting in contact with employees from different nations, languages and cultures.

For this reason, any business that wants to globalize its operations must come to terms with managerial issues typical of a multicultural organization. Therefore, intercultural management deals with managerial issues that affect the globalized corporation across borders.

Mismanagement of multicultural organizations can cause heavy losses to the corporation especially when the leadership does not know how to go about international projects. According to the current statistics, many international projects that involve international acquisitions fail due to poor personnel know how of the cultural differences.

It is therefore imperative for any globalized corporation to be sensitive to the differences in culture throughout its operations (Becker 2000). Differences in management styles across the cultures can negatively affect the profitability of a corporation. Mergers involving multinational business organizations can be a contributing factor to failures in a business.

This is because these mergers usually have an impact on the human resource due to the obvious- cultural differences. It is therefore imperative for managers to conduct extensive studies of the market before they think of trying any move that may end up to be detrimental to the operations and profitability of the company (Transcultural synergy, 2011).

My own experience of working in a multicultural organization is pretty interesting because it has exposed me to different kinds of cultures. Working with people from different countries has helped me to understand the nature of different cultures.

I have come to understand that Americans are more liberal, innovative and always try to do new things. They can easily embrace a new culture in whatever environment. On the other hand, people from Europe tend to be quite conservative. They believe that doing things the conventional way is not retrogressive. Instead it is a virtue that they all strive to enhance.

Conclusion

Multinational organizations are those organizations that have globalized their operations. Such organizations have branches in many countries around the globe. Intercultural management is a style of management that is sensitive to the different cultures represented by employees from different countries and languages.

General Motors needs a complete overhaul of the century old corporate culture. This is because the current corporate culture is dominated by managers whose main focus is to chase the next deal in order to reverse its market decline. Cultural interests and sensitivity, self awareness, and global mind-set act as solid foundations of international business skills.

This is a set of competence that leaders ought to develop in order to accommodate diverse cultures and remain competitive in the global market. Business leaders of a globalizing business organization should bend on recruiting only those professionals who can cooperate effectively. The professionals should also be able to interact with each other with minimum amount of risk.

It is quite natural that the situation where a leader hires employees who share the same set of values, rules and cultural norms is ideal. However, this situation is not ideal in the modern business environment.

Since the modern workplace environment is multicultural, the leader must work to enhance the smooth operations of the business with employees from India, China, Germany, Poland and Philippines working together with minimum conflicts.

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