General Motors and Global Market

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Table of Contents

Introduction
Geo-Political Events in the Arab World
The Impact on Business
The Approach Taken by the Leaders to Address the Problem
The Performance of the Leadership in Addressing the Problem
Conclusion
Reference List

Introduction

General Motors is one of the most successful automobile firms in the global market. According to Bolman and Deal (1), the management of General Motors has exhibited unique capacity to penetrate the global market despite the hostile environmental conditions.

The scholar notes that at a time when American firms were winding their operations in the Arab world due to the growing anti-American sentiments in the region, the General Motors was able to withstand the storm and even expand its operations. Egypt was one of the most attractive markets, and the firm established its production plant in the city of Cairo to serve the local population.

The plant served the regional market of North Africa and Middle East. The Arab revolution that was forced by Hosni Mubarak, the long serving Egyptian strongman, led to instability in the country. The political turmoil in the neighboring markets of Tunisia, Libya, South Sudan and part of the Middle East worsened the situation. In this paper, the researcher will analyze the role of the leadership of this firm in managing this geo-political turmoil in the region.

Geo-Political Events in the Arab World

The Arab Spring started in Tunisia and forced the President Ben Ali to run out of the country to Saudi Arabia. This event inspired the Egyptians that were uncomfortable with the leadership of Hosni Mubarak. The unrest started in various cities in the country following the massive civilian protest.

Business operations were brought to a standstill as the rowdy youth pelted cars and business premises with stones. The situation went on for 18 days. This forced the President Hosni Mubarak to resign his post. The military took over the leadership, but it did not stop the unrest.

In Libya, another attractive market for General Motors, a new revolution started. The city of Tripoli became a battle field as the government forces clashed with the rebel fighters. The events in Libya were worse than what was taking place in Egypt. Unlike Egypt, where the civilians engaging the government forces were unarmed, in Libya the rebel forces had effective arsenal to engage the government military forces.

The rebels managed to take over power after gunning down the then President Muhamar Gaddafi. In Egypt, things were not getting better even after the democratic election that saw Mohammed Mursi come to power as a new Egyptian president. He was accused of high-handedness. He was soon sent out of power and the military took over the leadership of the country once again.

The Impact on Business

These events had devastating impacts on the business community in Egypt. For four years, there was no political stability in a country that had been seen as an oasis of peace in a troubled Arab World. It was almost impossible to conduct businesses in such environments. The roads were impassible because of the activities of people trying to bring change to the government. They were barricaded using burning tyres and stones.

The rowdy youth would pelt cars and business premises with stones, especially the business premises that were perceived to be owned by the government sympathizers. Many investors were considering other regions away from Egypt and the neighboring countries that were politically unstable. Security was not guaranteed as criminals took advantage of the unrest to loot from various premises.

Some of the customers of General Motors, especially the organizational buyers, had frozen their activities due to the ongoing turmoil. They were also scared of the events and feared that their businesses could be destroyed. For almost one year, General Motors majorly relied on the government as the main organizational buyer of its products. The export to Tunisia, Libya and Sudan also dropped.

The Approach Taken by the Leaders to Address the Problem

General Motors has a long history of operation in Egypt since 1920s. That is why when it became apparent that the business environment in the country was getting worse, the top management unit had to act very swiftly. The chief executive officer of the firm, Dan Akerson, travelled to Egypt to assess the situation in February 2011 following the resignation of Hosni Mubarak. The top management did not expect such a serious twist in the country’s political structure.

Akerson was met by the regional managers in Egypt, led by Rajeev Chaba. The team wanted to find a way of maneuvering in this important market that was facing serious security challenges. Before travelling back to the United States, Akerson, with the helpof Rajeev Chaba’s team, drew a plan on how to deal with the prevailing environmental conditions. The plan was the least expected move of the General Motors.

The company announced that it would open its stores and continue with the operations despite the raging storm in almost all the major urban centers in the country. However, the production capacity was reduced because the local market was not very attractive. As Howard and Hussain (3) mention, Rajaav, with the blessings of the directors in Egypt, doubled its security at the production plants and the show rooms in order to facilitate the production and sale of its products.

However, the management knew that it had to avoid being seen as a government sympathizer that did not care about the concerns of the public. As Prashad (4) notes, it was during this political turmoil that General Motors spent the highest amount of its profits in corporate social responsibility.

It was one of the firms that were actively involved in giving aid to the protesting youths. They donated money to buy food and medicine in case someone was injured during the violent protest. One dilemma that the leadership faced was how to handle the rival groups. The government was at war with the rebels.

The firm had first approached the government and requested for a security beef-up, a request that was gladly accepted by the military rulers. However, the locals were also very important in enhancing security because in most of the cases they are the causes of insecurity. It had to associate with these two warring groups without being seen as a sympathizer of either side.

To do this, Mr. Akerson had to come up with a unique way of addressing the problem. Mr. Rajeev Chaba was instructed to focus on how to offer any humanitarian help to the locals as long as it did not facilitate them in any way in their fight against the government.

On its side, the management in the United States maintained a close relationship with the government. It was very important as the firm reopened the production plant. The fact that most of the shares of the firm are owned by Egyptian and Saudi investors also gave it the impression that it is a local firm. It gave it the image of an Islamic firm even among the radicalized Muslim youths that were against the presence of large corporations from the West.

The Performance of the Leadership in Addressing the Problem

The performance of the leadership of General Motors in addressing this problem can be described as impressive. According to Grasso (2), GM is one of the few multinational corporations that were able to withstand the storm arising from the political revolution in the country.

One area that expresses this impressive performance very clearly was the ability to relate well with both sides of the warring parties. This was done in a way that none of the parties considered the firm to betray their relationships or to be sympathizing with the opposing groups.

The firm was always ready to offer help to the people affected in the streets during the protest. This made it to be seen as a firm that is in touch with the locals. At the corporate level, the relationship between the firm and the Egyptian leadership never deteriorated. The firm is steadily making progress in the Egyptian market at a time when other firms are restructuring following the relative peace witnessed in the recent past.

Conclusion

The geo-political environment in the Northern Africa following the Arab Spring affected many businesses in the region. General Motors was one of the affected firms in this turmoil. However, the leadership of the firm came up with a unique strategy that helped the firm to overcome the security threats posed by the rebellion. The firm is currently enjoying huge profits at a time when other multinationals are to get back on track following the relative calm that has been witnessed in the recent past.

References

Bolman LG, Deal TE. Reframing leadership. In: Gallos JV, editor. Business leadership: a Jossey-Bass reader. 2nd ed. San Francisco, CA: Jossey-Bass; 2014. p 35-49.
Grasso D. High-performance GM LS-series cylinder head guide. North Branch, MN: CarTech; 2014. 144 p.
Howard PN, Hussain MM. Democracy’s fourth wave? Digital media and the Arab Spring. New York, NY: Oxford University Press; 2013. 144 p.
Prashad V. Arab spring, Libyan winter. Oakland, CA: AK Press; 2012. 272 p.

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