How General Motors Has Affected the Environment and Vice-Versa
Resource-Dependency Theory
Robbins and Barnwell (2006) feel resource-dependency theory “highlights the interaction of the organisation and its environment” by drawing on the approach of the open system to advocate the means of which the organisation is reliant on the environment for its resources. Being dependent on the setting’s resources gives suppliers the expanse of exercising a large extent of authority on organisations. The resulting vulnerability of organisations further leads to them being susceptible to the demands of their dealers and firms have found it a resistant challenge to break away from this dependency. It is almost a knee-jerk effect that organisations will attempt to diminish the impact of its resource dependence as much as possible. GM has, over the years, achieved recognizable success in lowering its level of uncertainty over supply issues by ensuring supplier diversity. It accomplishes this by not relying on a sole supplier nor just a mere few of them, but by establishing steady links with approximately 600 credible dealers. Not only that, GM finds resource security in making certain its supplies are derived from numerous geographical locations as well as from dealers of differing backgrounds. The former greatly lowers the risks of threatened adversities occurring from concerns like union protests, governmental regulations and even climatic catastrophes, all of which are usually localised issues. The latter not only provides opportunities for “minorities, women, and small businesses” ( Motors 2010) but also gives GM an advantage in being less dependent on a single type of supplier. GM today collaborates with more than 200 certified minority and female-governed firms and commits to mentoring their top suppliers to ensure high productivity rates ( Motors 2010).
Stakeholder Theory
Stakeholder theory holds that companies operate under socially responsible terms that assure a specific set of rights to stakeholders that are crucial to their progress. Organisations that are cautious to stakeholder requirements will achieve greater successes (Hatch & Cunliffe 2006). GM.COM (2010) identified that society is the basis of stakeholder relationship with General Motors. Society expects organizations to be environmentally and climate friendly in their operations and GM has reciprocated by building greener cars and manufacturing battery operated electric cars. General Motors’ constantly emphasizes on doing what is best for customers in order to serve them better. GM has also indicated that dealership and customers are of their greatest importance.
Globalisation
Globalisation describes an ongoing process by which regional economies, societies, and cultures have become integrated through a globe-spanning network of communication and trade (Daft 2007). Globalisation has emerged to be an almost conspicuous and often debated aspect of today’s society. GM’s stability in the global economy is indeed a remarkable feat and much of it has to be attributed to its efforts in the intercontinental market.
Two considerable elements will stimulate globalisation (Daft 2007). First and foremost, the concept of market-oriented investment suggests that a company’s expansion capacity beyond its local frontiers will be fundamental in increasing profitability. Equipped with facilities in most corners of the globe, the GM brand is able to function effectively as a lone, collective and assimilated automotive giant. Evidently, General Motors have sold more cars outside the United States than within America itself (General Motors 2010). Secondly, asset-oriented investment demands that human resources be exploited for the fact that they are not proportionate geographically. GM, being the perfect example of capitalising on this characteristic, has been attracting foreign talent into its diverse team for more than a decade. Expertise in the form of engineers and scientists have been scouted from North and South America, Europe, the Middle East, China, Taiwan, India, and Korea to satisfy the world’s growing hunger for developed automation. Being able to do that gives GM a phenomenal cutting edge in gaining access to resources anywhere in the world (General Motors 2010).
Producer-Driven Commodity Chain
Globalization has been encouraged by industrial firms that have established a unique kind of international economic network that has been called producer-driven commodity chains (Clegg, Kornberger & Pitsis 2005). Producer-commodity chains are those in which large and usually, multi-national producers have central control in coordinating networks of production. This is characteristic of capital and technological intensive industries and the automobile industry is an example of this (Rothstein 2005).
In producer-driven chains, the manufacturers will specify to their retailers, usually the models they will ship over and the respective prices the dealers will pay (Rothstein 2005).
Gereffi’s producer-driven variant can be associated with the internal and external networks emerging from large multinational producers, such as General Motors.
Technology and production proficiency were core competencies that needed to be fostered and positioned in-house, or in highly associated ‘captive’ suppliers that can be prevented from sharing them with rival firms (Clegg, Kornberger & Pitsis 2005).
Institutional Theory
Institutional theory is described by Robbins and Barnwell (2006) as an avenue of assimilating an organisation’s preceding actions with societal and environmental influences on it to make sense of organisational procedures. This theory asserts that organisations are characteristically robust and will gradually be systemized into the environment by the conduct of the groups within the organisations and society which is foreign to it (Hatch & Cunliffe 2006). GM’s remarkable sense of corporate social responsibility, especially in the areas of being environmentally-friendly, is highly evident of institutional theory being put in place. Today’s society has seen a growing consciousness over environmental issues that has been threatening to cease the world’s diminishing resources and potentially causing rising numbers of climatic disasters. Giant organisations such as Nike (Environmental Leader 2008) and McDonald’s (Green Peace 2003) have adopted to go green by using only environmentally-friendly materials in their footwear and refrigerators respectively, and GM is not alien to this approach. GM has committed itself environmentally in all aspects of its operations from the ways its vehicles are manufactured to the materials utilised in the production of its vehicles ( Motors 2010). This evidently highlights society’s take on the environment in institutionalising GM to grow into an environmentally-friendly organisation.
Conclusion
In summary, the paper has shown the multinational and multidivisional nature of General Motors and how these characteristics have provided the firm with comparative advantages in the global market, stabilising their stature in the Fortune 500 list. We also see that the relationship between General Motors and its environment is highly interdependent where their mutual influences have been depicted by examples of General Motors’ organisational practices through organisational theories. A significant learning point is that no organisation is an island in today’s world of intertwining business networks which spread across the globe. In order to excel, or even to survive, firms have to come to agreement with reality and seek means to adapt to such a situation. General Motors can indeed be an exemplary role model to other aspiring organisations.
(1515 words)
Reference
Bordenave, G and Lung, Y 2003, The Twin Internationalization Strategies of US Automakers: GM and Ford, Retrieved 2 March 2010, from Research Library
Clegg, S Kornberger, M and Pitsis 2005. Managing Organizations: An Introduction to Theory and Practice, Sage, Oxford
CNN Money 2010, viewed 1 march 2010, <>
Daft, RL 2007, Understanding the Theory and Design of Organisations, Thomson South-Western, Mason
Environmental Leader 2008, Nike Markets Air Jordan as Eco-Friendly, viewed 2 March 2010, <http://www.environmentalleader.com/2008/01/10/nike-markets-air-jordan-as-eco-friendly/>
General Motors 2010, viewed 20 February 2010, <http://www.gm.com/corporate/about/company.jsp>
General Motors 2010, viewed 27 February 2010, <http://www.gm.com/corporate/dealers/diversity/index.jsp>
General Motors 2010, viewed 27 February 2010, <http://www.gm.com/corporate/responsibility/environment/welcome_message.jsp>
General Motors 2010, viewed 1 March 2010, <http://www.gm.com/corporate/responsibility/environment/welcome_message.jsp>
Green Peace 2003, What Do You Do When a Bad Guy Does a Good Deed, viewed 1 March 2010, <http://www.greenpeace.org/international/news/mcdonald-s-bad-guys-do-good>
Hatch, MJ and Cunliffe, AL 2006, Organization Theory, 2nd edition, Oxford University Press, Oxford
Miller, D 1989, ‘Configurations of Strategy and Structure: Towards a Synthesis’, Readings in Strategic Management, Macmillan Education, London
Mullins, LJ 1993, Management and Organizational Behaviour, 3rd ed, Pitman Publishing, London
Robbins, SP and Barnwell, N 2006, Organisation Theory, 5th ed, Pearson, Australia
Rothstein, JS 2005, Economic Development Policymaking Down the Global Commodity Chain: Attracting an Auto Industry to Silao, Mexico, Social Forces, 84(1), 49-69. Retrieved March 2, 2010, from Research Library
Schwartz, HS 1991, Narcissism Project and Corporate Decay: The Case of General Motors, , Vol. 1, No. 3 (Jul., 1991), pp. 249-268, Retrieved March 2 2010, from Philosophy Documentation Center