Ldr_531_Examining_a_Business_Failure

Examining a Business Failure In February 1983 General Motors Corporation and Toyota Motor Company of Japan announced a joint venture in Fremont California. They would use a plant formerly owned by GM and produce a compact car comprised of a Japanese engine and transmission with a U.S style body. The venture would produce 12,000 new jobs in the U.S, 3,000 in the production process, and 9,000 in supplier and related industries (F, 1983). The joint venture was the New United Motors Manufacturing Inc. NUMMI, it would help GM managers get familiar with Toyotas’ approach to lean manufacturing, and Toyota would learn how US automakers handled human resources, the United Auto Workers (UAW), legal issues, regulatory, and compliance requirements, government relations, and other issues (Chappel, 2009). The venture was successful for many years and the NUMMI plant became the model plant for other GM plants across the country. In 2010 the NUMMI plant was closed and 4,700 employees were left unemployed. This paper will explain how specific organizational behavior theories could have predicted or explained the ultimate failure of the NUMMI plant and compare and contrast how the leadership, management, and organizational structures contributed to the plants failure. Organizational behavior is a field of study that investigates the impact that individuals, groups, and structure have on behavior within an organization (Stephen P. Robbins). When the NUMMI plant was opened in 1983, General Motors sent a group of managers to Japan to learn the work culture of the Japanese in Toyota city. The managers were shocked to see how efficient the Toyota plants were run because it was completely different from how the plants were run in the USA. The General Motor plants concentrated on quantity over quality and Toyota concentrated on quality over quantity. In the GM plants, the assembly line never stopped, and in the Toyota plants, the assembly line would stop to fix an issue as simple as one bolt in the wrong place. The organizational structure of Toyota is broken down into four categories: The long-term philosophy, the right process, development of people and partners, and continuously solving root problems (Liker). The management and the employees worked together at Toyota to ensure the quality of the product. Toyota understood the employees needs, and included the employees as a part of the organizational structure. The GM plants were described as being fiefdoms or plants ran by one dominant person or group. The plants were divided into two groups, the plant leadership, and the unionized employees. This division caused an unhealthy work environment, many employees did not want to work for GM but because of the pay the employees had a continuous commitment to General Motors. Despite the division at the GM plants, the NUMMI plant was a successful operation because they infused the Toyota way with the GM structure. Geoff Weller, who was one of the managers sent to Japan to learn the organizational structure of Toyota, was tasked to teach GM plants across the U.S. how the NUMMI plant was successful. Geoff Weller would go to the plants and give his presentation, and in some cases the plant manager would ask him to leave. Eventually the organizational structure of the NUMMI plant would catch on across the country, but it was too late. Leadership, management, and the organizational structure of General Motors and Toyota eventually would contribute to the failure of the NUMMI plant. General Motors was mainly ran by the plant managers and the United Autoworkers Union. The leadership of GM allowed the plant managers to cultivate their plant as they thought necessary. Some of the workers did not want to mimic the Japanese way of working because of their American pride, and others were just not accustomed to change. The culture of each GM plant differentiated from one another, this separation of culture would become one of the many factors that eventually led GM into the fourth largest bankruptcy in U.S. history. The Toyota leadership relied on General Motors to keep the NUMMI plant in business. The leadership team at Toyota failed to create a backup plan in case GM pulled out of the joint venture, and when GM finally pulled out, the lack of preparation left 4,700 people jobless. Toyota was a company known for never laying off its employees, their reputation was tarnished because of the plant closure. Even though the NUMMI plant was a joint venture, the perception is that Toyota was the blame. In conclusion, specific organizational behaviors could have predicted the fall of the NUMMI plant. When General Motors sent their management team to Japan to learn the Toyota way of efficiency, they failed to train the rest of the General Motor plants across the country when they returned. The division between the leadership and the United Auto Workers union in the GM plants became a contributing factor in the collapse of GM. The organizational structure of each plant in the General Motors system was different from the others. This eventually caused a ripple effect throughout General Motors’ financial systems, which caused them to file for bankruptcy, eventually pulling out of their joint venture with Toyota. The organizational behavior of Toyota also contributed to the failure of the NUMMI plant. Toyota’s lack of preparation in case GM pulled out of the venture, caused the plant to close and left many people unemployed. References Chappel, L. (2009, August 28). Toyota closing Nummi factory in California. (L. Chappel, Producer) Retrieved June 22, 2012, from Autoweek.com: http://www.autoweek.com/article/20090828/CARNEWS/908289998 F, J. (1983, September 1). The GM-Toyota joint venture. Retrieved June 2012, 2012, from Heritage.org: http://www.heritage.org/research/reports/1983/09/the-gm-toyota-joint-venture Isidore, C. (2010, April 1). GM and Toyota Failed Marriage. (C. Isidore, Producer) Retrieved 23 2012, June, from CNN Money: http://money.cnn.com/2010/04/01/news/companies/Toyota_GM_joint_venture_closing/index.htm Liker, J. K. The Toyota Way. New York: McGraw-Hill. Stephen P. Robbins, T. A. Organizational Behavior, Fourteenth Edition. Concord: Pearson Education. Welch, D. (2009, August 28). Bloomberg Business Week. (D. Welch, Producer) Retrieved June 23, 2012, from Business Week: http://www.businessweek.com/autos/autobeat/archives/2009/08/nummi_to_close.html