Case Study

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CASE STUDY GM: It’s Rocky in Recovery If there were a self-help group called Corporation Anonymous. General Motors could be charter member. After years of denial, America’s biggest troubled company is trying to come to grips with it’s problems. But it’s not a pretty picture. As GM heads down the road to recover everyone in the corporate family is suffering. Sign of frustration abound. In recent weeks, strikes have stalled work at two critical factories, and other job actions aren’t out of question. Suppliers are streaming over roughshod treatment by J. Ignacio Lopez Arriortua, the new GM purchasing czar with a taste for scorched earth. Last week Rockwell International walked away participation in GM’s electric car project, sending what was widely viewed as signal of disgust. In any restricting, some grief is inevitable. But the tumult surrounding GM is particularly intense. And that’s not only because of GM’s size, say friends and enemies from employees and suppliers; it persists in dictating its desires. If GM can’t create more of a partnership with constituents, it may jeopardize even its success. The strike in Michigan threatened to halt production of the company’s second best selling car, the Pontiac Grand Am. And the strike in Ohio worsened a shortage of the popular Saturn. GM is now running ads with buyers to wait for their cars. Turning point: GM’s woes aren’t new. Its share of the car market fell steadily from 48 percent in 1978 to 31 percent for the month of August, and it posted huge losses for the past two years. But a turning point came in April, when directors pushed aside slow-moving top management to elevate John (Jack) Smith and his lieutenants Lopez, who were largely responsible for GM’s profitable European Operations. GM officials wouldn’t go on the record for this story, but insiders say the mandate is to turn a profit within 18 months.

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