Analyze existing quality management system at Johnson & Johnson manufacturing company based on the Malcolm Baldrige National Quality Award criteria

General Motors

Table of Contents

1.0: Abstract 3

2.0: Introduction 4

3.0: Internal Strategic Analysis 5

4.0 Internal Strengths 7

5.0 Internal Weaknesses 9

6.0: Leadership 10

7.0: Customer and Market Focus 11

8.0: Human Resource 13

9.0: Quality Management System 16

10.0: Process Management (HR) 17

11.0: Conclusion 18

12.0: References 20

Abstract

General Motor (GM) is a multinational automobile manufacturer. The company was founded in 1908 in Flint, Michigan by William Durant and Charles Mott. At present, GM is the second largest automaker after Toyota as measured according to the global industry sales. A key competitive edge that GM has compared with its competitors is its innovative designs and products. The purpose of this paper is to study the company based on the Malcolm Baldrige National Quality Award criteria. GM’s key strategic objectives are place the company to be competitive, satisfy customers, remain solid growth in global vehicle sales, and continually invest to dedicate to improving cultural, economic, educational, environmental, and social aspects of the communities. The paper will look into; internal analysis of GM strategic plan, leadership, customer analysis, human resource analysis, and business process management within the organization.

A key to GM’s success is its management. Without efficient management GM would not have been able to sell and finance its vehicles globally. Success does not mean that the company is not facing any impending threats. Threats for the company do exist in the industry, especially in terms of high cost and brand dilution. In order to avoid them, GM needs to reduce the cost of its vehicles and to add GM letters in all of its brands to increase the awareness among its customers. Furthermore, GM needs to focus more on Hybrid technology because it is cheaper fuel cost.

Introduction

The Auto Industry

The automobile industry has a huge influence on every country’s economy and the U.S. is still the number one manufacturer of vehicles globally. According to various studies this industry is the major user of latest technologies and other supplies such as; computer chips, textiles, aluminum, copper, steel, iron, lead, plastics, vinyl, and rubber. The industry also has a substantial economic impact in the U.S. and globally as well. For example, research show that for every autoworker there are seven other jobs created in other industries that work both directly and indirectly with the auto industry. In the state of Kentucky, the auto industry is one of the largest employers with substantial economic impact to the commonwealth. The auto industry has gone through its ups and down here in the U.S. The latest crisis taking place in 2008, when the industry felt the severe effect of the 2008 global recession. To protect the industry from a financial collapse, the U.S. government had to provide financial assistance to companies such as General Motors (GM) and Chrysler to keep them solvent.

Here in the U.S., laws and government regulations have affected this industry since its founding. The regulations are primarily the effect of consumers increasing concerns for the environment and their personal safety. In addition, today’s automakers like GM are looking at the younger generations when building future vehicles. Development in technology has a huge impact on the automobile industry, especially in terms of how vehicles are moved from the factory to a customer’s home. For example, a recent study conducted by J.D. Power and Associates showed that more than 60% of the buyers referred to the internet before making their vehicle purchase and out of that 60%, 88% went to the dealer’s auto websites before going in and taking a test drive.

This paper will be focused on General Motors (GM), an American icon. The paper will look into; internal analysis of its strategic plan, leadership, customer analysis, human resource analysis, and business process management within the organization.

Internal Strategic Analysis

Background

General Motors Corporation (GM) is a multinational automobile manufacturer founded in 1908. The company headquarter is in Detroit, Michigan, United States. At present, GM is the second largest automaker after Toyota as measured according to the global industry sales. Before Toyota, GM held the position as the largest automaker in the world. The company remains one of the largest automotive companies in the world with operations in 157 countries and more than 212,000 employees around the world. In 2013, they sold 9.71 million vehicles. (General Motors, 2014).

After the economic recession of 2008, GM has rebounded somewhat within the last two years. The company still faces major challenges going forward and recently if one has been following the news, the company is in the middle of a major recall controversy for one of its models. Internal factors that contributed to the 2008 collapse were related to the failure of the company to adapt to the changes in the environment such as; consumer preferences, effective deployment of technologies by competitors, lack of product innovation and lack of effective cost leadership.

Vision Statement

General Motors has a clear vision which is "to design, build, and sell the world's best vehicles."

Mission Statement

The mission of General Motors is devoted to be a leader in providing transportation products and services of such quality that its customers will receive superior value, its employees and business partners will share their success and their shareholders will receive a sustained return on their investment.

Key Strategic Objectives

GM’s key strategic objectives are as follow;

1. Place the company to be competitive, and to increase its profitability and growth.

2. Satisfy customers based on the design, quality, technology and value of the product line; cars and trucks.

3. Remain solid growth in global vehicle sales.

4. Continually invest to dedicate to improving cultural, economic, educational, environmental, and social aspects of the communities that the company operates in.

Brands and Geographic Locations

Key GM brands include the following; Chevrolet, Buick, Pontiac, Cadillac, GMC, Saturn, Hummer, Saab, Holden, Opel, Daewoo, Suzuki, Vauxhall, Wuling, Baojun, Jie Fang, and Isuzu.

 GM operations meet consumer demands through four strategic geographic locations: GM North America (GMNA), GM Europe (GME), GM International Operations (GMIO) and GM South America (GMSA).

Core Competence

The core competence of General Motors is innovation. The company values innovation highly and has been integrating innovation in every part of the organization from product development to reaching out to end consumers that buys its vehicles. Innovation has been the core of the company since the beginning. For example, in 1911 it conceptualized, engineered and commercialized the self-starter engine for the first time. Then in 1926, the Cadillac brand was pioneering in devising a nationwide service oriented strategy. In 1996 the company introduced OnStar satellite technology. This particular technology was integrated in vehicles and tracked individual vehicles in case of an emergency or theft.

Internal Strengths

1. Large Market Share

At present, GM’s market share in the U.S. is at 26%, a drop from the past but still significant. They also have a growing share in the Chinese market and are also making huge successes in the Chinese road.

2. Global Experience

Though over the last couple of years, GM has been going through difficult times, it still is a global company with huge resources and a global footprint. The company has worldwide operations with a global customer base.

3. Strong Brand Names

Since the company has been around for more than 100 years, it has been able to build a strong portfolio of brands. Within the last decade, the company has also sold of non-performing assets including some brands like SAAB to focus more on its existing brands. The current GM brands include; Chevrolet, Cadillac, Buick, Pontiac, Saturn, Hummer, and Daewoo.

4. Ally Financial Program

At present a large percentage of the company’s profits are coming from financing activities of its vehicles to end consumers. The Ally Financial Inc. is at the heart of the GM financing program. Over the years, the business has grown including insurance, online banking, mortgage operations, and commercial finance.

5. OnStar Satellite Technology

When this technology was developed in 1996, GM showed the innovative part of the organization. At present, OnStar currently has over 3 million subscribers and is standard on all GM vehicles. Through advanced Satellite technology, it allows the vehicles to be tracked in the event of an emergency or theft.

6. Market Share

In May 2013, The Cadillac brand won the title of fastest-growing major automotive brand in the U.S., among 12 luxury brands like Audi and Lexus. As per market research, Cadillac sold 13,808 cars in May 2013, a 39.88 percent increase when compared to 2012. The table below shows the position that Cadillac holds when compared to its competitors in terms of market share and unit sold (Luft, 2014).

Table 1

Luxury Segment, May 2013, USA

Brand	YOY Change	May 2013	May 2012	May 2013 Market Share	May 2013 Market Share Rank
Cadillac	+39,88	13,808	9,871	8.69%	6
Audi	+15.00	13,228	11,503	8.32%	7
Lexus	+3.57	22,229	21,463	13.99%	3

Internal Weaknesses

1. Stagnant Profitability

Looking at GM's profit we see that they are certainly struggling with respect to the size of their company. The profit margin of the company is around 1.5% and the Return on Investment has dramatically decreased due to heightened competition in recent years. The ROI has dropped by more than 10%. This is a troubling trend for the company and will certainly not make the shareholders happy.

2. Poor Credit Rating

The 2008 financial crisis truly showed a greater picture of internal GM finances. The company was in the verge of bankruptcy with tremendous future obligations such as employee pension funds, interest payments on loans, and low return on assets. The U.S. government had to step in to save the company for public and private financial institutions were not willing to loan further money to the company. The company’s credit rating has rebounded in recent years but still its current bond rating is below AA.

3. Legacy Costs

Though the company has restructured a lot of its legacy costs such as employee pension fund, union contracts, and long-term supplier contracts, GM still faces present and future challenges in managing these obligations. These long-term commitments are substantial financial burden on the company.

Leadership

Throughout its history, GM has had a strong leadership. For a global and dynamic company such as General Motors, leadership is where it starts. Recently the company made history by hiring the first female CEO, Mary Barra. Ms. Barra is known to be ingrained in the GM culture as she held various positions within GM before becoming the CEO. Some of the positions she held inside the company were in the area of Global Product Development, Purchasing and Supply Chain, Plant Manager of a manufacturing facility. She has had a thirty year distinguish career in General Motor.

Ms. Barra is known to be a dynamic leader with a great strategic vision for the company. Her colleagues and workers say that some of her key strengths can be in the area of collaboration, openness to a wide range of inputs, predisposition to Innovation, and embracing key technologies to fuel innovation. She is also known to be a good listener. An example of this would be the way she conducts town hall meetings. She is known to listen to all opinions while conducting these meetings. As resulting of these meetings, she is known to make decisions wisely (Engelmeier, 2014). Also, she is known to promote an inclusive environment inside the company where employees feel comfortable expressing their opinions and sharing their ideas as well. Since, Barra came from the product development area, she values innovation highly within the organization. She is a firm believer that innovation is what will separate the company from its competitors. For example in 2012, Barra led successfully a team in GM to increase the sale of the Chevrolet Malibu. Also, she helped many departments in GM to work together collaboratively for the first time in the company's history to promote the overall welfare of the company (Bomey, 2014). The judgment on Ms. Barra is still out because she has only been on this position for less than a year. The true measure of her leadership will be based on how GM will carve out the future and drive shareholder value at the same time.

Customer and Market Focus

Building and maintaining customer relationships is very significant to GM. Without customers, there are no sales. GM recognizes the importance of understanding both near and longer-term customer needs and expectations as well as employing systematic processes for gathering customer needs and managing customer feedback. In addition, the company has also set up customer councils which bring current vehicle owners and vehicle team members together to talk about product satisfaction and areas for improvement. This customer centric strategy is extremely important to the company (Evans, 1996).

One external agency that GM values highly in understanding the market perception is J.D. Power and Associates. J.D. Power and Associates is a well-known organization within the automotive industry. The annual quality survey and its results that J.D. Power shows each year are highly anticipated within the automotive industry. The survey measures factors such as customer satisfaction, product quality, and buyer opinion about individual brands. In 2013, J.D power And Associates Initial Quality Study announced that General Motors ranked at the top of all automakers in several of its brand categories. Two brands, the GMC and Chevrolet were ranked in the top five. Beside these two brands, Cadillac and Buick scored above the industry average. In addition, eight other GM vehicles in different divisions won the quality award among 23 other competitors. The 2013 results show how far GM has come in customer satisfaction and approval. The key metric the J.D. Power study measured was what kind of quality problems rose in the first three months of the purchase of a new vehicle. More than 83,000 buyers of 2013 model-year participated in the survey that had 233 questions (Jdpower, 2014).

One of the factors that helped GM to increase their profits and meet their customer expectations was by combining both product quality and customer experience into one area led by a GM expert Boler-Davis. This strategy helped GM to convert the voice of their customer into producing design that the customers want with high quality, which in turn led to great products in the showroom.

Another tool that GM utilizes in valuing customer input is the “AVL Drive”. This tool allows GM engineers to convert customer's feedback into technical requirements and give the customers what they are looking for in a vehicle. This shows that listening to customer inputs is paramount to GM. So, GM engineers are not only design in the scope of their knowledge and experience but also in the desire of the customers.

To further make their customers an integral part of their organization, the company created a call center in Austin, Texas. The center is technologically advanced and is equipped with real life simulators where GM staff can regenerate exactly what their customers experience when they call. In addition, the company also ensures that each dealership has technology experts who could explain how various technology work inside a vehicle (Muller, 2013).

In order to further extend their appreciation to customers, in June 2005, the company announced its "Employee Discount for Customers" sales promotion. The results were phenomenal, as sales skyrocketed to record levels. GM's "Employee Discount for Everyone" allowed people to purchase selected vehicles at the same price as GM employees.

Human Resource

What makes a company successful at the end of the day is what type people work for the organization. This is true for any global organization like General Motors. The human resource department within GM plays an important role inside the company. Human resource planning managers within GM ensures that the company has the appropriate knowledge, talent and expert employees working at the right positions within the organization. Through HR department, the company can avoid losses and can deal with emergencies which will lead at the end to profitability (Robbins and Coulter, 2006). Strategies that GM uses to promote its human resource capabilities are as follows:

Streamlined Incentive Structure

GM provides employees with annual bonus as a reward for meeting customer satisfaction. Rewarding plans are very important in the overall company strategy. In order to strengthen the company's strategies in customer management, training plans are designed by the company for its employees to enhance their careers and enable them to meet flexibility. The management set up lessons and meeting for their dealers at Walt Disney resorts and Ritz-Carlton Hotels to educate them on various service standards. Disney resorts are well-known for their skills to deal with customers, while Ritz-Carlton Hotels are the gold-standard for service.

GM employees have good compensation packages including state of the art health insurance plans. In addition, the company also provides an appropriate discount to employees and their family members when they purchase a GM vehicle. (General Motors, 2014)

Emphasis on Global Collaboration

General Motors brought employees from India and China as full time workers in their plants in the U.S. As GM was trying to increase their global footprint, training employees from India and China in U.S. factories were essential to the company’s strategy. Collaboration with their U.S. counterparts was a very important learning process for workers coming out of India and China. In addition, this collaborative strategy also helped the company to increase their global footprint which was very important to their overall profitability (David, 1999).

Emphasis on Cost Cutting

GM also gives a tremendous amount of responsibilities to its managers. If a manager feels that reducing employees is important, he or she has the authority to make this decision on their own. In this process, they can also seek counsel of the company’s human resource department. From a centralized structure, the company has moved more towards a decentralized structure, where decision making process is a lot faster with improved efficiency (Taylor, 2011).

One of the objectives of the company is to reduce material and logistics costs. In order to do that, the company moved some of the logistic centers closer to assembly pants. In addition GM also decreased the number of its dealership for some of its dealership were not operating profitability. The reduction in the dealership network allowed the company to focus more on the stronger ones and provide them with additional resources. (Charles, 2011).

GM “mySocrates”

The portal, known as “mySocrates,” is the place employees go for information about GM. Managers use the system for performance reviews. HR uses it to communicate benefits, training programs, and other programs company wide, which in the long run saves time and money. In addition, HR can also communicate with GM employees on a real time basis. For example, in the past annual benefits enrollment used to take several days. Now it takes just a few minutes.

Technician Training

GM has a specific technical training to assist dealers in improving their next generation of professionals. This training allows dealers to train and educate technicians in each level from high school to college and beyond. For example, GM ASEP (Automotive Service Educational Program) provides training for students pursuing a career in the service and know how on how to maintain GM vehicles. GM ASEP is a collaboration between GM dealerships, the company, and colleges throughout Canada and the United States. Students are allowed to attend college and work at sponsoring General Motors facility for two years. After graduation, students obtain an Associate Degree in Automotive Technology. General Motors ASEP training includes advanced auto technology with a strong emphasis on mathematics, reading, and electronics, focused on both analytical and technical skills. Training period is two years with 70 credits hours (Choulochas, 1989).

Quality Management System

Number of years ago, GM adopted the Total Quality Management System (TQM). Its strong emphasis on quality management initiatives, allowed GM Cadillac to earn the Malcolm Baldridge National Quality Award, which recognizes organizations that excel in quality management in terms of management philosophy, practices, and policies related to the pursuit of improved quality. TQM has been very popular in the automotive industry and the principal of TQM is widely used by all manufacturers. GM has globally integrated the TQM process throughout its manufacturing facilities worldwide. TQM involves management and control of quality throughout the entire organization or the entire supply chain. It also emphasizes top management commitment, focus on customer satisfaction, product design and manufacturing for quality, continuous improvement, extensive education and training of employees, employees’ involvement and empowerment, development and maintenance of an effective in house quality assurance system, as well as an effective supplier’s quality management system (Bandyopadhyay and Sprague, 2003). The 2013 J.D. Power recognition that GM got for its brand can be directly attributed to its commitment for TQM process.

Process Management (HR)

To complement strategic TQM objectives, GM has also developed a portfolio of HR management policies. Furthermore, GM has been successful in aligning HR practices (i.e., communicating, training, empowering, evaluating, and rewarding individuals and teams) with quality initiatives. Starting with communication, GM makes it a point to communicate vital initiatives to all members of the organization. When it established a vision to pursue a TQM culture, it developed strategies for communicating the new mission throughout the organization. In communicating with the members of the organization, GM uses its own in-house television networks to broadcast “live” to all their employees. Furthermore, GM employees get updates and answers to often asked questions on the company’s voice-mail system. Also, GM management conducts the annual state of the business meeting attended by all employees to share quality victoriesand also to reveal future quality objectives.

Regarding training, GM provides at least eighty hours of quality training which include statistical quality methods, Deming’s leadership and quality models. Furthermore, top-level management is also required to attend quality courses. Regarding employee empowerment, GM has rationalized its product development process to the point where more than fifty teams direct the entire process. In addition, more than sixty percent of all of GM's employees are members of some type of team. In terms of evaluating employees, GM replaced their traditional performance review system with a personnel development planning process. Managers meet with their employees to set future expectations, identify training needs, provide coaching, and reward continuous improvement. Finally moving to rewarding employees, GM makes points in rewarding key employee performances, managers can give up to $500 instantly under their Spontaneous Recognition Award Program to their subordinates.

Conclusion

2013 and beyond will be an interesting time for General Motors. This American legend has seen its ups and down and have completely revamped itself to meet the requirements of the time. CEO Barra has interesting yet promising challenge in her hand. The company throughout its history has had a strong culture of quality and has been effective in its quality management system and product development. Furthermore the company’s human resource management practices and customer orientation contribute to its successful quality management system and overall profitability in the present as well as the future. However, threats for the company do exist in the industry, especially in terms of high cost and brand dilution. These factors could have negative implications to GM. Compared to its competitors; GM still has one of the highest cost structures in the industry. This is still after the cost reduction strategy that the company implemented in 2008. The company still has one of the highest cost structures in the industry. So, GM needs to work on this area to compete better. Regarding brand dilution, GM operates 18 different brands and management of all 18 different brands can be both cumbersome and cost intensive. For example only one of the brands carries the GM letters. This can make it difficult for customers to identify all the brands that belong to the GM family. GM has to add GM letters in all of its brands to increase the awareness among its customers. Hybrid technology is the way of the future and GM needs to address on how to compete in the hybrid marketplace. The attraction for customers regarding hybrid vehicles is cheaper fuel costs and a greater environmental consciousness.

References

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