Reference no: EM133218789

Assignment:

The modern automobile industry has changed greatly in the past 60 years. In the mid-20th century, when General Motors controlled 50% of the American market, there were roughly 30 car models around, half of which were made by General Motors. Production runs for individual models were large - for example, GM produced over 500,000 Chevy Impalas per year.

Today, there are over 600 different models on the market, General Motors' market share has eroded to a fraction of its previous level, and a successful single car model may sell 300,000 copies over its entire lifetime. An article in the Economist reported, "the trick is to make different models using the same underpinnings of parts unseen by consumers."

Along with GM's market environment, its organizational structure, known for its different automobile divisions, changed too. In the mid-20th century, marketing and new model introduction decisions were centralized while key operating and engineering decisions were decentralized to the divisions, whose managers were paid based upon the profits of their division. Today, it is the other way around: the brand divisions still exist and that is where key marketing decisions are made. Many operating and engineering decision, by contrast, are centralized.

Explain the centralization and decentralization decisions described for

(a) "old" GM,

(b) "current" GM, based on the information given in the first two paragraphs.