Reference no: EM131462157

Question: Saturn was only an idea in 1983-General Motors' new idea about how to organize a car company. The idea was to give the company and its employees a lot more autonomy instead of imposing the rigid rules and conventions under which auto factories normally operated. Yet, since 1990, when the Saturn plant opened in Spring Hill, Tennessee, GM has changed the organization little by little. Is today's Saturn still a different kind of car company? The Saturn project went into high gear after GM and the United Auto Workers came to agreement about having plant employees take a more active role. Instead of operating under an inflexible system of narrow job specialization, the plan was for Saturn's employees to work in teams and handle a variety of tasks as needed. The new company was to be managed as a separate entity and therefore hired its own engineers, developed its own vehicles, and purchased its own supplies and raw materials. GM also built Saturn a new state-of-the-art plant at a cost of $3.5 billion. And to reinforce Saturn's independence from the GM hierarchy, its top manager was designated its CEO.

By the time the first sedans started rolling off the assembly line, Saturn had established itself as a different kind of car company. Customers welcomed the "no haggle, no hassle" pricing policy as a change from the back-and-forth price negotiation they usually had to endure when buying a car. Just as important, Saturn's dealers put extra emphasis on service and satisfaction, making customers feel especially appreciated. Such a mystique surrounded Saturn that happy customers began dropping by the factory to thank the employees. Saturn soon channeled their enthusiasm into a "homecoming" festival at Spring Hill that drew more than 40,000 customers from all over the United States. The CEO even gave the bride away when the employees of two competing Saturn dealers decided to hold their wedding at Spring Hill. Sales soared, and the plant strained to keep up with demand. For a time, Saturn was more than just a car company-it was a national phenomenon. By end of the 1990s, however, Saturn had lost its novelty.

While GM's officials debated whether to invest in new models, tastes were changing. Competitors' sport-utility vehicles (SUVs) and light pickup trucks had captured the public's imagination and gained market share at Saturn's expense. Eventually, Saturn did introduce the Vue SUV, but it was unable to generate the same kind of magic as the company's original sedan. Meanwhile, GM was under great pressure to improve its financial performance, and top management was determined to cut costs worldwide. In the past, the president of each region (North America, Europe, Latin America, and Asia-Pacific) was responsible for that region's product development and other key functions. As a result, corporate officials could request but not order changes that would lower costs, such as following one set of engineering standards. By centralizing engineering, purchasing, and product development, the corporate office gained direct control to squeeze out redundancies. This move toward specialization touched Saturn as well.

The Spring Hill plant was efficient but costly to maintain. So GM merged Saturn's engineers with its corporate design staff and began managing the brand like all other brands in the corporate lineup. Spring Hill may manufacture Chevrolets in the future, with Ohio or Mexico producing Saturns. Already the Saturn minivan is being made in Georgia, and some auto industry observers believe GM's awardwinning European-designed model, the Opel Insignia, will become the next Saturn Aura model in the United States. With all these changes, is Saturn still a new kind of car company?11
For more information about this company, go to www.saturn.com and www.gm.com.

1. In a factory such as Saturn's, where certain tasks must be completed in exactly the same way to produce each car, why would the company not push for job specialization?

2. Does GM appear to be organized by function, product, location, customer, or more than one of these departmentalization bases?

3. How does eliminating the CEO position at Saturn affect the chain of command at GM?