Systems Theory the Auto Industry Thesis

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For example, GM lobbied the state of California 1998 to overturn an emissions-reduction mandate that would have prohibited many of GM's passenger vehicles from being sold in the large, car-hungry state. When it was successful in the short run, GM discontinued its work on its prototype of a battery-powered car, the EV1 that ran 100 miles on a single charge. Toyota, in contrast, continued to work on its hybrid line, and the resulting Prius shows the fruitfulness of the Toyota approach (Lifton 2008). Discontinuing research on battery-powered technology was not simply bad business sense on GM's part, but also showed how one part of the company (management) could thwart the efforts of another part of the company (R&D). The focus of systems theory is synergy rather than such discordant behavior. Systems theory stresses that "the system's overall behavior depends on its entire structure (not the sum of its various parts)" (McNamara 1997). It also stresses the need to take input from forces outside the system, including the global pressures to minimize the effects of climate change.

Despite its sale of its unprofitable brands and development of the Chevy Volt, industry analysts still say that GM's thinking remains limited and mired in the past: "Ever notice how an organization seems to experience the same kinds of problems over and over again? The problems seem to cycle through the organization. Over time, members of the organization come to recognize the pattern of events in the cycle, rather than the cycle itself" (McNamara 1997).

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Even after returning to its R&D on electric and hybrid models, GM has failed to maximize the efficiency of its supply chain "home town advantage" despite "having the very first nickel metal hydride battery manufacturing facility," Ovonic Materials, in its backyard (Lifton 2009). Instead, GM, in 2005, announced it would use a lithium-ion battery in the Chevrolet Volt rather than a nickel metal hydride battery. "In 2008, in the 9th year in which the nickel metal hydride using Toyota Prius is being manufactured, now at the rate of 1000 cars per day, there is still no Chevrolet Volt" (Lifton 2009).

Toyota has consolidated control over its battery supply chain. It recently bought "a Japanese trading company specializing in sourcing the rare earth metals critical for the manufacturing of the nickel metal hydride battery" (Lifton 2009). Toyota manufactures all of its own nickel metal hydride batteries and now has a regular source of the material for its energy-efficient vehicles. Unless GM can find similar ways to streamline its supply chain and find new ways to answer the cries for stricter emissions standards in the industrialized world, even its new inroads in China and niche spheres of the global economy will not sustain the company in the future. GM has yet to form a cohesive strategy and business mission for the 21st century......

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