Economics 1- General Motors Essay Example | Topics and Well Written Essays - 750 words

Economics 1- General Motors - Essay Example he question directly, the cost structure of the combined entities, as General Motors, improved after the mergers, with the trimming of costs and improving profit margins even when the level of revenues remains constant. Economies of scale is possible only with a certain minimum critical size of firms in an industry such as the automobile industry. The company continued its acquisition binge in the ensuing years. Management decisions that improved operations included reduction of costly factory errors with the establishment of a testing laboratory, and setting up of facilities for research and development, which turned out to be the most complex in the industry at the time. These contributed to improved efficiency and productivity. During the 1920s the big car manufacturers were GM and Ford, followed by Chrysler in 1925 (American Motors was formed only in 1954). At that time only Ford posed a semblance of competition to GM. GM proceeded with some major innovations in management systems using policy coordination from the top, policy direction through top-level committees, and delegation of responsibilities - practices that were to become standard in business management theory and practice. In the late 1920s, GM introduced the synchromesh gears by Cadillac, the shatter-proof safety glass, and the V-16, the first car type with a 16-cylinder engine, setting standards in power and performance. Then it pioneered in innovations in styling and engineering, capped by the discovery of the automatic gear. GM also developed the independ4ent front wheel suspension and the automatic transmission under Sloans leadership before the WWII. In the 1950s GM introduced the V-8 engine with a higher compression ratio, power steering , air-conditioning systems, safety belts, among others. In short, the company outdistanced its competition through design and engineering as demonstrated in the functional quality of cars it produced. In the area of marketing strategy, GM boss Sloans