Case Analysis – Saturn Corporation in 1998
Current situation
In 1990, Saturn was born in Springhill, Tennessee. General Motors (GM) had dreamed of creating a new brand that would be an example of corporate innovation and a learning laboratory for GM’s other divisions.
The most advanced techniques and ideas in the industry were implemented at Saturn. To facilitate the implementation of the new practices, the Saturn division was given extensive freedom from GM in comparison to the other divisions.
Essentially, Saturn was to make American cars for the American people. Saturn cars were designed and manufactured in Springhill. Employees were able to have ownership in the company and participate in the decision-making process. Saturn dealers were also considered part of the organization. They were trained to improve their customer service and avoid the high-pressure sales techniques customers hated. Overall, Saturn differentiated itself from competitors by the values it communicated, the quality of its cars and the innovation that went into manufacturing the cars.
In 1996-1997, sales of Saturn cars declined. The growth in the small car market had slowed down, but it was not negative. Saturn’s poor performance was mostly because it had not come out with a new car model since its institution.
In the summer of 1998, UAW protested and called for a strike. It was estimated that a 7-weeks strike would cost GM more than $2 billion due to loss in profitability and lay-offs. Saturn workers were able to continue operations as normal since it had its one distributors and manufactured most of the parts in the cars it produced. However, now, Saturn workers were threatening to go on strike as well. Recently, GM had made decisions about the future of Saturn without involving the workers in the process. With the general strike, Saturn workers now had the bargaining power. Their concerns focussed on:
1. Employee performance being tied to the total annual production of cars