Strategic Decision Making for a Company in Crisis - Term Paper Example

American car-makers also felt the sharp punch of economic slowdown. Another reason for the weakening of the automobile industry was the rising fuel prices around the world. This was linked to the energy crisis of 2003-2008. This discouraged the customers to buy Sport Utility Vehicles (SUVs), as these vehicles did not fuel efficient. The big three automakers in America, General Motors, Chrysler, and Ford had to shift their focus to manufacturing trucks or fuel-efficient cars due to the shifting focus of the customers.

As in 2008 situations were turning critical, so the prices of the raw materials were also increasing (Jansen “Why the UK’s Auto Industry Remains Crisis Free”). The impact of the global financial crisis was more on the automobile sector than on the housing and financing sector. The first reason was the big three automakers of America were running with life-support or financial aid from the US government. The credit market had frozen, so the orders were being cancelled, the plants were being shut temporarily, and the suppliers were not paid their invoices.

The debt loads were increasing and the high labour cost was additional pressure for the companies, surviving in this environment. The second reason was the high internal cost and increasing longevity of the two-wheelers led the customers to delay their car purchase (Sturgeon and Biesebroeck “Strategic Decision-Making” 3-4). Thus the demands for four-wheelers were neither getting created nor were the ordered cars sold. Moreover, in the US the people were not receiving car loans to buy cars because of the sub-prime crisis, so the customers were reluctant to buy cars solely with their savings.

This was the reason why the sales figure plunged too (Zeese “The Causes of the Auto Crisis”). The major effect of the automobile crisis was felt in the United States and Canada. The weakening of the sector was due to the increasing prices of spare parts and other raw materials, and governments’ strict regulations against minimizing the emission of harmful gases and reducing carbon footprints. Companies like General Motors who had dedicated product line or brands of SUVs faced the heat because the SUVs were not at all fuel-efficient vehicles.