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Strategic decion making for a company in crisis - Assignment Example

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Relevant strategic management theories and decision-making approaches have been discussed to evaluate the case of General Motors and its bankruptcy filing process. The…
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Strategic decion making for a company in crisis
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Download file to see previous pages However, American car makers also felt the sharp punch of economic slowdown. Another reason for weakening of the automobile industry was the rising fuel prices round 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 were 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 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 labor cost was an 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 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 United States and in Canada. The weakening of the sector was due to the increasing prices of spare parts and ...Download file to see next pagesRead More
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