Case Study: General Motors Bankruptcy Case In The United States?

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The Case of General Motors Just one month after Chrysler filed for bankruptcy, General Motors (GM) followed, earning the “distinction” as the fourth largest bankruptcy case in U.S. history. Even $19.4 billion in federal help was not enough to keep the trouble automaker out of bankruptcy court, and the government has further pledged another $30 billion to help the company during its reorganization. A “new GM” is expected to emerge out of bankruptcy that will revolve around a mere four brands, Chevrolet, Cadillac, GMC and Buick, as well as a few of its overseas operations. In its wake, GM’s bankruptcy will have a major impact on a cross section of Americans. The move will result in the closure of numerous plants and dealerships, which means thousands…show more content…
Some of them were caused by improper corporate governance rules set by GM, but the role of external influences that affected GM’s production after 2000 must be taken into account as well. First of all it was the corporate culture as mentioned by Canis et al. (2010) or by Monks & Minow (2008): “...the company was managed like an institution. It was highly risk-averse, chronically slow to change, endlessly bureaucratic, and contemptuous of competition.“ General Motors produced inefficient cars that did not match to the demand of customers after year 2000. This was caused partly by the high self-confidence of the top management which was too ensured that the position of GM is everlasting. This assumption was proven as incorrect. The market position of General Motors before 2009 was dominant in many, but after 2000 GM’s vehicle production was stagnating globally. Together with the fact that the automotive market was stably growing it implies that General Motors was losing its positions on all important markets relatively to other automakers. In U.S., traditionally known as the core market, GM was selling less and less cars even since 2000 (The New York Times, 2009) and lost one third of its position, covering 28,1% share in 2000 and only 19,8% in 2009 (figures for cars and light trucks sales in U.S., Canis et al. 2010). From today’s point of view it could be surprising that GM still holds its leading position in…show more content…
One of them is connected with oil prices, in 2011 the price of gasoline was triple as high as it was in 2000 (1,25$ vs. 3,713$ per gallon of regular gasoline including tax, see, 2009) and cars made by GM are traditionally not of those with low gasoline 5 consumption. This could be highlighted as another example of rigidity of GM and unwillingness to accept new trends and to respond to market needs. Furthermore the macroeconomic development after the crisis in 2008 squeezed the demand for new cars, so that not only GM was facing troubles with lowering sales. Conclusion; We will see if the on-going procedures will be sufficient to get back the lost positions of General Motors Company. What we know is that the process of restructuring is not finished yet, but by now it can be labelled as successful, most important steps leading to eliminating inefficiencies were at least launched. Questionable is the position of U.S. government, which should fulfil its declaration and divest itself GM’s shares as soon as possible It is also seen that Management is crucial for bankrupts. Wrong decisions, speed of change, bureaucracy, and management wrong behaviours are the reasons and it is very difficult to create the company equity again with

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