Essay Preview: General Motors
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The general motors automobile was a giant in the automotive production industry. They went from a small time company producing just cars to automotive giant producing cars and other industries. They once became so large that they were said that they were too big to even fail. But in June 1st 2009 the company who was too big to fail went bankrupt. How could a company so big and successful suddenly fail, was it management that made it fail or could it have been the behavior of the company. In this paper we are going to talk about how the General motors company failed. We will also discover how leadership, management and organizational structure contributed to the overall fail.
A general motor was founded in 1908 in Flint Michigan by a man named William C Durant. Durant quickly purchased competitive companies Oldsmobile, Cadillac and several other unknown companies. With Mr. Durants debt quickly rising he went bankrupt and quickly made a deal with Louis cheverlete to join forces. Mr. Durant was finally let go for his wasteful money practices and they hired a Mr. Alfred P Sloan, who was to turn the company into the number one auto manufacture. At the time General Motors was behind auto giant Ford, But because of Sloans new concept of financing they quickly out sold ford to become number one. Sloan created an organizational structure that went on for another 90 years until the economic recession began to unfold in the 1990s. General motors then hired Mr. Jack smith to revamp the Sloan organization structure and turn general motors around from its downward debt slide. Mr. Smith began to introduce cost cutting initiatives without the care of the customers auto tastes. With the company now reaching its 101 birthday on June 1st 2009 had to get a Government bailout from bankruptcy. To better understand how these events turned the company into bankruptcy we should look into the five reasons for their failure.
Bad financing policies
To many peoples surprise General Motors was considered bankrupt since 2002, but it used its financing to try and keep its company afloat. General motors scheme was they would take a below average produced car and sell it in monthly payments to make a profit. The CEOs turned the companys main base selling cars into a more of a financing profit organization. The problem is the company was not built for financing it was built to produce quality cars to customers. After focusing the companys attention on financing rather than vehicle design operations there debt climbed. General motors liabilities were 91 billion dollars more that there assets, causing a negative profit on producing a single car