The Moment of Decision: Can Management Fix GM’s Financial Crisis
What planning approaches and methods might GM adopt to help manage its turbulent environment and respond effectively to global economic crisis? The impact of the global recession resulted in a massive decline in the total cumulative motor sales in many motor industries.
One of the most of the affected motor industry domain during this time was the General Motors. This led to massive concerns among industry investors regarding the modes through which the restructuring program would be launched in order to bail out the industry from the impending effects of the global economic crisis. One of the approaches that could be used by General Motors to save the company is essentially through utilization of the proposed government funding. “The company commits to use the proposed Government funding to exclusively sustain and restructure its operations in the United States and aggressively retool its product mix” (General Motor Corporation, 2008). This would significantly result in a reducing the inceasing pressures on General Motors Corporation by increasing profitability.
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Elements of this plan would entail implementing a shift in the company’s portfolio, reducing the number of brands, retail outlets, and nameplates, increasing production potential, decreasing employees, and supplementing their liquidity rates through Federal assistance (General Motor Corporation, 2008).In what way does a merger solution to GM’s financial crisis represent strategic thinking and planning? Merger solution for General Motors implies the significant reduction in terms of expenditure through splitting of costs of input. This is especially with regard to raw material input, provision of numerous and strategic off shore retail outlets location. In addition, a merger solution introduces a sharing criterion with regard to the constantly fluctuating market factors and essentials (Eugene, 2009). The impact from a merger, say the combination of productive elements from General Motors and Toyota would lead too successful transition in terms of the desired deliverables. As GM’s managers continue making decisions that affect the company’s ultimate survival, what prevents them from making purely rational decisions, and what common decision-making errors must they guard against?Managers are usually prevented from making rational choices by considering solely the professional definition of the recurring economic situation. For instance, most managers would rely upon the industry projections while disregarding the roles played by the input factors like the employees (Eugene, 2009). Some of the common decisions that GM managers need to guard against include the production of environmentally harmful variants of fuel inefficient vehicles in a bid to capture the slim affluent market. “Large, fuel inefficient vehicles are the U.S manufacturer’s most profitable products” (Litman, 2009).
Despite the slim profit margins, the subsequent production costs are relatively high.