Essay on General Motors Case Study

766 Words May 10th, 2012 4 Pages
General Motors
Case Study #3

Problem Summary:
One of the most serious problems that GM faces is when the firm announced a $10.6 billion loss, which was their first in 12 years. The auditors for General Motors even thought that the firm’s survival was in substantial doubt even if they received the additional $30 billion they were going to borrow from the federal government. The problems have grown as a result of mistakes by GM’s management over the last 30 years. They built up a bloated bureaucracy that supplied boring, low-quality cars for many years. GM will also lose leadership of the United States market, having already been replaced by Toyota as the world’s largest automaker. GM has been burdened with a high cost structure
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GM faces several challenges, and seeking bankruptcy will have risk and place a heavy burden on them, and people will think twice about buying cars from GM, therefore GM will have trouble with becoming competitive again and reorganize fairly quickly.

Alternatives:
GM is planning on forming a restructuring plan to shrink the brands down to four, which would include Chevrolet, Cadillac, Buick and GMC. It also tends to lay off 47,000 of its 244,000 workers and close more than five plants. GM has managed to negotiate with the United States Auto Workers for some relief from the escalating health care costs, which resulted in employees and retirees to pay for part of their health care-related costs for the first time. GM had decided to stick with the decision of their full-size, because they’re still generating a sufficient amount of revenue. The profits will be used in order to carry GM through their overhaul of its North America operation and offset its eroding market share. GM’s extensive brand lineup has been a primary weapon in beating back both domestic and foreign rivals. GM is also searching for new terms for funding a trust fund for health care costs of retired workers.

Recommendations:
I would recommend that GM cut back on the firm’s production capacity, offered buyouts to

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