Essay about Risk Management Within General Motors Company

3845 Words May 28th, 2013 16 Pages
Abstract

This research looks at the General Motors Company and what led to company failure and filing of bankruptcy in 2009. The American automotive industry was poorly managed for years and was almost eliminated when the economy crashed in 2008. Without the help of the U.S. government, General Motors and Chrysler would not have been able to survive. How did GM, as the number one auto manufacturer and seller, go from being at the top to almost ceasing to exist? This kind of financial mess usually takes years of poor decisions and does not happen to a large company overnight. To come to my conclusion I analyzed four books written by people with inside knowledge of the company, as well as magazine articles and a couple of online websites.
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Problems within the Company
The issues that caused GM to lose their money did not happen overnight; years of poor business decisions led them to where the company stood in 2008. Several executives were very short-sighted in their decision making; they failed to set long-range goals and objectives which are important for successful strategic project management. In 1970, GM and the United Auto Workers (UAW) entered a new contract after a sixty seven day strike over wages. The most notable change with the new contract is that it allowed employees to retire after thirty years with the company with a full pension after the age of 57. At the time their full pension was $500 a month, but with inflation and wage increases, this number was much higher more than three decades later. They believed that early retirements would create new jobs for young people entering the workforce. Another strike occurred in 1973. This one resulted in a contract change that employees had the right to retire at any age with full benefits after thirty years working with the company ( Ingrassia, 2010). Men and women were now able to take full retirement at as early as the age of 48. Union members who decided to retire early would also receive extra pension pay until they were able to draw from Social Security. By 2003, GM had over 460,000 retirees and spouses, which outnumbered current

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