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Managing in Troubled Times Case Study

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Case Title:

Is GM heading for Bankruptcy?

Publication Year :  Aug 2010

Authors: M Bhatt, J Thadamalla, S Gollapalli

Industry: Automobiles

Region:US

Case Code: TRT0097IRC

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
General Motors (GM) was one of the big three automobile manufacturers in the US. GM was posting operating losses for the past five years (2004-2008). The US economy slowdown added woes to GM's decreasing sales as consumers shifted their preference to more fuel efficient vehicles. In the wake of the credit crunch that gripped the US financial markets consequent to sub-prime mortgage crisis with global impact, and also poor credit rating of GM by rating agencies, GM could not raise further capital to upgrade its operations and to pay off its earlier loans. Chairman Rick Wagoner announced in November 2008 that if such a situation continued, GM could run out of cash in the coming months. However, he denied possibility of GM filing for bankruptcy under Chapter 11 of the American bankruptcy code. GM including two other major US automakers approached the US government for possible bailout, the prospects of which are yet to become clear. The case facilitates discussion on the possible strategic options left with GM to come out of the liquidity crisis.

Pedagogical Objectives:

  • To GM's growth and its problems.
  • To the concept and process of crisis management.
  • To the role of leadership in crisis management.

Keywords : General Motors; Liquidity crisis; Financial crisis 2008; Bankruptcy; Bailout; Rick Wagoner; Crisis management; Chrysler LLC; Ford Motors; Fuel-efficient cars; Toyota; Market leader strategy

Contents:

  • Evolution and Growth of General Motors
  • Problems with General Motors
  • Strategic Options with General Motors

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