General Motors is on the verge of bankruptcy, and its' executives are currently in the center of the current bailout controversy. In an examination of why GM finds itself in this predicament, consider assumptions that GM may have been making about their business environment that failed. In what ways were these assumptions load bearing and/or vulnerable? What, if anything did GM do to mitigate the risks associated with assumption failure? Were these hedging strategies, shaping strategies or both? If you believe that GM did nothing to mitigate risks what would you have done differently?
In my personal opinion, what the executives of GM were banking on is that the United States economy would continue to flourish. I base this rational on the fact that GM has continued to manufacture and produce SUV and large vehicles that consume large amounts of fuel. If the executives believed that the economy was going to go into recession, they may have scaled back the production of large vehicles and placed a higher concentration of their resources to developing more fuel efficient vehicles. ...
Strategic management for GM and the auto industry bailouts are discussed.