I figured I had better touch on this before it becomes old news what with President Bush considering using the TARP funds for an auto bailout as we speak. By the way, my wife warned me that I shouldn't write really long entries as people wouldn't have the time or desire to read them... I told her that that was exactly the point of minutiae, it's all the details - and that's how I am!
A few months ago I had a strategic international business class where I had the arduous task of writing a weekly essay on current events as they pertained to international business. I found an article from MSNBC regarding GM’s efforts to cut costs to stave off the serious dangers that it was facing. It’s funny how hindsight really is 20/20. This article was from July 15th – long before they would be faced with the major issues that they now face. I have included some analysis from that essay. It basically had to do with the fact that GM needed to cut costs or increase sales in order to have the cash necessary to pay its bills – it was the proverbial writing on the wall.
According to the text from one of my previous classes, a business can make money in only a few ways. Logically, two of the most effective ways to manage this are to increase revenue and to lower costs. As with personal finances, these management tools are fairly simple to understand – either you need to make more money or spend less.
There are several strategies for increasing revenue. Basically the goal would be increase sales of your good or service, raise the price, or expand your company footprint. Several volumes have been and could be written on any one of these approaches. A company will usually try to increase sales or raise their prices before they look to increase their footprint – assuming they are fully expanded into their domestic market. This is usually due to many of the hurdles that have to be overcome as a company expands its global footprint. Some companies may need to expand globally but are constrained by various internal and external forces. Externally they might have a corporate structure or ownership that isn’t permitted in a different market. Much like some government controlled companies from
At first brush I didn’t think that this article really had much to do with the assigned reading for the week. However as I read this and ancillary articles the picture it painted was pretty clear. GM has clearly become a huge international company. In many of its markets outside of the
Much of the success that GM has experienced outside of the
In essence they have to determine how to stay in business in the market that they call home. The landscape of the
As we now know they have gone to
But why are so many people opposed to this and not the financial bailout? I think it is for many reasons but a big part of it is the fact that the Big Three are three of the Biggest Whiners in the country. Not to mention the fact that Chrysler is privately held by Ceribus Capital. But they are continually strong-armed by the biggest union in the world, the UAW. And every time they get kicked while they are down by the UAW’s arm twisting (mixed metaphors, I know) and they end up conceding just so they can continue production, fully aware of the fact that they will have to do it again in a few month’s time. They continue to cry that their woes are the product of the economic downturn, but I think that it’s just the downturn that exposed the festering sore that was being covered by bandaid after bloody bandaid. Let’s just see if the newly appointed CAR CZAR (just what we need, someone else who will get into a pissing contest with Ron Gettelfinger) will have any power to make the changes necessary to keep the big three from crawling back a third time.
I could go on, but I need to finish working…at least I don’t cost my company $73 an hour!