HRM-587: Managing Organization Change Project Proposal
Overview of Organizations
September 14, 2015
In late 2008, Chrysler and General Motors announced to the world they were in danger of folding. At the time, our president, George W. Bush, agreed to a temporary bailout, but handed the auto companies' long-term future over to his successor, President-Elect Barack Obama. President Obama then lead a comprehensive bailout of the two companies that allowed them to stay in business but imposed numerous conditions that, it was intended, would secure their viability and allow the companies to eventually return to profitability.
In an interview in the Detroit News (Shepard ...view middle of the document...
to today's GM Co. (Miel, 2014).
Following dramatic drops in automobile sales throughout 2008, two of the "Big Three" U.S. automakers – General Motors (GM), and Chrysler – requested emergency loans in order to address impending cash shortages. (Zywicki,, 2015). By April 2009, the situation had gotten so bad that both GM and Chrysler were faced with imminent bankruptcy and liquidation. With the intent to prevent massive job losses and destabilizing damage to the entire manufacturing sector, and the federal government provided unprecedented financial bailout ($85 billion) support to allow the companies to restructure via Chapter 11 bankruptcy. Both companies separately filed for this protection by June 1.
It is fair to say that no one involved in the decision to rescue and restructure GM and Chrysler ever wanted to be in the position of bailing out failed companies or having the government own a majority stake in a major private company. We are both thrilled and relieved with the result: the automakers got back on their feet, which helped the recovery of the U.S. economy. Indeed, the auto industry’s outsized contribution to the economic recovery has been one of the unexpected consequences of the government intervention. The automakers’ future success will depend on their own managerial decisions in the years to come. The fact that Ford was able to weather the economic downturn and financial crisis because it had taken precautionary steps and efforts to restructure before calamity hit, while GM and Chrysler could not have survived without extraordinary government support, is a stark reminder of the importance of good managerial decisions for the survival of businesses. To their credit, the companies restructured to a greater degree than they had ever done before and under extreme pressure, and – after shedding much legacy debt -- returned to profitability in 2010. They also were fortunate that the economy began to turn around and that consumer demand for autos rebounded strongly.
Since the restructuring, there are some signs that quality has improved and that price
discounting has become less aggressive, though the jury is still out. General Motors emerged from bankruptcy as a new company...