Essay about Risk Management Within General Motors Company

Better Essays
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.…show more content…
Naturally, employees first went on unemployment when being laid-off. The UAW contract then required GM to give additional payments that would guarantee an employee 95% of their prior wages for forty eight weeks. Once this time period was over, an employee would enter a job bank. Here they would stay, while being paid, until their old plant reopened or a job became available at a factory within a fifty mile radius. Because nearby positions rarely opened, people would remain in the job banks for years. The requirements for staying in the job bank included volunteer work for company approved organizations and programs. Or, employees could punch in at their empty building and pass the time by watching television, reading the newspaper, sitting on a computer, or playing Scrabble. The only stipulations were that they had to punch out to use the bathroom or go on their lunch break, and they could not sleep or play cards. Eventually, this program was costing GM an estimated $1 billion a year to compensate their employees who were not even working (Vlasic, 2011). In 2000, Rick Wagoner was promoted to the position of CEO of GM. He immediately instituted several changes throughout the company. He flew to Italy in March of that year to negotiate with Fiat because GM needed their diesel engine technology for their GM Europe divisions. GM obtained 20% of Fiat Automobile by paying Fiat $2.5 Billion in GM stock (Ingrassia, 2010). In December of the same year,
Get Access