The new CEO of GM, Mary Barra, addressed the problem on the general perception that the company has had hyper centered costs for squeezing the suppliers so as to get much from them but paying little. This seemed to be a business strategy, but then it created an environment that stronger the useful context for examining the might of GM, and acquired into trouble with the ignition switch. The new CEO acknowledges that the company failed to address the major safety measures, but then had to look at the culture at the automotive assemblers without always looking at the connection between cutting the cost and hold the quality of the automotive (Helper & Henderson, 2014). The other auto analysts believe that there were no likely possibilities of the callous disregard for the safety of the automotive in the company.
The responsibility of the government when the Congress takes the Majority Equity shares
The government brought to an end the $ 80 billion bailout of the US auto industry when the Treasury sold part of the shares of GMAC that had remained at a cost of 19.6 billion dollars. By selling the stock market, there was a yield profit of $ 2.4 billion from the first investment of $ 17.2 billion from the GM’s former financing branch. In June 2009, GM together with Chrysler rose from bankruptcy and the bailout enhanced them to create 340,000 more jobs (Goolsbee & Krueger, 2015). In November 2008, the Congress had received requests from 3 Big automakers for $ 50 billion so as to avoid bankruptcy as well as the loss of 3million jobs.
GM was quite desperate for funding that it had delayed the incentive program for reimbursing the dealers. The federal government made a loan of $13.4 billion to General Motors, in January 2009, so as to fast-track the development of energy efficient vehicles as well as consolidating the operation. As GM rose from bankruptcy in July 2009, the US treasury took a stake of 60.8 % in the company as part of the return of the $ 50 billion bailout (Canis & Webel, 2013). A trust put up a fund health care benefits assigned to the UAW retirees and whereas the UAW was allocated a stake of 17.5 %. The trust fund was meant to be part of the restructuring GM.
Canis, B., & Webel, B. (2013). The role of TARP assistance in the restructuring of General Motors.
Goolsbee, A. D., & Krueger, A. B. (2015). A retrospective look at rescuing and restructuring general motors and chrysler. The Journal of Economic Perspectives, 29(2), 3-23.
Helper, S., & Henderson, R. (2014). Management practices, relational contracts, and the decline of General Motors. The Journal of Economic Perspectives, 28(1), 49-72.
Mueller, K., & Straatmann, T. (2014). Organizational values. In Encyclopedia of Quality of Life and Well-Being Research (pp. 4525-4531). Springer Netherlands.