General Motors, which used to be the leading car manufacturer in the world, fell out of its domain to become the shadow of what it was in the past. The last talk is that the company’s auditors are not sure about finances and how to cover operating expenses without going bankrupt.
The difficulty that GM faced is not entirely clear to the people
The only question we must ask ourselves is whether the government should help the company by providing financial assistance, or simply leaving it alone with bankruptcy. The company’s business model is a total failure, so you should consider whether the reorganization of your business model will have a positive impact. The main difficulty facing the company is cynical feedback.
The company’s problem is open and known to all, but it expects to return to form through restructuring through important leverage provided to investors and unions. But he has no choice but to declare bankruptcy since it makes much more sense, but it causes another problem. Nobody would buy a product for 30, 20 or more dollars to a company that went bankrupt. If you still do it, you will be one of the few who does it. The company proposed its restructuring plan based on the high sales expected in the coming years. The conclusion is that it will take a long time to restore sales, so your plan will be a complete failure, given your high sales estimate. There is another problem for which GM cannot be held accountable, but it is to blame for the poor state of private financing. Every time a company declares bankruptcy, it receives funds to save the company and its employees.
This financing is controlled by the bankruptcy court, so it provides guarantees to the creditors. The only hope that gmc dealer receives financial assistance from the federal government, although it has already allocated funds for more than 10 billion dollars, really gave the minimum effect. For this reason, the company has requested another 30 billion dollars. In fact, the sales forecast for next year does not seem so promising, so the company really needs about 100 billion dollars. This can be confusing as to whether GM should be saved or simply allow it to fail. It does not make sense to invest 100 billion dollars in a company that does not have a clear way to make a profit. If we go ahead at the expense of taxpayers’ money, it is unlikely that this will give the desired results, given the economic situation.
GM had its moment in the past, but it was time to stop it. Other companies, such as Ford and other manufacturers, will come to an agreement and propose pragmatic business models to gain the trust of the customer.