case study analysis

Case Study Analysis : GMAC

INTRODUCTION

Thesis

After suffering from three consecutive quarterly loss in profit , from 1 .6 billion to 3 .8 billion in 2005 , and to produce higher yield for its stockholders , GMAC embarks on an urgent bid to restructure , slashing 30 ,000 jobs and closing of 12 plants in the U .S . and Canada till the end of 2008

Background

GMAC , the world 's biggest automaker , to stave off an imminent bankruptcy possible to occur in two years , opined by many financial analysts reported by Editorial Board (2005

, was invalidated by its CEO Roger Wagoner . The company 's declining share in the US market , now only at 25 , down by half , stems from its own complacency to design and introduce more fuel-efficient cars in the market that began in the 1970 Instead , stubbornly , it continued to set the luxurious standard of the American public for big and spacious vehicles , has come to a screeching and hurtful halt . This attitude , in part , accounts to an overstock of SUVs . A painful realization for the company was that customers , by nature , are volatile , and are driven by economic forces , especially , by the lingering instability of fuel prices

One other issue pertains to the situation that the company 's long-term goals are subordinated to the demands of wealthy investors , the like of Kirk Kirkorian , GMAC 's biggest investor (Isaacs , 2005 ) Any big demand to pull out their stocks can create a dent

Case Study Analysis GMAC

in the company 's capital pool . By its nature , any business pursuits of its long-term goals , consequently , are being hindered and bridled . GMAC is as much vulnerable as any other corporations in this respect

Major effect of the problem is felt on the company 's attack on its workers ' health care programs , extending to the retirees benefits . With the company 's profit margin pattern been wacky in the past , negotiations have actually resulted to temporary agreements where the workers will be accepting a defined contribution ' where for the first time in the company 's history , workers are co-paying for medical insurances . The problem has rattled the UAW organization , after having been accepting concessionary deals , in an attempt to avert the corporate collapse , but in the process infuriating the retirees and other employees to the point that they are going to court suing their own union (Read Isaacs 2005

Alternatives

1 . Mobilize the think tankers to design line of cars with unquestionable fuel efficiency , using all the available resources and technology available to the company to attain the goal

To compete with the competitors , GMAC must mobilize its designers for lines of cars with unquestionable fuel efficiency . Utilizing all the available resources and technology is the way to do it , which GMAC has in its disposal

Pay close attention to economic forecasters

Case Study Analysis GMAC

Paying closest attention to economic forecasters , and use it as guide in the forecast of the oil price , by which the price index is pegged . In staff economists could provide this...