This report has intentionally been written for those large organisations which run at risk of failure. World's one of the biggest car and truck manufacturing company, General Motors has been chosen as a case study. The reason behind selection of GM as a case study is due to its 100 years of long history, business operations in 158 countries across the world and filing for bankruptcy petition in year 2009 in an around the time of financial crisis of US. Therefore, financial data for three consecutive years of GM before its application of chapter11 bankruptcy petition have been analysed and compared with its global competitor Toyota for comprehensive judgement. Another investigation is made by analysing the various currencies and important commodity trends against US dollar. This is done to know, how fluctuation in exchange rate of various currencies influence the performance of multinationals. Finally for generalisation, a survey has been carried out on the bases of various literature reviews, financial ratios and currency trend analysis.
In addition to previous researches, which were limited only to financial ratios, this research has been expanded beyond financial sector and included external factors such as economic, capitalism and currency fluctuations.
An insight of various disciplines, which have always been neglected has taken as an empirical and found the diverse conclusion. Whole research prospers through four different segments; from various literature reviews, to financial ratio analysis, examinations of various currencies and commodities and finally questionnaire survey.
Subsequent to research an imperative outcome has been realized. This exploration suggests that for survival of large businesses knowledge of economic is crucial besides financial planning and management. Therefore, large organisation should keep self-regulation to exploit available credit facility and do not exceeds its debts beyond certain agreed limits.While taking strategic decision, it is crucial to analyse base currency and its long term trends.Finally, multinationals should always implement innovation practices for their existence.
Table of Contents
1.0 Chapter 1 – Introduction
1.1 Study Background
1.2 Rationale
1.3 Aims and Objectives
1.4 Organisational profile:
2.0 Chapter 2 - Literature review
2.1 Introduction
2.2.1 Impact of economic and financial crisis on large organisations
2.2.2 Capitalism and market economy
2.2.3 Strategic management
2.2.4 Financial management
2.2.5 Bankruptcy and Insolvency
2.2.6 Closure and divestment
2.3 Conclusion (summary of the literature review)
3.0 Chapter 3 – Methodology
3.1 Introduction
3.2 Research philosophy
3.3 Data Collection
3.4 Research design
3.5 Study Limitations and conclusion
4.0 Chapter 4 – Findings and Analysis
4.1 Introduction
4.2 Presentation of Data and Analyses
4.3 Comparison between General Motors and Toyota
4.4 Trend analysis
4.5 Questionnaires
4.6 Discussion of results
5.0 Chapter 5: Integrative Analysis and Discussion
6.0 Chapter 6: Conclusion
Objectives and Research Scope
This research aims to investigate the primary causes of insolvency in large corporations by examining the case of General Motors, particularly in the context of the 2008-2009 financial crisis. The study seeks to develop a risk model that identifies warning signs for corporate failure by integrating internal financial performance data with external economic factors, such as currency fluctuations and market trends.
- Analysis of financial ratios as indicators of corporate health and potential insolvency.
- Evaluation of the impact of global currency fluctuations on multinational performance.
- Critical review of strategic management and capitalist economic structures regarding business failure.
- Empirical assessment through questionnaire surveys of industry experts and professionals.
- Development of an organisational risk model to aid in strategic decision-making and business survival.
Excerpt from the Book
2.2.3 Strategic management
Today’s environment is becoming more and more competitive, due to advancement of technology and globalisation. In this globalised world companies are facing challenges from internal factors due to increased completion, organised labour unions, financial problems and continuous change in external factors such as political, economical, social and technological.
To cope with this threat, leadership and management of companies should keep long-term, flexible, proactive and visionary strategic approach.
According to Johnson et al. (2008) strategy is long-term path of an organisation to sustain competitive advantage in changing environment according to market demand and stakeholder expectations (p.3).
According to this definition, three factors interplay; external environment, internal resources and organisation objectives. In this process operation management involves to organise internal resources to meet external environment to achieve organisation mission. Success for organisation depends upon the ability of operation management, because it is the important part of organisation strategy.
It is considered that strategy involves three levels in organisation; corporate level, business level and functional level.
There are four different characteristics of strategy; long term, flexible, proactive and visionary. In view of Chandler (1962) strategy is long term planning of organisation on the base of organisation mission. He argues that it involves strong coordination of organisation mission, aim and organisational structure.
Summary of Chapters
Chapter 1 – Introduction: This chapter outlines the background of the study regarding global corporate insolvency, justifies the focus on General Motors, and establishes the research aims and objectives.
Chapter 2 - Literature review: This section provides a critical overview of theoretical frameworks concerning economic and financial crises, capitalism, strategic management, and the indicators of corporate failure.
Chapter 3 – Methodology: This chapter describes the research approach, including the philosophy, data collection methods (quantitative financial analysis and qualitative primary research), and research design used to address the study problems.
Chapter 4 – Findings and Analysis: This chapter presents the empirical results of the financial ratio analysis, currency trend investigations, and the quantitative data derived from the expert questionnaire surveys.
Chapter 5: Integrative Analysis and Discussion: This chapter synthesizes the research findings, evaluates the organizational risk model, and discusses the implications of strategic management and currency fluctuation on corporate survival.
Chapter 6: Conclusion: The final chapter summarizes the research conclusions, offers recommendations for large organizations to avoid insolvency, and suggests avenues for further research.
Keywords
Insolvency, General Motors, Corporate Failure, Financial Ratios, Economic Crisis, Strategic Management, Currency Fluctuation, Capitalism, Bankruptcy, Risk Management, Market Economy, Organizational Survival, Multinational Corporations, Debt-Equity Ratio, Innovation
Frequently Asked Questions
What is the primary focus of this dissertation?
The dissertation focuses on investigating the causes of insolvency in large businesses, using General Motors as a primary case study during the 2008-2009 financial crisis.
What are the central themes of the research?
The research themes include strategic management, financial health analysis, the impact of economic crises, and the influence of currency fluctuations on multinational corporations.
What is the main research objective?
The objective is to identify key factors challenging organizational survival and to propose a model that provides advance warning signs of failure for large organizations.
Which scientific methodologies were employed?
The researcher utilized a mixed-methods approach, combining secondary financial ratio analysis of GM and Toyota with primary data collection through expert questionnaires.
What does the main body of the work cover?
The main body covers literature reviews on corporate failure theories, detailed financial performance comparisons, currency trend analysis against the US dollar, and an analysis of survey responses from industry experts.
Which keywords best characterize the work?
Key terms include Insolvency, Corporate Failure, Financial Ratios, Strategic Management, and Risk Management.
How does currency fluctuation impact General Motors?
The study suggests that the consistent decline of the US dollar against major currencies since 2000 has had a significant negative impact on GM's global operations and overall financial performance.
What is the proposed "Organisational Risk Model"?
It is a strategic framework developed by the author that advises organizations to analyze base currency and financial ratios, and to implement proactive strategic changes, innovation, and efficiency measures when these indicators consistently fall below industry benchmarks.
- Quote paper
- Makboolbhai Masi (Author), 2012, Causes of Insolvencies in Large Businesses. A Case Study of General Motors, Munich, GRIN Verlag, https://www.grin.com/document/305268
