G.M.Returns to Bankruptcy Court: Analyzing the External Environment ofthe Firm-Chapter-2
G.M.Returns to Bankruptcy Court: Analyzing the External Environment ofthe Firm-Chapter- 2
Thearticle “Hopping to fend off suits, G.M. is to return to bankruptcycourt” was written by Hilary Stout and Bill Vlasic and published inthe New York Times on May 1, 2014. The authors give a preview of theGeneral Motors bankruptcy and the possibility of the company gettingback into bankruptcy in the near future. Although the authorsintroduce the article by explaining the reasons that have broughtGeneral Motors back to bankruptcy court, the main idea is that thecompany has lost its competitiveness and ability to operate in thecontemporary business environment. For example, the authors statethat the General Motors, out of recklessness, has been manufacturingdefective motor cars (such as Chevrolet) and relaxed its customerrelations strategies. In addition, Hilary Stout and Bill Vlasic(2014) assert that the company has lost its fame and the nickname“the Government Motors”.
Thearticle “Hopping to fend off suits, G.M. is to return to bankruptcycourt” falls under the topic “Analyzing the external environmentof the firm” found in chapter 2 of the course text StrategicManagement authored by Dess Lumpkin and Eisner McNamara. From themain article, Straut & Vlasic (2014) show that the General Motorshas been operating in its dead glory when its customers nicknamed itas the Government Motors because of the high quality motor vehiclesit produced. Nevertheless, the company failed to analyze and forecastits external environment, which subjected it to the risk of collapseduring the global recession and a slow recovery after the financialcrisis. Forecasting the firm’s external environment requires themanagement to take account of three factors, including environmentalscanning, environmental monitoring, and competitive intelligence(Lumpkin, D. & McNamara, 2012). In the case of the GeneralMotors, it is evident that the company failed to keep track of trendsin the motor industry and predict the global economic cycles.
Failureby the General Motors to comprehend its external environment hasreduced its capacity to take the necessary measures to avoid losingits market share to competitors and the risk of bankruptcy. From thatarticle, there are two factors that demonstrate General Motor’signorance about its environment. First, the company has beenproducing faulty cars in the recent past, which shows that it failsto understand that the number of manufacturers has increased andcustomers has a wide selection base (Stout &Vlasic, 2014).Secondly, public relations with the General Motors have beendeclining over time. This is the reason for the firm’s failure torespond to the needs of its customers, which has subjected it to therisk of bankruptcy. According to Melanie (2008) public relationsincreases the strength of organization’s stakeholder byfacilitating communication between them and the company.Communication between the stakeholders (including consumers) allowsthe firm to keep track of changes taking place in the market.
Inconclusion, the article “Hopping to fend off suits, G.M. is toreturn to bankruptcy court” demonstrates the major factors thatsubjected the General Motors to the risk of returning to bankruptcyseveral years after the occurrence of the global recession. Mostimportantly, the General Motors failed to analyze its externalenvironment and forecast environmental changes that might affect itsgoing concern. This is demonstrated in the article by deteriorationin public relations and production of vehicles that fail to addressthe needs of consumers.
Lumpkin,D. & McNamara, E. (2012). Strategicmanagement: Text and cases (6 th ed.).New York: McGraw Hill Companies Incorporation.
Melanie,J. (2008). A review of the impact of new media on public relations:Challenges for terrain, practice and education. AsianPacific Public Relations Journal,8, 137-148.
Stout,H. &Vlasic, B. (2014, May 1). Hoping to fend suits, G.M. Is toreturn to bankruptcy court. TheNew York Times.Retrieved July 7, 2014, fromhttp://www.nytimes.com/2014/05/02/business/hoping-to-fend-off-suits-gm-to-return-to-bankruptcy-court.html?_r=1