Causes of Insolvencies in Large Businesses. A Case Study of General Motors

Master's Thesis from the year 2012 in the subject Business economics - Business Management, Corporate Governance, Prifysgol Cymru University of Wales, language: English, abstract: 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.