Detroit, the auto hub of the World, and headquarters of major US auto companies like GM and Ford. But nowever days, Detroit streets have a deserted look, as 3 US Auto majors GM, Ford and Chrysler file for their bankruptcy and requested a 25bn$ bailout pie from Fed approved 700Bn$ economy bailout plan.
Its a very old saying in India, "Behti Ganga mein haath dhona" (Wash your hands in the running waters). This is what these auto companies are doing, they are thinking that as US fed is bailing out banks from the financial crisis , they will certainly bailout them. But the real question at the first time is, Why these auto companies are in such a crisis? These are not the companies who lended subprime loans, but these are the companies who are settled in among the auto loving consumers.
So why they are in such a mess? and why now are they begging for survival?
The answer lies in complete mismangement by the senior management of these firms which leads lavish spending by the senior management and lack of timeley decision. ,and second most important thing is lack of innovation by these auto makers. When world auto markets are demanding more fuel efficient and environmental friendly cars, these auto makers are still developing less efficient cars.
So before they ask fed for the bailout plan, they have to provide a viable plan, how will they are going to use the money, what will be their strategy to increase revenues, how will they leverage in house technology or export new technology from outside world? How will they deal with their competitors? What will be their strategy for the emerging economies? How will they decrease their expenditure? How will they increase their utilization rate?
They have to answer many such What? How? and Why? questions before they really ask US fed for the aid.
Thanks&Regards,
Mohit
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