Chrysler LLC being one of the largest automotive producer in America would be described as one of the “to large to fail” companies, but time proved that without effective management and leadership any company not withstanding the amount of assets and capital base. The company went on its knees to near bankruptcy only to be saved by the federal government and a buyout from Fiat automobile company.
On 30th April 2009 filed bankruptcy protection which was as a result of the company searching for agreements with its creditors to no avail (Wallace, 2009). The major problems that caused the failure mainly lie on the leadership and management due to inadequacy in proper policies that would forge the company forward on the road to profit making and success. The company had earlier secured loans that were injected in business to fund its growth and development plans. These loans were guaranteed by the government. The management should have foreseen the actual repayment of the loans and should have planned the major repayments schedule that should have been followed.
The major purchases made at later time of expensive brands just to make the company achieve a vision of a large empire were correct but not done at the right time. The mergers with other companies like Daimler-Benz were not properly embraced thus the company stood to loose more deals. Management needs the person in-charge to take the right decisions, at the right time, and at the appropriate atmosphere (Wallace, 2009).
Leadership failed to analyze the business atmosphere and the right ways to invest. Without the information handy then decisions will be risky and more likely to fail. The running of the company through mergers made by the company earlier was also not utilized in a way that would ensure profitability growth and development but remained as chances wasted by management. Tapping expertise of the other companies should have been prioritized and the company stood to benefit from such deals that slipped their way.
Investing in future would be another aspect that would distinguish leaders from failures, future business prospects were largely ignore by the managers, since any business without a vision then it fails. Proper implementation of short term policies was also not coordinated that could have led to the loss of $81.1 billion that was invested in Chrysler LLC (Scheid, 2010).
The use of Chrysler LLC money to pay hefty salaries and bonuses to the board which many had banked on to bring success to the company was also a misled priority. Increasing the expenses of the company that was ailing would be the last thing focused leaders ought to implement. Companies with effective leaders seek to reduce costs at all costs and invest more so that the business recovers from loans and economic turmoil. Managers ought t have tips in mind to know the best policies that the organization needed to achieve its goals and objectives particularly on how to eliminate all liabilities that may lead to the collapse of the company.
Many issues can make a business fail, the most common include; poor operations, low capital, uncooperative employees, poor and ineffective management, and bad business proposals. With any business that is already operational the proposals needs to change if the business is not performing but there must be scrutiny of the management who contribute mainly to the failure. Management takes the lion’s share of the blame such as in the case of Chrysler LLC where they were accused of overspending, overpaid union contracts that were signed annually (Scheid, 2010). They also made the prices of vehicles to shoot up and did very little to attract customers. The managers also positioned franchised dealers where customers never wanted.
The Chrysler LLC case keeps leaders and managers on the spot light in that they should know that they have an upper-hill task and much is expected from them. Their performance should be beyond reproach and their conduct excellent while making the important decisions of managing a company.
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