In the wake of a massive bailout from the U.S. Government, General Motors finds itself in a precarious position. What must the company do to survive? One answer seems to be turn to foreign investors. Chinese automaker SAIC Motor Corporation may be willing to pay $500 million to acquire a one percent share of the company. GM indicates it will offer up to $1 billion in stock to asset management funds in the Middle East and Asia.
1. Are rumored moves by General Motors suggestive of global management or something else?
2. Ignoring GM’s present situation, why would the company enter into a joint venture SAIC? What are the advantages to the arrangement for SAIC?
3. What are the potential drawbacks to increasing foreign investment in General Motors?
SOURCE: S. Terlep, “Chinese Plan to Buy Stake in GM,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748704865704575610771579286344.html)
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