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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.

QUESTIONS:

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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