Business Failure Review: Chrysler Group LLC

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Introduction
Organizational-behavior theories that can predict or explain a company’s failure
Leadership, Management, and Organizational contribution to the failure
Conclusion
Reference

Introduction

It is the wish of all business organizations, both big and small, to succeed in whatever activities they undertake. Traditionally, all for-profit organizations endeavors to realize improved financial performance, maintain solvency, consistently retain, and increase their capital and client bases.

However, various factors, either internal or external, can cause business failure in a given segment of an organization or even the entire organization. This research paper explores a business failure that occurred at Chrysler Group LLC in 2009.

The paper aims to describe how organizational-behavior theories could have predicted or explained the company failure. It also compares and contrasts how leadership, management, and organizational structures contributed to the failure.

Organizational-behavior theories that can predict or explain a company’s failure

Chrysler Group LLC is an American multi-national automobile maker with its headquarters in the Detroit, suburb of Auburn Hills, in Michigan. It was positioned as Chrysler Corporation in 1925 under the leadership of its founder Walter Chrysler.

In 2009, Chrysler LLC slipped into bankruptcy and on April 30, 2009, filed for chapter 11-bankruptcy protection from which it emerged on 30 June 2009 after collaborating with the Italian automaker, Fiat (Isidore, 2009).

Typically, a well-established business organization like Chrysler Group LLC is run by a management team consisting of senior officials like CEOs and senior financial managers, board of directors, and internal and external auditors.

All of these players actively take part in the decision making processes of an organization regarding all of its aspects including human resources management, production, marketing, financial management, and corporate social responsibility (CSR) among others.

Even though, there is a tendency to hinge a company’s future success on the shoulders of the CEO, each of the above-mentioned key players is supposed to play his or her part in order to safeguard the future success of the organization. Concisely, a company’s success or failure can be determined by the role played by its key decision makers during a definite period.

Former Chrysler Group LLC board of directors failed to play their role effectively or professionally. They over relied on the leadership of CEOs as the principal key to the company’s future success especially during the early years of the 21^st century. Even though, the CEOs of an organization play a critical role in guiding an organization along the path of success, they cannot run an organization singlehandedly.

The necessary input of all relevant senior stakeholders is a requisite for success of an organization. Chrysler’s board of directors was wiling to approve exorbitant salaries and bonuses for its CEOs at the expense of the corporation’s ability to pay its debts. Moreover, the board of directors did not consider the company’s ability to continue remunerating its other workers and remitting their employment benefits.

The result of this trend was an abnormal accumulation of debts, which nearly pushed the 85-years old automaker out of the market. Fortunately, the company was saved from an inevitable liquidation by Obama’s administration bail out and a successful merger agreement with Fiat.

Financial managers viz. internal and external auditors, bear the greatest blame for the failure of the Chrysler Group LLC because they aught to have raised a red flag for other stakeholders following the evident accumulation of debts.

In any case, the inability of this category of officials to provide relevant financial information to the board of directors and the CEOs should have pointed to a possible company failure in the future.

Apart from providing key decision makers with reliable financial information on which they can base their strategies, financial officers of an organization should offer reliable insights on how a company should perform in coming days, in relation to possible business and market conditions.

In short, financial performance of an organization should remain closely monitored under the guidance of the relevant stakeholders including senior financial managers, internal, and external auditors because it is one of the key indicators or pointers to the fate of an organization’s future success.

The CEOs and former board of directors of the Chrysler Group LLC probably ignored this fact and hence, the eventual failure of the company was inevitable given the unfavorable economic conditions of the year 2009.

Leadership, Management, and Organizational contribution to the failure

Proper and professional management of an organization’s resources, both human and non-human, is central to its success. Leadership, management, and organizational structures provide the needed framework within which control of organizational resources takes place, as well as the running of the day-to-day activities of an organization. These important features of an organization can therefore, contribute to the failure of a company.

Chrysler Group LLC leadership, which was expected to emanate from its CEOs and board of directors, similarly failed to find out the cause of the consistent accumulation of debts. They also equally failed to guide the company on how to reverse the trend in order to sustain its solvency.

In contrast, one leadership segment, that is, the board of directors, contributed to the failure of the company because of its hands-off attitude that left the company’s future success at the mercy of the CEOs who were also unable to avert the eventual failure that befell the company.

Both the leadership and management were unable, and/or unwilling, to read possible pointers to possible failure due to the unpleasant debt accumulation that proceeded its eventual slippery into a detrimental bankruptcy.

Chrysler LLC’s organizational structures contributed to the failure by failing to unite the CEOs and board of directors into a constant platform, which could foster teamwork needed in the making and approval of all sensitive decisions that guide a company to its future success.

Therefore, the lack of teamwork orientation between the CEOs and the board of directors prevented them from seeing the looming failure from a similar perspective. This, in turn, meant that they did not have an opportunity to put in place the necessary measures at the right time in order to prevent the failure that befell their company.

Conclusion

All for-profit organizations aim to realize improved financial performance and retain their ability to pay their debts and employees in order to survive in the increasingly dynamic markets. However, that is only possible through able and competent guidance of its leadership and management.

The leadership and management of an organization should be able to establish organizational cultures that nurture behaviors, which are congruent to its desire to succeed such as teamwork and professionalism or risk failing to achieve its set goals.

Chrysler LLC’s poor leadership, management, and ineffective organizational structures, was its undoing that culminated into an unfavorable bankruptcy that nearly drove the 85-years old automaker out of markets; but thanks to the federal government bailout, the company remained in the market.

Its leadership and overall management failed to read signs of a possible failure; the company‘s financial performance deteriorated as indicated by its adverse preceding debts accumulation but the management was too busy or ignorant to realize it.

Reference

Isidore, C. (2009). Chrysler files for bankruptcy. CNN Money. Retrieved from <https://money.cnn.com/2009/04/30/news/companies/chrysler_bankruptcy/>

Click Here To Order Now!