Three businesses that almost went out of business

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Table of Contents

Cisco Systems
General Motors
Avon
References

Cisco Systems

Cisco Systems Company refers to a United States multinational business with its headquarters in California that engages in designing, manufacturing and selling networking devices. At the close of 2011, the Chief Executive Officer (CEO) of the company, John Chambers, was trying to restructure and streamline the company after a year of stumbles that had resulted in the company facing a financial hardship.

In April, the company had announced a change in its consumer products business that made Flip, business unit dealing with video cameras, to collapse. In 2011, the sales of the company had continued to decline and had dropped by about 40% in its fourth quarter. The net income of the company in the fourth quarter, ending on July 2011, had dropped to 1.2 billion dollars from 1.9 billion dollars in the same quarter in 2010.

Following the decline, Cisco began an overhaul of its functions by cutting $1 billion from its yearly operating costs to cater for the declining sales. Moreover, Cisco made an untimely retirement offer to more than five-thousand of its older workers and anticipated that around 3,000 workers would leave as a result (Waters, 2011, para. 2-5). Following the restructuring of its management, the company reduced its huge number of executives to just three.

General Motors

Around mid 2008, an international-scale decline distressed the economy of the US and the stock price of General Motors (one of the Big Three automakers in the United States) dropped by about 30%. Because of the fall in automobile sales, General Motors borrowed emergency loans from the government to assist in handling its financial shortages.

By mid 2009, the condition had turned from bad to worse in such a manner that General Motors was facing bankruptcy and liquidation. To avoid the loss of jobs and in an attempt to stabilize the industry, the governments of both US and Canada offered an 85 billion dollars worth of bail out to the Big Three (General Motors (GM), Chrysler and Ford Motor Company). GM rose from bankruptcy as a new company with a great part of it under the ownership of the US Treasury (Ikenson, 2012, para. 4-7).

General Motors terminated some of its brands (reduced its brands from 8 to 3) in trying to address bankruptcy, by intending to save 5 billion dollars per year. Nevertheless, this turned out to be very expensive because of franchise laws; for instance, General Motors had to spend approximately 2.1 billion dollars for the withdrawal of Oldsmobile (Ikenson, 2012, para. 5-6). By 2012, General Motors had considerably recovered and made sales of more than 9 million vehicles in that financial year.

Avon

Avon is an American multinational company that deals in manufacturing and distributing of beauty and household products in more than 150 nations across the globe. The ousting of the companys CEO, Andrea Jung, in 2012 almost wrecked the company. In spite of the restructuring schemes that cost Avon almost $1 billion through the financial year 2011, it was apparent that the company was consistently trying to put out fires in 2012 instead of making progress.

In Mid 2012, Coty (a perfume corporation) gave $25 per share to Avon, almost 19 percent of its stock price then. Nonetheless, after witnessing the slow pace of Avon, Coty withdrew its assistance (Rushe, 2012, para. 4-9). This resulted in the decline of the shares of Avon below $15 from over $43. Avon was eventually able to triumph over its financial hardships as by the close of 2012 it had made a yearly sale of $11 billion internationally.

References

Ikenson, D. J. (2012). America Without Its Automakers. Web.

Rushe D. (2012). Avon rejects $10bn takeover bid from celebrity-fragrance company Coty. Web.

Waters R. (2011). Cisco Systems to cut up to 14% of workforce. Web.

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Three businesses that almost went out of business

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