General Motors (GM)

Paper Summary:

This paper explains that the economic performance of General Motors (GM) has been declining steadily for the past six years to the point of being on the verge of bankruptcy because it lacked the vision to anticipate rising oil and gas prices worldwide, based on increased international demand for these resources. The paper points out that, unlike more forward-looking foreign car companies including Toyota and Honda, GM has not focused at all on producing a hybrid automobile, still producing far too many over-sized and gas-guzzling cars. The paper states that higher gas prices seem to be here to stay; hopefully, GM management will learn from its past mistakes.

From the Paper:

"A direct negative correlation clearly exists, then, between high gas prices and the declining profits of GM, and has existed for some time. Further, as of April 2006: "GM said its April sales fell 11 percent, primarily due to a 21 percent decrease in car sales. Truck and SUV sales were down 2 percent." Oil shortage in general (i.e., decreasing growth in production, caused by some oil refineries being off-line, as a result of natural disasters like Hurricane Katrina); and unstable governments and economies in oil-producing countries (e.g., Iraq) have also resulted in decreases in oil exports, thereby shrinking the oil supply and thereby raising the demand for (and the price of) oil even further."

Sample of Sources Used:

• Durbin, D.A. (May 3, 2006). Gas costs affect car sales. Deseretnews.com [Salt Lake City, Utah]. Retrieved May 31, 2006, from: http://deseretnews. com/dn/view/0,1249,635204381,00.html.
• Gas prices have mixed impact. (May 3, 2006). Vindy.com. Retrieved May 31, 2006, from: http://www.vindy.com/content/business_tech/293368568395166 .php.html.
• Hollis, J. (June/July 2006). Who killed the electric car? Green Gazette [Mother Earth News]. Retrieved May 31, 2006, from: http://www.motherearthnews. com/top_articles/2006_June_July/Who_Killed_the_Electric_Car_Green_ Gazette.html.
• Hyde, J., & Ellis, E. (May 27, 2006). Car buyers embracing better gas mileage, survey shows. JournalStar.com [Lincoln, Nebraska]. Retrieved May 31, 2006, from: http://www.journalstar.com/articles/2006/05/28/business/ doc4477659f660 e9293525505.txt.
• Kyoto Protocol. (May 31, 2006). Wikipedia. Retrieved May 31, 2006, from:http://en.wikipedia.org/wiki/Kyoto_Protocol.html.

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