by Ametha Williams

Created on: June 16, 2009   Last Updated: June 17, 2009

Over the past few months there has been talk of the collapse of the automotive industry. Now General Motors, one of America's largest automobile makers, is on the brink of bankruptcy and President Obama is discussing government take over of the company in order to save the economy and the consumer.

In this situation, there is only a win/win option. If General Motors declares bankruptcy, the company gets to keep what assets they have and then the government takes over and prevents the company from going out of existence.

Some opponents of the government takeover of this automaker may feel that the government will be in full control, and the company or its administrators will have little to no say-so. This concern breeds fear that government will start a takeover of every aspect of its citizens' lives. The supposed "government takeover" of (GM) has sparked concerns of the emergence of a more socialized American approach to government. Most critics may see it as a sign of democracy being subplanted or even uprooted by socialism.

For some supporters, government takeover of General Motors is a move in the right direction to stop out-of-control spending practices of Big Businesses. According to ABCNews, "the government will only take a sixty percent stake in the company" (ABCNEWS, 2009). This means that the government will not be in full control of (GM) but will operate as a stakeholder. In other words, the company is no longer privately owned; nearly sixty percent of it will be owned by the American people. If sixty percent of the American people own GM, then the company must produce products that satisfy its constituents and stakeholders.

According to (GM) CEO Fritz Henderson, "I want them to get a fanstatic return on this investment. It's our job to deliver that" (ABCNEWS, 2009). The government does not and will not own any portion of (GM), the American people will be the beneficaries of General Motor's bankruptcy. Regardless of how things turn out for (GM), consumers will remain faithful to a company with whom they have an established history and relationship. Consumers will still buy (GM) products not solely because the consumer thinks (GM) produces a good product but because the company has built a reputation during its time as a business. The consumer identifies with (GM) as an automaker of the working man.

Generations of families grew up riding in automobiles produced by (GM) and have raised generations of consumers who drive and depend on a (GM) product. The main reason why the bankruptcy and government take over of (GM) will not hurt its sales is based on two factors: consumer needs and established reputation. Consumers will continue to buy (GM) because it is a household-name item, it is simply what they know and the product they trust.

Sources

Gomstyn, Alice, Herman, Charles, and Jaffe, Matthew. (June 1,2009). GM Chief Wants Americans to See 'a Fantastic Return'. ABCNews. Retrieved on June 14, 2009 from http://abcnews.go.com/Business/Economy/story?id=7722 655&page=1.

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