One Economics asepct of the auto industry Essay Example | Topics and Well Written Essays - 500 words

One Economics asepct of the auto industry - Essay Example It is important to explain that the 2007/2008 economic crisis had a very negative effect on the American auto industry, with almost all American auto companies becoming on the verge of bankruptcy. Companies such as Chrysler and General Motors were on the verge of bankruptcy, and this forced the American government to intervene and bailout these companies. This is by using the funds emanating from TARP, which is an acronym for the Troubled Asset Relief Program. A company such as Ford Motors was able to protect itself from the effects of the financial crisis, mainly because it was maintaining a hedge fund, whose money could be used for purposes of protecting the organization, during a period in which it was facing some financial crisis. There is a lesson to be learnt from this study. The lesson is that, it is always necessary for companies or business organizations to maintain an hedge fund, that could be used to fund the operations of a company or a business organization during periods of recession. This should not only be applicable to the auto-industry, but to other industries as well, such as the finance, communication, transportation industries, etc. Furthermore, this information is also significant to me, mainly because the auto industry has managed to improve from a near bankruptcy situation in 2007/2008, to one of the most profitable industries in the United States. This is because all these companies that were bailed out have managed to repay their debts, totaling to billions of dollars. It is quite interesting to know what type of strategy that these business organizations were able to use, despite the strong competition that emanated from the other companies, specifically from Japanese auto companies. My interest in this issue also emanates from the desire to know more about the 2007/2008 global crisis. In my knowledge, the crisis emanated because of the inability of the