Why were the respective strategies of General Motors and Swissair not challenged more effectively well before they failed? (It may help here to consider the identity of their main stakeholders and their respective beliefs and interests).

Question

What will be an ideal response?

Answer 1

Obviously shareholders such as the large pension funds cannot have been impressed with GM’s
performance for a long time. But for both GM and Swissair, their respective governments have been
key stakeholders. Of the former it was said for many years that ‘what is good for GM is good for
America’, while Swissair was the Swiss national airline or flag carrier, responsible for maintaining
the nation’s prestige abroad. Understandably, then, these key stakeholders were perhaps much too
slow to criticise and kept anticipating improvements that did not materialise. Given the tough,
international competitive circumstances in motor vehicles and airlines, governments rarely have the
answers to declining commercial performance. Their subsidies and other ‘soft’ forms of support they
may choose to provide merely suppress the need for reform while they often obstruct tough
managerial initiatives progress when other stakeholders such as employees’ trade unions protest and
threaten to create other problems such as strikes, loss of electoral popularity etc..