http://www.benzinga.com/news/12/10/2974294/general-motors-wooed-by-wall-street#
In class, we have discussed the Big 3 American companies quite a few times; especially in regards to their failures. However, the Big 3 have managed to achieve success over the past few years. The article, linked above, discusses GM’s success over the past years and its dealings with Wall St(in terms of getting financing).
Financing, as discussed in class, is using outside money to fund something. GM has been getting both debt financing (credit line) through JP Morgan and equity financing from its IPO. Is it responsible or safe to finance a company that just a few years back went bankrupt and is still not considered “investment grade”? I would say that since GM has made significant progress on its cars, financial practises, and brand perception; GM is a safe investment for financiers. Moreover, as the economy has improved, the car industry as a whole has improved and become attractive. For instance, according to the Porter’s Five Forces Model of Industry(http://www.quickmba.com/strategy/porter.shtml), growth in the market will result in higher revenue for the company. Therefore, as the market improves, GM becomes a more attractive investment option. However, GM must continue to innovate to stay ahead of competitors.