General Motors and Chrysler recently experienced financial distress resulting in near bankruptcies fundamentally because
A)the Asian markets such as China, India, and Japan entered the North American market and captured an even larger share.
B)the value-pricing strategy used by the "big three" was flawed and North Americans' perceptions of value had changed.
C)they were continually using deceptive pricing when establishing the manufacturer's suggested retail price for their vehicles.
D)their costs got out of control, causing their total costs to exceed their total revenues.
E)their product line was not changing with the times in order to meet changing environmental standards regarding fuel economy and emissions.

Question

Quizplus · Accepted Answer

The financial distress experienced by General Motors and Chrysler was fundamentally caused by their costs getting out of control, which in turn caused their total costs to exceed their total revenues. This led to near bankruptcies and required government intervention to prevent them from going out of business. The other options may have contributed to some extent, but were not the fundamental cause of their financial distress.

General Motors and Chrysler Recently Experienced Financial Distress Resulting in near Bankruptcies