Home » Did Anyone Think McDonalds And GE Would Fail?
Did Anyone Think McDonalds And GE Would Fail?
Posted: Friday, August 05, 2011
by Jesse Mobley
EconomistNow
Less than two years ago this country faced the biggest financial crisis since the Great Depression. We have all heard this bold statement delivered to us by media broadcasters and even politicians themselves, but I fear that many young generations don’t understand the true urgency that this country faced. Most of us understand that this crisis developed from various banks that participated in greedy and self-centered mandates to further inflate earnings, but many don’t understand how this trickled across the board to many other industries. In my studies, I have found two dominant and prestigious companies that single-handedly have been models for how thousands of companies over decades that were almost taken down by this financial crisis.
McDonald’s and General Electric are these top performers who had been directly affected by the mismanagement of banks during the financial meltdown. Many individuals believe that companies of this magnitude are protected from short-term bank problems because of the earning and capital for which they host. The reality is that both of these firms are just as fragile as the mom-and-pop store down the street. Daily operation costs for both companies exceed millions and to protect from disruptions in their operations they often receive financial assistance from banks—essentially, loans. McDonald’s was almost to the point where if conditions didn’t begin to improve financially, then the company wouldn’t be able to play those gifted burger flippers. At the same time, General Electric was faced with the same financial pinch and was on the edge of shutting down. I can recall a report back in 2008 that stated that former U.S. Treasury Secretary Henry Paulson was told by the CEO of General Electric, Jeffrey Immelt, that the company was having problems selling commercial paper. Basically, General Electric couldn’t get enough money to pay short-term debt obligations like paying off their payroll or funding quick business transactions. It would be hard to live out my days without a twenty-piece order of chicken McNuggets for $4.99 or better yet try walking around with a candle instead of just flicking lights on.
Since the aforementioned financial hiccup, both companies have prevailed, and I would expect both companies to grow and further mature for years to come. But this goes to show that massive multinational companies, which seem to be very profitable and stable, are actually funded on a day-to-day basis much like any other small business around the world.
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