US in new push for auto bailout

This BBC article has the latest information on the ongoing saga of the US car manufactures current financial troubles.

a) What external environmental factors are mentioned in this article?
b) To what extent are these external factors likely to influcence the US Government in its decisions.

US carmakers publish rescue plans

This article from the BBC is the latest on the problems faced by the big US car makers.

You may need to read the previous articlec on this saga to remind yourself of some important information before answering the following questions.


Level 1 - Knowledge
1a) How much money were the US car makers asking for in the previous article on this situation? How much are they asking for now?
1b) What sort of merger might Chrysler be forced to accept?

Level 2 - Application
2a) Explain the strategies that the 3 US car manufactures plan to action in order to rescue their businesses.
2b) Explain this statement in this article - “Most analysts think that GM is "too big to fail"”

Level 4 - Evaluation
4a) Based on what you know about this case (from this and from previous articles, to what advise the US congress on whether or nor to agree to the US car makers request for finance.
4b) Ford currently owns Volvo (a Swedish based car manufacturer) . Justify Fords plans to sell this part of their business right now?

Note Level 1 – Level 4 are questions based on IB standards where

• Level 1: Knowledge
• Level 2: Application
• Level 3: Analysis
• Level 4: Evaluation

Words in bold (define, explain…) have a specific meaning in the IB Diploma Program (DP). The meanings are in Glossary of Command Terms Section of the IBO DP Business and Management Guide available at the OCC and from

my website

US rescues ailing Citigroup bank

An update from the BBC on US bank Citigroup. Citigroup's share price has risen 60% today on the news that the US Government has just agreed to

a) Provide $USD20 billion to Citigroup in return for preference shares in the business (a preference share is one that guarantees a fixed dividend)

b) Guarantee up to $306bn of risky loans on Citigroup's financial accounts (remember that banks like Citigroup are blamed for creating the sub-prime loans that are a major cause of the current financial crisis)

The article suggests an economy of scale that we dont often see in a textbook - businesses like Citigroup (and Fanny Mae and Freddir Mac) are seen as "too big to allow to fail".

The recent history of Citigroup

• Shares in Citigroup fell in value by more than 60% last week.



• Citigroup announced an extra 52,000 job losses worldwide (thats on top of 23,000 job cuts they have previously announced)



• Citigroup has lost more than $20bn in the past year because of the global financial crisis, suffering four straight quarterly losses



• Citigroup CEO (Vikram Pandit) and his senior managers have been criticised for failing to fix the banks problems

US shares plunge to five-year low

Read this BBC article on the fall in US share prices to their lowest levels since 2003, before answering the following questions.

Hint – you will need to review your previous work on the following blog entries on Citigroup job cull to hit 75,000 and US car companies seek $25bn aid to complete your answers:

Level 1: Knowledge
1) Define the following terms in this article:

• economic growth


• interest rate


• recession

Level 2: Application
2) Explain this statement in the article:
" The reduction in consumer prices also reflected a significant decline in energy prices - fuel costs fell for a third month in a row.

Level 3: Analysis
3) Based on your knowledge of analyse the statement in the article “There was also uncertainty about the fate of the "Big Three" US carmakers - GM, Ford and Chrysler".

Level 4: Evaluation
4) Advise the CEO of Citigroup on how to solve the fact that “Citigroup shares tumbled 23% to a new 13-year low”


Note: Level 1 – Level 4 are questions based on IB standards where
Level 1: Knowledge
Level 2: Application
Level 3: Analysis
Level 4: Evaluation
Words in bold (define, explain…) have a specific meaning in the IB Diploma Program (DP). The meanings are in Glossary of Command Terms Section of the IBO DP Business and Management Guide available at the OCC and from my website

Citigroup job cull to hit 75,000

The problems faced by Citigroup are described in this BBC article and this one.

Read both articles and answer the following questions
1) As a result of the financial crisis,
a) What are Citigroup’s losses this year?
b) How many workers will lose their jobs at Citigroup?
c) How much has been given to Citigroup by the US Government to ‘bail-out’ the business?
d) How much has Citigroups share price fallen

2) What has Citigroup done to try and restore the bank to profitability?

3) Vikram Pandit was appointed CEO of Citigroup in January 2008. What factors are mentioned on the article(s) for AND against the choice of Mr Pandit for this top job?

US car companies seek $25bn aid

This BBC article describes how the US Governments is being asked to put money into the 3 largest car makers in the USA.

Level 1: Knowledge
1) Define the term GDP mentioned in the article. By how much does Mr Waggoner (GM chief executive) believe that GDP will fall if the car makers do not get the financial help they are asking for?

Level 2: Application
2) Explain why Mr Waggoner (GM chief executive) said that the $25 billion aid is needed because
"It's about saving the US economy from a catastrophic collapse," he said.

Level 3: Analysis
3) Examine the political forces for and against the US Car manufacturers in their request for $25 billion aid

Level 4: Evaluation
4) To what extent are the problems faced by US car makers of their own making

Note: This article contains useful information to answer these questions

Note: Level 1 – Level 4 are questions based on IB standards where

• Level 1: Knowledge
• Level 2: Application
• Level 3: Analysis
• Level 4: Evaluation

Words in bold (define, explain…) have a specific meaning in the IB Diploma Program (DP). The meanings are in Glossary of Command Terms Section of the IBO DP Business and Management Guide available at the OCC and from my website