3 As GM’s managers continue making decisions that affect the company’s ultimate survival, what prevents them from making purely rational decisions, and what common decision-making errors must they guard against? In the months leading up to 2009, news leaked that General Motors

(GM) was pitching a merger to other automakers in the USA. Although they are famous cross-town rivals, GM, Ford and Chrysler were facing a brutal common enemy: the devastating global economic crisis. As these storied companies struggled to survive the worst sales slump in decades, an unexpected meltdown in the US mortgage industry became the global financial crisis, freezing cash flows worldwide and dramatically slowing new car sales. Unable to obtain money, and burning through $1 billion of its own reserves monthly, GM set out to find partners who might ‘circle the wagons’ to stave off bankruptcy.

Chairman Rick Wagoner and President Frederick Henderson met with Ford executives Alan Mulally and William Ford Jr. to propose merging their companies to survive the economic downturn. After numerous meetings, Mr Mulally and Mr Ford concluded that Ford Motor Company could reorganise better on its own. Not willing to give up on the idea, Wagoner took his pitch to Chrysler.