Massey Ferguson Case
Question 4. a) What are the main problems for MF in 1980? What alternatives were available to MF?
Market-wide problems:
• High interest rates – After the 1973 oil crisis and the 1979 energy crisis, the US economy was affected by stagflation. In an effort to fight excessive inflation, the Fed adopted a tight monetary policy, raising interest rates (as an illustration, the federal funds rate increased from 11% in 1979 to 20% by June 1981).
This affected all players as it led to a plunge of stock market prices, on the one hand, and an economic recession, on the other. Furthermore, Massey was particularly hit hard: since it mainly financed its operations with short-term debt, its financing cost went up dramatically.
• Low demand – The above-mentioned contractionary monetary policy pushed the American economy into recession. Massey's renewed drive into North America (by 1978, it had introduced a new range of large, high-horsepower tractors and an improved baler line)......
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Approximate Word Count: 824
Approximate Pages: 4 (250 words per double-spaced page)
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