GM Makes The Right Move At The Right Time

| About: General Motors (GM)
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If you snarled at the bailout handed to banks in late 2008, your opinion was more than likely no more favorable in regards to the auto bailout that subsequently followed. In fact, you probably showed a greater distaste towards your money being thrown at an industry that was far less critical than that of the banks and an industry that had also become the root of their own demise.

However, for as much as the sector still needs to prove itself, some companies are already proving they have learned a lot from the recent turmoil. The funny thing about bailouts is that they can lead to two entirely different results. You can have your companies like JPMorgan (NYSE:JPM), which turn reckless knowing government benefits clearly await. Or, you can have those like General Motors (NYSE:GM) that actually turn financially responsible; those that witness the excruciating and painful control the federal government can take of a business and realize such a path must be avoided at all costs in order to keep the company afloat.

The newfound fiscal responsibility focus that General Motors has learned came to light when the company announced it pulled $10 million in ads from Facebook (NASDAQ:FB) because they simply didn't work. The company's claim can be well understood. After all, its safe to assume the major bulk of social networkers don't log onto Facebook to click on a GM ad. However, to make such a claim before the much anticipated IPO of Facebook shows guts. It shows a company willing to look beyond what most would view favorably, such as advertising on one of the most popular websites in the country, and instead use its resources and time to embark on a strategy that actually provides results for its own balance sheets.

More and more companies these days make assumptions instead of actual decisions. They look at what works for most and assume it would automatically work for them. A strategy that has proven precisely the reason why so many companies and even sectors seem to come and go with the wind these days.

Now there will undoubtedly be some question marks directed at General Motors for this decision. Some will wonder how this advertising strategy couldn't work while others will probably proclaim the company didn't give the strategy enough time. However, in an economic environment where so many things seem to go wrong while only a few end up working, it should be reassuring to find a company that admits when something fails and move on.

The auto industry may still be far from being completely healed, but with appropriate managerial decisions and a company that looks first and foremost upon its own balance sheet and goals, there's no reason to think General Motors current path won't find sustained success.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.