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Identify the problems (3) as set out in the case study and discuss actions the company can take to solve the problem identified above.

The subprime mortgage crisis of 2008 and the now famous failure of investment bank Lehmann Brothers in the United States brought the world's financial system to the brink of chaos in what became known as the global financial crisis. Even the acronym 'GFC' became commonly used in everyday speech. Hundreds of banks in the United States and other countries collapsed, and governments injected 'fiscal stimulus packages' into economies, aimed at spending their way out of or at least delaying the onset of the recession they feared. Once proud icons of industry appealed for increasingly large govern- ment grants and loans, and banks that had previously been free with credit tightened loan criteria to the point at which some businesses failed for want of operating capital. Even the United States government did the formerly unthinkable and virtually nationalised banks (as did the British government), and made staggeringly large loans' to big business, just to keep the economy turning over. Large and formerly profitable companies like insurance giant AIG and car empires General Motors and Chrysler suffered severely. United States President Barack Obama told them their bailout support would not continue, and that they could not expect to live on as 'wards of the state'. Management had to accept the downside of their behaviour along with the upside they had enjoyed for years. Ordinary people were furious as their superannuation funds were savaged while corporate high flyers took large bonuses. The crisis became an enduring downturn, and many household names simply disappeared from the market. By 2009, it was clear that this was not just a temporary downturn. Leaders of nations, including Australia, joined together in an unprecedented initiative for coordinated action. It took a year of fiscal stimulus by Western governments before optimism and signs of global recovery emerged. The tightly regulated Australian banking sector remained conservative throughout the GFC; while the banks needed and got government guarantees, they had no need of the rescues required by their foreign counterparts.