Referencing the strategic management literature, discuss the extent to which events associated with the "credit crunch" and the 2008 banking crisis witnessed a fundamental reevaluation of the organizational purpose of banks and corporations construction and corporate governance. In the last 10 months there has been a global credit crisis that has affected every individual and every organization. A good definition of credit crunch would be that provided by Simon Nixon (2008): “The credit crunch began in August 2007. The term refers to the sudden contraction of credit in the financial system as banks became increasingly reluctant to lend loans. It has left individuals and businesses facing potentially higher interest costs or difficulty gaining access.” Credit crunch can occur for several reasons such as; “sudden increases in interest rates, direct monetary controls by the government or the exhaustion of capital market funding”, (www.thismoney.co.uk). According to the Times Online, “years of borrowing have fueled a huge debt bubble; people borrowed “cheap money” and property. The crisis began in the summer of 2007, when lending to low-income Americans ushered in a wave of financial problems. As a result, banks did not lend money to consumers and each other. Furthermore, it has become a worldwide phenomenon; “The way the debt was sold to investors gave the crisis global significance. The U.S. banking industry packages subprime home loans into mortgage-backed securities known as CDOs (collateralized debt obligations). These were sold to hedge funds and investment banks who decided they were a great way to generate high returns (and big bonuses for the smart bankers who bought them). As borrowers began defaulting on their loans, the value of these investments plummeted, resulting in huge losses for banks around the world,” (timesonline.co.uk). While this was happening, consumers were feeling the impact of the rising prices of basic necessities. Some of the problems that have occurred due to the credit crunch are: Shortage of loans: There has been a decline by banks in lending money to consumers. “In the UK, mortgage approvals have fallen to their lowest levels since records began. This consumer loan shortage is causing; falling demand for homes and falling prices, falling consumer confidence as people struggle to get loans, falling profitability for banks and falling stock values,” (www.economicshelp.com). Tighter credit – “Credit shortages are pushing banks to increase the cost of mortgage products. The gap between base rates and bank rates has widened as banks seek to increase the profitability of their loans.