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Chrysler-Fiat Case Study
Transcript of Chrysler-Fiat Case Study
- Bailout package
- Strict labour laws
- The economy in the U.S. was in turmoil
- Initiate change
- Labour crisis that led to layoffs
- Chrysler is a part of the american identity and has a lot of value to many people because of its history.
- Growing awareness and demand for fuel efficient cars
- Constantly developing
- Different "new" technologies can impact industry
- Focusing on R&D to create competitive advantage in the industry.
The Chrysler Company
Table of context
1. Introduction and events
2. External analysis
3. Major stakeholders
4. Objectives and concerns
6. Positive and negative views
7. Alternative solution and our recommendation
Positive and negative views
Performance of Chrysler
So.... in conclusion
The Chrysler-Fiat Alliance
Amy (42910927),Martin (43791514) and Mia (43819540)
Two sides to the Story
- Bailout money was to avoid bankruptcy which they were forced into anyway
- Based on modeling in relation to performance before 2008 and performance of competitors post 2009
Fabbrica Italiana Automobili Torino was founded
Became the largest automaker in the world
GM aquires 20% of Fiat
Fiat and GM dissolves the partnership
Announces a deal to acquire 20% of Chrysler
Announces a global strategic alliance with Chrysler and agrees on a new ownership structure
- Chrysler is an icon of the American auto-industry
- Bailout with some terms
- Assumptions for the alliance
- stability and structural changes to Chrysler
- New technology and European market
- Quick access to North American market, and possibility to expand a possible 51 % stake in Chrysler for Fiat
- Strength and weaknesses of the alliance:
- Gain good access to different markets, combining production capacity.
- knowledge sharing in R&D, control, antitrust issues, and ownership problems.
- Company specific issues
- Chrysler: Financial issues and changing markets.
- Availability of Fiat's technology platform
- Technology sharing
- Availability of the North american market
- Fiat can re-enter North american market, because of well established partner.
- Brand portfolio and branding issues.
- Combine resources to consolidate brand portfolio
- Savings in R&D and technology platform
Objectives and concerns
- De-merger of Daimler Chrysler.
- Impacted by 2008 recession and high oil prices.
- Problems because of financial exigencies, disappearing market share, and limited influence in global auto industry.
Major stakeholders and their problems
To increase market share and
Expand their limited clout in the global auto industry.
Alternative solutions and recommendation
- Volkswagen, GM and Ford offers factors that would benefit Chrysler
- Distinct weaknesses and/or future plans that collide with Chrysler's needs and goals
Alternative solutions and recommendation
- Production alliance
- Research and Development alliance
- Financial alliance
- Marketing alliance
- We agree on the alliance that has been made
- complementary needs
- Fiat has previous experience with alliances that worked well
- Chrysler had a previous alliances that did not work
- Not productive
- Important to fulfill criteria mentioned earlier
Further development and re-organisation is one of their core focus
- Corporate growth has been tumultuous.
- Market share problems and reputation.
- Growth and survival had problems in areas of technology and quality standards.
- Financial problems and laid off thousands of workers.
1. Access to New Markets.
2. Knowledge Sharing.
3. Technology Sharing.
4. Research & Development.
5.Acquisition of Stake.
7. Money Injection.
9. New Leadership.
10. Distribution Networks.
1. Post-merger integration problems.
2. After de-merger problems.
Disappearing market share,
massive losses, etc.)
3. Knowledge sharing.
4. Anti-trust issues.
5. Ownership problems.
6. Corporate cultures.
Founded by former Buick Motors president
Enters the European market
The first Bailout
Seeks a $36 billion merger with Daimler-Benz
Cerberus acquired 80% of Chrysler
Impacted by the Global recession and high oil prices
Announces a global strategic alliance
Emerges from its bankruptcy
Fiat owns 20% of Chrysler
Economies of scale
Necessity for companies to be flexible, and form alliances for competitive advantage
Collaborative activities inside R&D
Made joint ventures
Intense competition in the industry across borders due to merge of companies.
Objective and concerns continue...
Identifying the logic of the collaboration - complimentary needs
Selecting partners through PEST and 5 Factor analysis
Other major stakeholders
UAW (United Automobile Workers)
Porter's five factor analysis
Rivalry within the auto industry is intensely competitive,
A relatively high barrier of entry,
A weak supplier bargaining power,
A strong buyer power and
The threat of substitution whilst is available, it is does not offer the same convenience (Porter 2008).