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Case study :Chrysler-Fiat alliance Case Study

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Tichanun Jumpee

on 17 October 2014

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Transcript of Case study :Chrysler-Fiat alliance Case Study

The Chrysler Company
What Could Be Learnt From Multinational Alliances
Conclusion
Evaluating the Chrysler-Fiat
Auto Alliance in 2012

- 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
For Chrysler
this alliance means stability, structural changes in manufacturing, new technology, and access to Europe's market.

Fiat
is expecting from this alliance a quick access to the North American market, possibly own 51% stake in Chrysler, and a strong global presence.
Chrysler’s Survival in North America

The number three automaker in North America
>> Quality problems
>> Low market share

Chrysler concentrated on the segments that required inexpensive autos
by middle-income consumers
What is a Strategic Alliance
What Are The Problems
In the majority of alliances, businesses’ goals and markets can present problems.
Areas that can be affect in international alliances are: knowledge sharing in R&D, control, antitrust issues, and ownership problems.
Chrysler views this alliance mainly as a survival action and a part of a bankruptcy proceeding.
FIAT need to bring under control Chrysler’s losses and restructure the organization.
Both auto manufacturers had problems with alliances in the past.
Before Alliance

- 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.
Before the Alliance

- Established Brand in North America.
- Established distribution and sales network in North America.
- Major manufacturer of utility trucks.
- Jeep brand and minivans are popular in North America.
Strengths After Alliance
Chrysler
- Survival of company and bankruptcy proceedings.
- Stability.
- Structural changes in manufacturing and management.
- New technology.
- Access to Europe’s market
Weaknesses after Alliance
Chrysler & Fiat

The global auto industry is a classic example in the areas of competition, industry evolutions, and creative destruction.

- Corporate Integration.
- Technology Sharing.
- Mismatch of Brand Portfolios.
Compare and Contrast

- FIAT has made huge recovery under leadership of Sergio Marchionne.
- Has been reinvigorated in Europe.
- One of the most visible brands in small cars in Europe.
- Quality has improved.

- 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.
Fiat
- Owns 20% of Chrysler with a possibility to raise it to 51% after 2013.
- Quick access to the North American market.
- Strong global presence.
- Savings of millions of dollars.
Positive
1. Research & Development.
2. Product Development.
3. Distribution Networks.
4. Knowledge Sharing.
5. Technology Sharing.
6. Access to New Markets.
7. Acquisition of Stake.
8. Survival.
9. Money Injection.
10. Profits.
11. Money Savings.
12. New Leadership.
Negative
1. Post-merger integration problems.
2. Corporate cultures.
3. After de-merger problems.
(Financial difficulties,
Disappearing market share,
massive losses, etc.)
4. Anti-trust issues.
5. Ownership problems.
Fiat Group
Chrysler Group
Fiat’s Corporate Endurance in
the European Markets
The company has survived
>> Corporate disruption
>> Labor crises
>> Technology shifts

Fiat has come a long way in the European market
regarding dealing with
>> Quality areas
>> Reputation
The Chrysler-Fiat Alliance in 2012
The strategic alliances link two
companies’ operations by combining
>> Manufacturing resources
>> Knowledge

The alliance has allowed Chrysler and Fiat not only to survive in the auto industry but expand in global markets
Please welcome
Portfolio
Benefits of our alliance
Strengths
weakness
Strengths
Weakness
- Fiat needed to find a new market for its cars to balance the declining domestic market.
- Fiat would have a strategic partner with operations based in the US.
- Fiat would be able to utilize Chrysler’s distribution channels.

- In order for Chrysler to receive the government loan they had to show a long term viability plan which included possible mergers.
- Chrysler needed fuel efficient engine technology to make smaller eco-friendly cars.
- Chrysler had to find a new CEO (terms of the loan).
-Thousands of auto workers in the US would be able to keep their jobs, and 573 new jobs would be created.
Both Fiat and Chrysler would help each other launch new vehicle models in the US.
what do preple think about Fiat's alliance Chrysler?
Full transcript