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Chrysler Case Study

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by

David Stearns

on 20 April 2013

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Transcript of Chrysler Case Study

Chrysler in Crisis Falling sustainability
Complacent bureaucracy
Misguided management Diminishing sales Attempting to recover from bankruptcy Allowing company to become bankrupt Repetition of failed measures Lack of innovation
Lack of focus Sergio Marchionne Named CEO of Chrysler in June 2009 2004 CEO of Fiat 2002 CEO of SGS 1997 CEO of Algroup 1994 CFO of Lawson Group 1992 CFO of Acklands Ltd. York University University of Windsor University of Toronto Which of the seven managerial challenges discussed in this chapter is Sergio Marchionne facing at Chrysler? 1 Seven Challenges to Being an Exceptional Manager 1. Managing for Competitive Advantage
2. Managing for Diversity
3. Managing for Globalization
4. Managing for Information Technology
5. Managing for Ethical Standards
6. Managing for Sustainability
7. Managing for Happiness and Life Goals Competitive Advantage: The ability of an organization to produce goods or services more effectively than competitors do, thereby outperforming them Responsiveness to Customers Innovation Quality Efficiency Pre-Marchionne $4500 rebate by government offered by "Cash for Clunkers"
Sales chief Peter Fong offered for Chrysler to match amount Post-Marchionne The focus switched from trying to appease the customer through rebates to ensuring quality products and innovative features In a market saturated with many alternate choices, Marchionne emphasized innovation
Focus on product quality to attract customers rather than through rebates
Marchionne also advised stricter control over pricing Lowering costs to maintain profitability Marchionne set dozens of interviews to determine who to fire
Afterwards, Marchionne had a management team of 23 employees
Elimination of rebates also eliminates inefficient costs Knowledge Management: The implementation of systems and practices to increase the sharing of knowledge and information throughout an organization Marchionne improved knowledge management by making employee communication more efficient Weekly videoconferencing
Electronic communication such as Marchionne's five cell phones
Decision to place office amongst engineers as opposed to within executive tower Describe which functions of management were displayed by Marchionne. 2 The Management Process Planning Goals Improve management
Return to profitability
Increase market share Organizing Tasks Restructured the management team for efficiency
Ensured employees follow company direction
Emphasized quality and improvement Leadership Ability Influence and insight carried over from experience
Took less prestigious office to be closer to employees
Commits to working seven days a week, including a full week in Michigan per month Controlling Performance Removing failed directives such as rebates
Managing and promotion of essential employees
Elimination of inefficient or ineffective workers Which of the three types of managerial roles did Marchionne display? 3 Three Types of Managerial Roles Interpersonal Roles Informational Roles Decisional Roles Figurehead Leader Liaison Monitor Disseminator Spokesperson Entrepreneur Disturbance Handler
Negotiator Resource Allocator Interpersonal Roles: Manager interaction with people inside and outside of their work units Informational Roles: Managers receive and communicate information within the organization Decisional Roles: Use of information to make decisions, solve problems or take advantage of opportunities Figurehead Marchionne's dedication to Chrysler is proven by his seven day work week. His constant need to travel to meetings represents the work ethic he wants to see with in the organization. Figurehead Marchione's dedication to Chrysler as proven by his seven day work week and constant need to travel to meetings represents the work ethic he wants to make an example for the organization Leader Instilling an environment of success allows Marchionne to be a successful leader through the proper training, motivation and discipline of his employees Disseminator Marchionne maintains a much more successful level of communication with his employees than his predecessor through meetings, videoconferencing and other electronic communications Entrepreneur As opposed to the complacent environment that existed when he first joined, Marchionne emphasized change and innovation by taking risks to achieve profitability that previous methods had failed Disturbance Handler Marchionne has succeeded in solving unforeseen problems such as correcting the actions of a sales chief who was continuing to offer costly rebates in opposition to Chrysler's new direction Resource Allocator By reigning in the unnecessary costs that were wasting away company profits and through allocating his limited time throughout the entire work week, Marchionne is an excellent allocator of company resources To what extent did Marchionne display an entrepreneurial orientation while trying to turn around Chrysler? 4 Entrepreneurship The process of taking risks to try to create a new enterprise Entrepreneur Intrapreneur VS Someone who sees a new opportunity for a product or service and launches a business to try to realize it Someone who works inside an existing organization who sees an opportunity for a product or service and mobilizes the organization’s resources to try to realize it Intrapreneur Because Marchionne saw his opportunity within an existing company such as Chrysler as opposed to starting his own company, he is an intrepreneur 1. Opportunity He saw that Chrysler lacked a lot of structure within their company and needed to be reorganized but with enough initiative he could turn around the company and make great profit as a stakeholder 2. Risk He had invested time and resources into a company that nearly went bankrupt and just left safety in 2010, taking such a risk to stay invested and trying to turn the company itself around shows dedication to the brand 3. Mobilization He utilized capital and workers that were already employed, eliminated exorbitant costs and unproductive employees and and attempted to seize his entrepreneurial opportunity with these resources How would you evaluate Marchionne’s technical, conceptual, and human skills? 5 Managerial Skills Technical Skills Job-specific knowledge needed to perform well in a specialized field Degrees from three universities, one of which is an MBA
Prior managerial experience as CEO and CFO
Experience as CEO of Fiat, another car manufacturer Technical Skills

Conceptual Skills

Human Skills Conceptual Skills The ability to think analytically, to visualize an organization as a whole and understand how the parts work together Understood which parts of the organization were disposable
Ensured better organizational communication
Conceptualized a better focus on product quality Human Skills The ability to work well in cooperation with other people to get things done Emphasis on better communication from the CEO downwards
Employees cooperate more successfully with better guidance
Dedication to working long hours throughout different locations
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