Question

Q1. Please provide case analysis of the case Fiat Chrysler Automobiles N.V.(2015)(THIS IS THE NAME OF THE CASE STUDY IN BOLD LETTERS) From Alliance to a Cross Border Merger(PC3-31) 9TH Edition-discuss recommendations for problems and issues found in the case study along with consequences of these recommendations? will management, customers,partners and employees accept these recommendation ?

Answer 1

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Case Analysis - The Chrysler-Fiat strategic alliance will provide a meaningful opportunity to both companies regarding dealing with survival and expanding their markets in Europe and North America. As of 2009, it is evident that the companies are off to a good start. Both firms have marketable brands in their market segments but lack a collective effort. The case is a good example in the area of cross-border alliances that take place between two or more companies. Since 2008, Fiat has actively sought a partner in North America because of the attraction of the market. This is also attributed to the auto industry’s consolidation, restructuring, and cost-cutting activities. Chrysler and Fiat ended up seeking an alliance because of their compatibility, product portfolios, and markets. In Chrysler’s case, the main motive was to seek a partner who could help strengthen its financial problem regarding new technologies, markets, and quality standards. Chrysler did very well after its 1980's reorganization and introduced many new models. In 2008-2009, Chrysler suffered because of the global financial crisis and weakened demand in the auto industry. Before filing for Chapter 11 in 2009, the only alternative Chrysler had was to seek a partner. As of May 2009, Chrysler-Fiat Strategic Alliance looks feasible. At the same time, cross-border alliances are difficult to succeed because of differences in corporate cultures, ownership issues, regulatory barriers, and labor unions. As discussed in the case, Marchionne may become the CEO of Chrysler if Fiat raises its stake in the company. According to analysts, the Chrysler turnaround is possible if Fiat shares appropriate technology with Chrysler. In Chrysler’s case, the company can add a good value-added to the alliance by sharing its two cash cow products (Jeep vehicles and Dodge trucks) with Fiat.

Problems & Issues - The shortcoming of Fiat is its advertising strategy which may not be as effective as its European rivals. In global markets, the company has a limited product portfolio. Following the alliance, it is expected that both companies will do better if no market or company disturbances happen.

Recommendations - Fiat should make a turnaround regarding its advertising and marketing strategy for matching the rivals in the European market. And also Fiat should increase their product portfolio by diversifying into or creating other business portfolios so that the risk can be mitigated in the long run.

Acceptance of recommendations - These recommendations must be accepted by the stakeholders given in the question, so as to develop their strategies and increase the competencies of the company. In the last 15 years, strategic alliances have become the norm in the auto industry because of cost and market entry strategies. Although alliances are difficult to be materialized, they bring good economies of scale and provide opportunities within R&D, technology sharing and dealer networks. For reaping the benefits out of such alliances there is no other way but to accept these recommendations by the management, customers and other stakeholders.

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