International management

Assignment 3

Q.1What are your views of the 2009 Chrysler- Fiat strategic alliance and its future prospects in the auto industry? Ans: according to me the alliance is good both for Chrysler and fiat as Fiat can take care of the technology of Chrysler. It can have fiats well developed distribution network in European market. Fiat will have the advantage of North American market. Combined production capacity will bring profits. They can have problems in Different corporate culture Mismatch of brands Regulatory issues Distribution and ownership problems.

Q2. Analyze and evaluate Chrysler and Fiats strengths and weaknesses before and after their strategic alliance. Fiat Strengths (Before Alliance) Fiat acquires Lancia and 50% of Italian icon Ferrari. Fiat became the largest auto maker in Europe by acquiring Alfa Romeo from the Italian government. Fiat hires Sergio Marchionne to become its CEO Fiat was the largest automaker in Europe.

(After Alliance) Fiat have the advantage of getting new technology Large distribution network in Europe and North America.

Fiats weakness (Before Alliance)

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Took off jobs of many employees.

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Fiat had labor strikes and assembly line problems.

(After Allianz) Labour union problems Ownership problems

Chrysler Strength (Before alliance) Chrysler had a market share of 12.5% in U.S in 2008. The company was a big player in North America in mini vans and jeep brand. (After Allianz) It emerges out of the bankruptcy. Chrysler got support from Fiat so it can run in profits once again. If the joint business works then Chrysler will once again get a chance to emerge and make its place in the market. Chrysler Weakness (Before alliance) Quality was not good. Chryslers products were low priced. Faced high global recession pressure in 2008-09 in terms of high oil prices (After Alliance) Changes in market situations Ownership problems.

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Assignment 3

Q.3 Compare and contrast Chryslers and Fiat with five other global auto manufactures (GM, Ford, Toyota, Volkswagen, and Daimler) in the area of global operations and manufacturing issues. Chrysler GM motors Chrysler had a market share of 10.7% as but GM had 19%. Chrysler was the manufacturer of low cost vehicles but GM had various ranges. Chrysler Ford Ford had a market share of 14.6% Ford is the third largest auto maker in the world but Chrysler is far behind. Chrysler VW VW had a market share of 3% which is less than Chrysler. Sales of VW are much more than Chrysler. VW have good distribution network in Europe but Chrysler had good network distribution in North America. Chrysler Toyota Toyota have a market share of 16.1% Quality and technology of Toyota is much higher as compared to Chrysler. Chrysler Daimler Daimler have a big share in the European market but Chrysler didnt had any hold in European market. Daimler have good R&D.

Fiat GM Sales of Fiat are very low as compared to GM. Fiat VW Sales of VW are $149 bil and that of Fiat is $83 bil.

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Assignment 3

Fiat Ford Ford have sales of $172 bil and fiat have $83bil sales Ford is the 3rd largest auto manufacturer in the world. Fiat Toyota Sales of Fiat were $83 billion as of December 2009, as compared to $230 billion of Toyota. Quality of Fiat has improved, turnaround strategy is in progress. Toyota production systems (TPS) is the best in quality Fiat Daimler Sales of Fiat were $83 billion as of December 2009, as compared to $177 billion of Daimler. Fiat has limited product portfolio in the international market. Daimler is highly focused on R&D and product development.

Q4.Analyze Chrysler and Fiats brand portfolios in the world auto Industry. How do you see both companies revamping and overhauling their brands in the short(1-2 years) and long terms(56years) ? Chrysler had a strong presence in North America and Fiat had good networks in Europe but Chrysler slowly lost its hold in the US market too. Its merger with Daimler failed then 20% of Chrysler was acquired by Fiat which can prove to be success if Chrysler gets support from government and Fiat. In 1-2 years Chrysler may gain its market share again.

Advanced technology may improve the quality of the cars.

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In 5 - 6 years They will have a large customer base Brand image can improve

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They will have a more revenue and so they can further invest in R&D They can manufacture a large variety of automobiles.

Q5. What do you learn from the Chrysler Fiat strategic alliance regarding managing multinationals in the changing global business? What role did the U.S government play in the strategic alliance? In this changing global business these kind of strategic alliances brings about economies of scale, production is improved along with good technology. This strategic alliance will result in joint product development which will have major savings. U.S Government Role: Auto bail out by US government in 2009, by specifically

targeting GM and Chrysler.Chrysler had to go for strategic alliance because of its bankruptcy situation. Moreover, Fiat was wanting to enter the North American market which was possible through the strategic alliance with Chrysler. Q6) what has happened to the company since this case was written as the alliance being formed? Give an update as of the time of reading this case? (Source: www.jalopnik.com)

More than 100 Fiat dealerships nationwide are hoping that Fiat
will fulfill the promise of the Fiat-Chrysler alliance announced in January 2009

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Assignment 3

As part of the alliance, Fiat will contribute to Chrysler its world-class technology, platforms and power trains for smalland medium-sized cars,

Allowing the company to offer an expanded product line including environmentally friendly vehicles increasingly in demand by consumers.

Fiat is to provide its small-car technology to Chrysler to fill a gap in a Chrysler product line dominated by gas-guzzling SUVs, pickup trucks and minivans.

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