2009 Chrysler Fiat Strategic Alliance - Essay

Bankruptcy discussions started immediately and centered on the prospect of Chapter 11 bankruptcy (Start Fresh Today 2012), commonly called restructuring. It was generally used to provide a window of opportunity for a corporation to renegotiate contracts, sell assets or component businesses for cash, obtain debt forgiveness, or otherwise reform itself as a viable business enterprise. On April 30, 2009, Chrysler filed for Chapter 11 bankruptcy after talks with lenders broke down (Start Fresh Today 2012). On the May 14, 2009 Chrysler announced it was to close 25% of its US dealerships as part of its restructuring process.

In the hyper competitive world of today’s mega corporations controlled by the sway of the stock market, giant old industrial era companies rule over the automobile market in the United States as well as large parts of the global automobile market. Companies such as General Motors, Chrysler, and Ford were at the center of it until the economic crisis now known as the Great Recession of the late 2000s. The whole market was declining in sales with General Motors and Chrysler taking the biggest hits while Ford only suffered decline comparable to foreign automakers’, Honda and Toyota, levels due to restructuring in prior years. However, the tipping point was edging closer to bankruptcy with General Motors and Chrysler that ultimately

The Fiat Auto acquisition of Chrysler occurred in 2014, which turned Chrysler into an Italian automobile manufacturer (Abrams, 2014, para. 1). By combining these two firms one automaker now have strong ties to the American and Italian auto industry. By Fiat gaining Chrysler’s reputable name it can easily penetrate the American market. This why the acquisition between Fiat Auto and Chrysler can be seen as a growth strategy. Fiat now competes in a large global market, which subjects the firm to many different external environments. The General Enviornment consist of factors that affect every industry, for example taxation. A firm that operates in the auto industry and one that operates in healthcare industry are both going to be subject to government taxation and affect by it. In order to work efficiently and eliminate the threat of general enviornment risk the firm must use a strategy of including these risks in their work process. For example, if Fiat operations in the United States (U.S.) have to follow the U.S. Department of Labor regulations and pay any employee that works over forty hours in a workweek, overtime pay (2015, para.1). In order to reduce the cost associated with paying overtime and keep the budget in line, Fiat might consider hiring in part-time help during its anticipated high volume periods. This will keep production costs low and allow for a larger margin of profit.

General Motors, the “mother company” has faced many troubles in the past, and surfaced. A research by the National Research Council in the United States has revealed in 1992 that there had many impacts and future impacts in the automotive industry, indeed; it would affect the jobs and the internal economy. However, General Motors understood the threat potential that this and established strategic plans to revert the trend. Furthermore, whether General Motor Company was able to change the trend, and it saw the internal and external factors, prepared a strategic plan, Holden being the first brand in Australia, with at least just the 10 % of the population compared with the USA, the way to get a plan looks easier. In addition, it is easier to see a trend in countries with low population and good policymakers. In 2008 General Motors faced again the limit to bankruptcy. A fierce plan to develop and a new business association with FIAT made that GM avoid the dissolution. Even do all Europe have had a similar crisis( Boudette & Choudhury,

The crisis of Chrysler stemmed from falling sustainability, complacent bureaucracy, and misguided management. Sergio Marchionne (CEO of Fiat) was named CEO of Chrysler June 2009. Two managerial challenges that Mr. Marchionne is facing at Chrysler are managing for both competitive advantage and information technology. Prior to Marchionne taking the reins, rebates were being given by Chrysler per the sales chief Mr. Fong to match the amount given by the government. Once Mr. Marchionne took over, the focus changed from trying to appease the customer through rebates to ensuring quality products and innovative features. Mr. Marchionne's goal was to improve management, return to profitability, and increase market shares. He also restructured the

The Chrysler Group LLC initial public offering (IPO) was initiated by a trust known as the United Auto Workers (UAW) Retiree Medical Benefits Trust to cover medical benefits for retired workers who owned 41.5% of the company. The trust was created in 2007 as a way of reducing Chrysler's financial liability of paying existing workers and former employees’ health care costs and retirements. Initially, the trust was not supposed to have a large share of its assets in the form of stock, but with Chrysler running out of cash the following year, and falling into bankruptcy in 2009, the only asset it could offer was its own stock.

The Great Recession in 2007-2008 really hurt some companies and Chrysler was one of them. In order to return to profitability rather than breaking even Mr. Sergio Marchionne the Chief Executive for Chrysler Group LLC felt that there need to be a culture change after his analysis of the company, thus he did just that.

For Chrysler’s plan advancement they are planning on discontinuing the Chrysler 200 sedan and Dodge Dart sedan. Instead of shifting their attention to cars they are going to focus on making the Jeeps and Ram pickup trucks better. Since the gas prices have dropped by 2 dollars Americans are selling their cars and are starting to buy crossovers and trucks. If Chrysler Focuses on making the Jeeps and Ram trucks better more people will want to buy them which will bring them in a lot of profit which will make the company thrive.

“Hey Hassan. Want to know why they keep their cars here? Because Chrysler can’t sell their cars.” I joked, laughing idiotically. I nearly hit into a Jeep Grand Cherokee as I was laughing. Thing is, we don’t hate Chrysler, but Hassan and I love to joke about the company. It’s well known in the car community how poorly Chrysler performed right before the 2008-2009 recession, in which Chrysler had to be bought out by Fiat. They’ve been doing great since then producing aesthetically pleasing sedans, coupes, and SUV’s.

In recent years, the global recession has made a huge impact on the company cash flows and its financial situation. To sustain as a global leader in the highly competitive automobile industry the GM needs to have its own strategic plan to produce the next generation of vehicles and it has got no time to delay. This is a crucial time for automobile industry with many threats, but opportunities as well. The company has to choose the best "opportunities" to overcome the "threats" and "weaknesses" using its "strengths". The next several years will redefine

In the late 1980s, Ford strategists took a good look at the booming luxury-car market and realized they needed a global luxury brand to rival BMW and Mercedes-Benz. They considered acquiring several luxury brands. First on the list was Alfa Romeo. But Ford lost Alfa Romeo when Fiat intervened, with a little help from the Italian government. Fiat did not want Alfa, but did not want Ford getting it either. Next came Saab and Jaguar. Ford was negotiating to buy both luxury-car companies at the same time. But Harold "Red" Poling, then Ford chairman decided Ford could not manage two acquisitions at once, so Ford backed out of the Saab talks. That left Ford to pay $2.5 billion for Jaguar, a legendary brand that had limped along

One of the most spoken and discussed issues in the business world has become establishing the association between the Nissan and Mitsubishi car producers. After the scandal that occurred as the Mitsubishi falsified its fuel-economy tests, the cooperation with Nissan is like a lifeline to the company. Nissan's decision to buy an influential share of Mitsubishi's assets is believed to bring benefits to both participants of the process. While this deal would help the Mitsubishi corporation to improve its image after the cheating scandal, Nissan also expects to increase its profits by using the recognizability of Mitsubishi's brand in the eastern countries. Under the conditions of growing global competition in the automobile industry, the alliance between the large Japanese and European car producers is supposed to radically strengthen the positions of both companies on the market.

The merger between Daimler and Chrysler happened on May 7, 1998 when the Chief Executive Officers of the two companies suggested that they require strong partnership to enable them to survive in the car market industry. The two companies were equally large and they needed to build a multi-billion company that will dominate the market to be able to compete strategically and successfully as well. For several decades, Chrysler Group had experienced an unstable financial condition that necessitated support from Daimler. The company also encountered hostile takeover attempts from Kirk Kirkorian, the company’s largest shareholder, who collaborated with Lee Lacocca, Chrysler’s former chairman

A thorough analysis of the external forces that shaped the global automotive industry in 2009 reveals how the rivalry between established car makers set the stage for some to successfully survive the global recession while others were forced to seek Chapter 11 bankruptcy. A closer consideration of the impact of consolidation, demand and supply, fixed costs, product differentiation, and exit barriers on rivalry within the industry reveals how new entrants and weaker competitors were able to take advantage of environmental opportunities during the recession and gain profit shares. These considerations illustrate the critical importance of analyzing the forces that shape competition in an industry and how such an analysis serves as the

Comparing it now to Chrysler, the value chain activities a hardly even overlapping. Nonetheless, Porter would probably argue that the Chrysler company suffered from performing below-average and lacked in competitive advantage, so this have led to ‘stuck in the middle’ strategy 1998.Due to the merge with Daimler.