Chrysler Fiat: Strategic Alliance

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Case Brief: The 2009 Chrysler-Fiat Strategic Alliance

Case Brief: The 2009 Chrysler-Fiat Strategic Alliance

Facts of the Case

• Historically, Chrysler has been the number 3 auto manufacturer in North America, behind GM and Ford in market share; maintained number 3 designation after entry of Asian OEMs.
• Chrysler: o Founded 1925 by Walter P. Chrysler o Manufactured cars for the masses o 1980s: saved from the verge of bankruptcy by US government o 1990s: starting receiving positive reviews from analysts, but remained behind Ford and GM o Merged with Daimler-Benz in May 1998 for $36 billion o 2007: Cerberus Capital Management, LP acquired 80% of DaimlerChrysler for $7.4 billion o April 2009: Fiat SpA establishes
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2. Analyze and evaluate Chrysler and Fiat’s strengths and weaknesses before and after their 2009 strategic alliance.

Before the partnership, Chrysler had strengths in the product development and low cost manufacturing, though labor contracts were an expensive cut into those cost savings. The continued success of the Jeep brand, minivans and trucks have significantly supported Chrysler and are of great benefit to diversifying Fiat’s small car product mix. An established dealership and supply chain network in North America is of high prospect to Fiat. Quality concerns loom over Chrysler’s products and Fiat hopes to combat this with their own record of high quality products. Fiat’s technology platforms and small engine development will support Chrysler’s strong entry into the small car market, and vice versa for Fiat’s entry into the large car and SUV market. Since Marchionne took over in 2004, Fiat has been steadily rising and brings stabliliyt and growth potential to the partnership.
3. Compare and contrast Chrysler and Fiat with five other global auto manufacturers in the area of global operations and manufacturing issues.

Chrysler has long-time been considered the Number 3 manufacturer in the North American automotive industry, forever behind Ford and GM. Even after the introduction of the Japanese OEMs, Chrysler has remained consistently in 3rd place, but struggled to hold that designation. Initial quality issues in the
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