International Business Case Study

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The Association of Business Executives QCF

International Business Case Study Fiat Automobiles S.p.A
Tuesday 4 June 2013, Afternoon

This is an open-book examination, and you may consult any previously prepared written material or texts during the examination. Only answers that are written during the examination in the answer book supplied by the examination centre will be marked.

6IBCS0613

© ABE 2013

J/601/2793

Notes l As in real life, anomalies may be found in this Case Study. Please simply state your assumptions where necessary when answering questions. ABE is not in a position to answer queries on Case data. Candidates are tested on their overall understanding of the Case and its key issues, not on minor details.
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Fiat’s share of the European market shrank from 9.4% in 2000 to 5.8% in the summer of 2004, when Sergio Marchionne was appointed as Chief Executive. By March 2009 their market share had risen to 9.1%. This was mainly due to the successful launch of new cars, notably the Fiat 500. On 20 January 2009, Fiat and the US carmaker Chrysler announced their intention to form a global alliance. Under the terms of the agreement, Fiat would take a 20% stake in Chrysler and gain access to its North American distribution network in exchange for providing Chrysler with technology and platforms to build smaller, more fuel-efficient vehicles in the US and providing reciprocal access to Fiat’s global distribution network.

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In addition, the proposed agreement would entitle Fiat to receive a further 15% of Chrysler (without cash consideration) subject to the achievement of specific product and commercial objectives. No cash or financial support was required from Fiat under the agreement. Instead it would obtain its stake mainly in exchange for covering the cost of retooling a Chrysler plant to produce one or more Fiat models for in the US. Fiat would also provide engine and transmission technology to enable Chrysler to introduce smaller, fuel-efficient models in the NAFTA (North America Free Trade Agreement - USA, Canada and Mexico) market. The principal objective of the partnership was to provide both groups with
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