Lee Iacocca made a name for himself by saving Chrysler Corporation from the brink of bankruptcy in the late 1970s and built it into a powerful and profitable firm in short time. Management and manufacturing changes implemented by Iacocca resulted in a dramatic increase in Chrysler 's stock price and Iacocca 's ego. However, as the cash flowed in during the early to mid 80 's, Iacocca lost focus of what made the company successful and he changed Chrysler 's growth strategy by investing large amounts of capital in businesses that were unrelated to the auto industry. In the early 1990s, Chrysler again found itself in a precarious situation with its market share and stock price in steady decline. In early 1993, Robert Eaton was set to …show more content…
Iacocca 's leadership style was decisive and autocratic. He made decisions with little or no feedback from his superiors, peers or subordinates. However, his keen knowledge of the auto industry combined with his charisma helped influence those around him to follow his lead.
Transition in Strategy
In the mid-1980 's, Iacocca was basking in the glow of his successes at Chrysler. The company was performing better than anyone could have imagined back in 1979 and was sitting on large quantities of cash. With virtually nobody to answer to and convinced he could do no wrong, Iacocca pursued a diversification strategy for Chrysler from 1984 to 1988 focused on areas in which he had no expertise and areas unrelated to the company 's core business. Iacocca 's acquisitions were a reversal of his original turnaround policy, which focused on the production of automobiles. Acquiring businesses in the aerospace, banking, and electronics industries created the need for more knowledgeable personnel than Chrysler employed. The current management team was not equipped or experienced enough to handle large investments in unfamiliar industries. The diversification strategy forced Iacocca to implement a more decentralized management structure that was a reversal of the structure originally used to help Chrysler rebound. By spending money on non-core acquisitions and stock buybacks as opposed to reinvesting cash into the development of
Relevant changes will need to be effected in the future to return to its strategic position. Price be cut to compare well with the competitors. More budget to be kept aside for sales and marketing purpose. This will facilitate better market study and product promotion.
When entering the digital content market has required noticeable investments from the Company in the form of expenses and sizable capital
Manage rather than own hotel assets. Invest in projects that increase shareholder value. Optimize the use of debt in the capital structure. Repurchase undervalued shares.
They can achieve this a number of different ways, whether it be to increase net profit, increase return on investment and cash flow, or other means. As long as the end goal is to make money. He must learn how to put his operations into those terms to reach his goal.
* Focus on continual growth and improvement while providing a reasonable return to our investors.
grow at the current rate. This is because a company must make capital expenditures to continue to exist
The management or leadership style that Willie uses is autocratic. The autocratic leader holds all power, authority, and control, essentially reserving the right to make all decisions. For example, the way Willie micromanages and effectively ignores the mid-level
such as enhancing its differentiated appeal and improving its cost structure because it was losing its
He wants to pass on life lessons and emphasis the importance of role models. “Since nobody is born a leader, you need someone to teach you how to walk and talk and be one. You need a mentor. I was lucky enough to have three…”. Iacocca’s tone is informal and conversation which makes him likeable and seem accessible.
An Investment is where there’s 2 ways you can either save your money up till you have the right amount or you can either invest over a long time. Also you could buy something with increasing the value of your profit.
18. Why did Ford, GM and Chrysler undergo a harsh downturn relative to other car makers?
using their own core competencies to turn the airline around. By applying their own strategies,
After several failed attempt of internal diversification, they realized the lack of knowledge of their management about businesses outside the automotive area. so acquisition brought them quick fix where it brought already knowledgeable people in respective areas in their payroll.
They include: creating a tax shield, generating more free cash flow for future expansions, generating more free cash flow to repurchase stock, a short run increase in EPS due to repurchase of stocks, and overall an increase to the intrinsic value of the company.
His over confidence lead to an over evaluation of his business (Hayward and Hambrick 1997) and resulted in him investing in now unprofitable ventures (Zacharakis and Shepard