Lee Iacocca's Legacy

1883 Words Aug 9th, 2006 8 Pages
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 succeed …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 automobiles, Iacocca allowed

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