Sergio Marchionnes Takeover Of Chrysler Case Study

Lueneburger, Christoph (2014). Lessons from Chrysler: how to rev up a purpose-driven corporate culture. Retrieved from

McCoy’s Building Supply Centers and Chick-fil-A are two 70 years old, successful companies withstanding the test of time. They continue to sustain growth and longevity through economic turbulence, and remain competitive with new and upcoming companies. What is the secret to their success one might wonder? As we examine each company, we begin to recognize the existence of a strong organizational culture. The organizational culture of a company is the anchoring core values, which permeates throughout the company and its employees (Schermerhorn, Osborn & Uhl-Bien, 2012, pp. 9).

When an organization does not use a holistic approach towards their culture, structure and systems, the organization could create a poor working environment for its employees and poor results for their customers. An example of culture, structure and systems not working well together can be seen in General Motors (GM). GM prior to its bankruptcy was seen to be a “highly bureaucratic company in which brands, departments and regions operated like self-governing and competing states with a federation” (Smerd, J. 2009).

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.

5. Discuss the relation between the “hard” and “soft” elements of a firm’s corporate culture in the context of this case.

McCoy’s Building Supply Centers and Chick-fil-A are two 70 years old, successful companies withstanding the test of time. They continue to sustain growth and longevity through economic turbulence, and remain competitive with new and upcoming companies. What is the secret to their success one might wonder? As we examine each company, we begin to recognize the existence of a solid organizational culture. The organizational culture of a company is the anchoring core values, which permeates throughout the company and its employees (Schermerhorn, Osborn & Uhl-Bien, 2012, pp. 9).

The culture type is consistent because if Chrysler hadn’t made the changes, who knows where they would be now. The old management at Chrysler had made many decisions that were costing the company money and it caught the attention of the higher executives and Mr. Marchionne.

Within organizations, large and small, there exists a sense of identity among its members that separates it from other organizations. This sense of identity is known as organizational culture. All over, managers seek to influence and change this into something that can be beneficial for the organization. In his article, “The Six Levers for Managing Organizational Culture”, Professor David W. Young defines the different elements that can influence and change the culture within the organization and how the reader can use these “levers” to their advantage. While the author does present a decent explanation for changing the culture of an organization, he leaves many questions unanswered that leaves his argument incomplete.

Prior to Sergio Marchionne’s arrival, it appeared Chrysler Group LLC, organizational culture consisted of reacting “to falling sales by slashing prices” (Kreitner and Kinicki, 2013). Due to reduced sales volume, Chrysler had experienced major financial issues, including bankruptcy reorganization. The observable artifacts that I would suspect prior to Marchionne’s arrival would be massive advertisements endorsing Chrysler rebates, vehicle discounts, and slashed prices. After Marchionne got upset about the sales team “giving away margin”, he had to shake up the organization culture and transform the company’s way of thinking. Chrysler had to do something if it was ever going to get back to a profitable state.

Chrysler was in desperate need for a lifecycle cultural changeover prior to the arrival of Mr. Marchionne. The company was working on an antiquated system of organizational behavior that yielded little to no results. Mr. Marchionne and his Hierarchy culture approach significantly improved the overall performance of Chrysler and subsequently, led to higher volume of sales and profits. Clearly, control is the driving force within hierarchy culture. (Kreitner, & Kinicki, 2013, p. 70).

To me the new culture change in Chrysler made a major impact on the mangers. They had to step up and make sure the rest of the employees were up to par. One way mangers understood Chryslers new culture was the competing values framework better known as CVF. Competing values framework is a way for mangers to understand, measure, and change organizational culture. (Citation).Within the CVF there are four types of cultures. They are Clan, Adhocracy, hierarchy, and market. Within the Chrysler organization all could be possessed but there is always going to be one that overpowers the others. When Marchionne started the new culture change he broke it down into dimensions. In dimension 1 it focused on Marchionne primary goal of profitability.

“Corporate culture refers to the beliefs and behaviors that determine how a company's employees and management interact and handle outside business transactions (Investopedia.com, n.d.).” With regard to corporate culture, we will initially decipher the results gained by participating in the McGinty/Moss assessment and determine whether or not the results conformed to our expectations or the results created a new revelation for us. Secondly, we will determine the level to which, the aforementioned assessment and the McNamara information discloses to us similarities and differences about our own organization. Subsequently, we will discover whether or not a combination of the assessment and the McNamara categories assisted us with

When looking at the new culture that Marchionne created at Chrysler you can see characteristics from each of the four types of cultures that are found in the competing values framework. These characteristics all were relevant components of the reinvention of Chrysler’s culture and their product line, in addition to their ability to remain a main player in the auto industry.

     Thomas C. Mawhinney has a different approach to making a good corporate culture. His six ideas are the managers behavior, employee selection, the external culture, establishing a clear corporate mission, keep the mission up front, managers must reflect the desired culture, and employee’s learning must be ongoing, (Mawhinney, 23-74). Mawhinney’s first idea is the manager’s behavior. “Studies indicate that the single greatest influence on the work culture is the manager” (Mawhinney, 28). “The speed of the boss is the speed of the team”, said Chrysler chairman Lee Iacocca.

Globalization results in rapid and constant business environmental changes. As a result, most organizations tend to be more transformational organization so as to be flexible to respond promptly to those changes. Strategic change is one of the effective solutions to this situation. This paper will discuss the nature of strategic change in the first part. The next section is an analysis of Daimler Chrysler case study; whether the strategic change by merger bring them sustainable competitive advantage.