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Fiat’s Market Reentry into the United States
From the case study, it is evident that Fiat failed in its first attempt to penetrate the United States (U.S.) automobile market in the 1980s due to a number of factors, including car quality issues, poor service support, and lack of adequate infrastructure and organization in the country (Ivancevich, Konopaske, & Matteson, p. 503). Owing to the fact that reentering the same market can be rewarding for Fiat, the Italian car company must address car quality concerns and ensure that it has an expansive network of dealerships not only to enhance car sales but also to provide customers with excellent services support.
Indeed, Fiat’s 50 percent ownership of American automobile manufacturer Chrysler Group LLC is a step in the right direction for Fiat as such a partnership will provide the much needed access to distribution channels of Fiat’s automobiles and service backups. Available literature demonstrates that ownership of the distribution channels is a strategic advantage for any company, as existing channels might not be imagineable or they may be fully or partially owned by competitors (Pehrsson, p. 760).
Approach for Reentry
Extant literature demonstrates that “the selection of an appropriate entry mode in a foreign market can have significant and far-reaching consequences on a firm’s performance and survival” (Ekeledo & Sivakumar, p. 68). Since market entry mode and market reentry mode are two sides of the same coin, it can be argued that the use of the namesake “Fiat” (brand name) makes the most sense in Fiat’s attempt to reenter the US automobile market.
The resource based view is clear that an organization’s chances of success in foreign markets are enhanced when the organization develops the capacity to deploy critical resources essential for success, such as brand equity, marketing knowledge, and patent or process blueprint (Johnson & Tellis, p. 2). Owing to the fact that the “Fiat” brand name is popular across the world, it make much organizational and business sense for the Italian car manufacturer to use the value of having a well-known brand name to reintroduce itself to the US automobile market. Such a popular brand name, in my view, can be used as a critical resource to spur growth and competitiveness of the car manufacturer in the U.S. market.
Designing of the Fiat-Chrysler Organization
From the case study, it is evident that Fiat has a 50 percent ownership in Chrysler though it has formed a separate network of dealers from Chrysler, and that the intentional separation of the Fiat brand into autonomous dealerships has so far limited any direct benefit from the Fiat-Chrysler partnership for Chrysler dealers (Ivancevich et al., p. 503-504).
For the Fiat brand to take maximum advantages of the relationship, the Fiat-Chrysler partnership needs to be designed in such a manner that the Italian car maker will make full use of the distribution channels provided by Chrysler to reach more customers, address quality concerns, and ensure satisfactory services support to the U.S. customer base (Fiat and Chrysler, para. 9). Indeed, Chrysler’s massive distribution network in the U.S. can provide Fiat with the competitive advantages needed to reach more customers in its attempt to market its products.
Through the expanded distribution network, Fiat will also have the capacity to introduce other car variants into the North American market, not mentioning that Fiat customers in the U.S are likely to become more satisfied due to availability of service backups. However, as demonstrated in the literature, there is a fundamental need for Fiat to fully comprehend the strategic implications and interactions of different decision variables involving how to make optimal use of the expansive distribution network provided by Chrysler for the partnership to become a success (Xia, Xiao, & Zhang, p. 53).
References
Ekeledo, I., & Sivakumar, K. (2004). International market entry mode strategies of manufacturing firms and service firms: A resource-based perspective. International Marketing Review, 21(1), 68-101.
Fiat and Chrysler announce strategic alliance. (2009). Web.
Ivancevich, J., Konopaske, R., & Matteson, M. (2013). Organizational behavior and management (10th ed.). New York, NY: McGraw-Hill/Irwin.
Johnson, J., & Tellis, G.J. (2008). Drivers of success for market entry into China and India. Journal of Marketing, 72(3), 1-13.
Pehrsson, A. (2004). Strategy competence: A successful approach to international market entry. Management Decision, 42(6), 758-768.
Xia, Y., Xiao, T., & Zhang, G.P. (2013). Distribution channel strategies for a manufacturer with complimentary products. Decision Sciences Journal, 44(1), 39-56.
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