Category: Fiat

Description of the case

Among the most attention-grabbing dramas to come out of the Great Recession was the marriage of Fiat and Chrysler. Financed and brokered by the United States government in an unmatched market intervention, the amalgamation brought two outstanding companies together whose histories were strangely similar but whose prospects had recently diverged.

Chrysler is an American symbol one of Detroit has framed titanic three in the auto industry. Chrysler is a company with a turbulent history having experienced several cycles of booms and busts. The company fell on hard times and needed a government bailout in the year 1979. Chrysler managed to pay up the government loan and continued to be successful in the auto industry for a better part of the years.

This improvement in its activities was under the leadership of the legendary Lee Lacocca. In the mid 1990s, Chrysler was a strong and growing company, and this aspect led it to be an acquisition target by Daimler-Benz. This ownership lasted from 1998 to 2007 when Cerberus Capital Management took over the company. In another twist and turn of events, Chrysler declared bankruptcy in 2009 having recorded a 36%sales fall.

In addition, the companys market share dropped to 8.4%! During this period, Chrysler received $4 billion of the $13.8 billion in emergency loans from the $700 billion Troubled Asset Relief Program (TARP). Chrysler filed for bankruptcy on April 30, 2009, and by May 31, its reorganization became official (Clark, 2012).

On the other hand, Fiat is just as iconic as Chrysler Company. The Turinese Company was in particular a central pillar of Italys miracolo economico producing small but stylish and smart cars like 500 and 600. These emerged as key symbols of the nations speedy recovery from the desolation of World War 2. Fiat equally has a tumultuous history with the most notable one being in the late 1970s amid traumatic labour strife.

Thanks to the aid from the Italian state and creation of stylish new models, the company recovered from its collapse. The company did well in the auto industry and then faced its other challenge in late 1990s. Fiat fell apart during this time and was on the threshold of bankruptcy in the early 2000s. At this point, Fiat took a different step in trying to recover from the bankruptcy, which makes it different from Chrysler.

The Economist in 2008 described the move as a remarkable industrial and financial changeover that will be pored over in business schools for the rest of the times. This turnaround step for Fiat was under the management and leadership of Italian-Canadian CEO, Sergio Marchionne (Liff, 2007).

On June 10, the Chrysler-Fiat alliance became official, and this meant that Fiat CEO Sergio Marchionne took over as CEO. With the acquisition being official Chrysler underwent a significant organizational change starting with the leadership area. There was a change of the CEO and the name of the company.

The company attained the name of Chrysler Group LLC. In addition, Chrysler Group LLC management team included a nine member Board of Directors. The agreement was for Fiat to appoint three of the directors, one director appointed by the Canadian authorities, four to be appointed by the US government, and the other one by the United Auto Workers Retiree Medical Benefits Trust.

Organizational change in the company also included restructuring to concentrate on the Jeep, Chrysler, Dodge vehicle lines and the Mopar brand of aftermarket parts. Recently, Fiat increased its stake in Chrysler to 25%, which was through achieving the first three government-required milestones- producing a fuel-efficient engine in the United States.

The CEO reportedly stated that he hopes to take Chrysler Group LLC public before year-end together with a raise in its stake to 35%. In the event, Fiat meets these financial and developmental goals it will own 51% of the company.

The minority holders of the company include the US and Canadian governments of 8% and 2% respectively. So far, Chrysler has acknowledged to getting $13.8 billion in total aid and pledged to repay its loans by 2014. By the end of 2011, the company is to pay back the first $2.1 billion (Sebastiani, 2011).

Many people saw little chances of success with the Chrysler-Fiat merger. However, since this takeover by Fiat Marchionne has managed to turn Fiat losses into healthy profits by reducing Fiats managerial bureaucracy. The CEO has managed to change the managerial tone to a focus on profits and markets. This philosophy of reduced managerial bureaucracy has gone down to even Chrysler.

In regards to Chrysler, Marchionne stated in 2009 that their goals are straightforward as they look forward to breaking even with an operating profit of $5 billion by 2014. The organizational change in the company seems to be having positive impacts of the financial state of the organization (Denison, 2001).

In as far as, it concerns Chrysler; the company has exceeded its set targets having generated $763 million of operating profit in 2010. The initial expectation was to break even at $200 million for the full year.

Chryslers profitability is further held up by an increasing average transaction price that increased by 6.4% above the previous years average transaction price. These financial reports are a clear indication of the impact of the organizational change in Chrysler (Edmonds, 2003).

On the other hand, the current company plans on increasing the number of staff members on an annual basis. During the Daimler years, Chrysler employment level dropped from 123, 000 to just about 69,000 which was a 45%decline. From records, the company hired 82,280 staff world wide out of which 64,750 employees were within the United States.

In 2009, there was a further decline in the employment level with the company hiring 47,800staff. However, with the change in the organization there has been a remarkable change in the patterns of employment. Since the partnership with Fiat, Chrysler has begun work overhauling its model line up and has employed 5,000 employees, which include 500 engineers.

The companys management has promised to hire 1000 more employees to work on its new line up. Currently, Fiat enjoys the status of employing over 80,000 staffs in Italy and another 190,000 employees worldwide. This is an indication that the merger of the two outstanding companies has a positive impact both in the financial and human resource aspect (Cumming & Worley, 2009).

Organizational change come challenges that the companies will have to face. Introduction to change management is a process that will take time for the other people to adapt and will require several support-mechanisms to achieve the goals of the change. In this part of the paper, we analyse the underlying problems the organization faced in the wake of organization change.

For a company to declare bankruptcy it implies the management and all other stakeholders have done their best to revive the company to no avail. In this case, to rescue Chrysler from its current crisis will call for rescuers carrying out the task from different aspects. Fiat-Chrysler merger faces several challenges and these are the stepping-stone over the challenges that will render the merger a success.

This change in an organization should be ready to achieve the main challenge Chrysler is facing which is bankruptcy. For Fiat to fall under the success stories in the merger, the management and other stakeholders will have to pull the company out of bankruptcy within the set period. Most companies, which try to make a comeback from bankruptcy, end up going back to bankruptcy or getting out of business for good.

The change in management will face resistance from different stakeholders concerning the steps it will take in getting the company out of bankruptcy. Most notable will be the creditors who may not be patient to the managements approaches to reviving the company.

By the time Chrysler declared bankruptcy, it had already had a clear outline, which was to help it make a strong coma back from bankruptcy. The organizational change will mean the company following the plans of the new management comprising of Marchionne and the nine-member board of directors (Collins, 2001).

Problem Analysis

Over the years, Chrysler had a clear product line, which has seen it excel in the auto motor industry. A change in the organization will mean a change in the product line. Mainly, the Fiat-Chrysler merger looks at pruning the product line for the company, and this may be a considerable challenge. Change in any company is hard to take and the investor and stakeholders maybe resistant to leaving their ideas of production.

The approach Fiat-Chrysler merger is likely to employ under new management will involve critical analysis of the vehicles the company produces. There will be a need of getting rid of cars that are unpopular, unprofitable or too similar to other models out there. This move is likely to impact negatively on the companys customers who still have their products and would wish to continue purchasing them from Chrysler.

Product pruning will be necessary to the new management can introduce a line of Fiat cars only popular in their native country-Italy. Another notable challenge with the new management is the selling of Americans on Fiat. The company will have to bring fresh offerings, and this will increase the companys expenditure.

The new management aims at coming up with new models, which will be helpful in getting customers into the showroom. The new models will have to come at a lower cost than what most customers expect of Chrysler (Cohen, 2005). The main challenge under this step is the reception of the new models by the Americans.

The new management of Marchionne will have to come up with methods that will see to more customers purchasing the new models. Introducing new products to the market can be a challenging issue for any company and putting to mind that the management is new to the market.

It is unpredictable whether the Americans and other relevant stakeholders will embrace Fiats line of small and flashy cars, which are fuel-efficient. These are the additional challenges most companies face in the wake of organizational change, and Chrysler has no otherwise but to deal with the challenges (Freyssenet, Shimizu & Volpat, 2003).

Chrysler will also have to work with the new change of leadership starting from the top management. The current CEO of Chrysler, Bob Nardelli, will step down at the end of the companys bankruptcy. This will mean a substantial change in the management area as the CEO for Fiat takes over. The company will once again have to deal and adapt to the new corporate culture.

The prior case when Chrysler faced change in change, in management, the partnership fell apart because of lack of understanding (Cummings & Worley, 2009). Fiat- Chrysler merger will be introducing a new culture of leadership- Italy, and the company has always been under the American management.

Introducing a new partner in the business is one thing but having one who speaks a different language and is an ocean away, it becomes a complex case. During this bankruptcy period, the company faces another challenge of boosting the morale of its employees. The staff members of Chrysler have been through bankruptcy more than once, and the trend can be heartbreaking for the employees.

The earlier Daimler-Benz merger failed terribly and with it came several cases of extensive buyouts and cutbacks. The employees will need a more promising decision on the effectiveness and success of the Fiat-Chrysler merger.

The new management will have to come up with an extensive plan, which will assure them of the people in charge. This will be a motivating factor to the already sceptical and angry employees of the company (Bracken, 2002).

In addition to the above challenges, Chrysler will also have to work towards maintaining satisfactory labour relations in these times of bankruptcy. The companys bankruptcy plan calls for the union taking a 55% stake in the new company through an arm that provides retirement benefits to its members.

More so, the new management faces the challenge of helping the company to survive the current recession. Navigating the company through a punishing recession that has relentlessly affected both access to credit and consumer spending will be the new managements main challenge (Avery, 2010).

The above case clearly outlines hoe change management should be handled in any company undergoing organizational change. Chrysler underwent a significant change in management and so far, he has managed to improve its financial and production status, which is a clear indication of well-managed change management.

The process for managing change bases on varied models and theories, which give, outlines to management in place. Managing change in any organization calls for the inclusion of all stakeholders of the company to achieve the companys objectives.

For instance, in the above case of Fiat- Chrysler merger the decisions the new management makes will be in line with the interests of the stakeholders- customers, employees, investors, government, and any other party. One process of managing change is not to focus on the project management, but the impact the change will have on other people.

Most organizational changes fail because of the management neglecting the impact of change on the individuals concerned. People react to change differently, and in this case, it is up to the management to highly focus on this aspect (Kogut, 1993).

Tools of change management include change management process, resistance management, readiness assessments, and more so celebrating and recognizing success. The change management process refers to a sequence of steps that a change management team would follow to apply change management to change.

Just like any other company, change management in the Chrysler-Fiat merger involved the following steps- preparing for change, managing change, and reinforcing change. The company declared bankruptcy prior to the merger and took time to make the merger official. This duration was magnanimous enough for the company stakeholders to prepare for the change in management that was to take place in the company.

The creditors and employees had ample time to prepare for the change in management. Any change in management comes with varied changes that the customers, employees, and creditors will have to abide to so as the company can function normally.

For instance, the Fiat-Chrysler merger changed the production strategies that every stakeholder was accustomed to, and they had a reasonable time to adjust (Ortmeier & Meese, 2010).

Application of Change Management Principles

Readiness assessment is a component for change management process. This strategy assesses the companys readiness to accept change. In the case of Chrysler, the company was ready for any change as the change would be beneficial to the company. Prior to the merger, the company had already declared bankruptcy, and this meant a merger was to save the company from its woes.

At this point, the project leader enlightens the relevant stakeholders of the scope of the change, the impact of the change. In addition, the step assesses the strengths of the change management team together with the sponsors. According to John P Kotter, a Harvard Business school professor, there are eight steps to a successful organizational change management.

The first, crucial step according to this model is the increase of urgency, which involves inspiring people to make real and relevant objectives that will lead to the success of the change. In any change, there has to be a guiding team to oversee the change process and get the vision for the change right.

The best example for this step is the change of the CEO of Chrysler and introduction a nine-member board of directors to oversee the change objectives in the organization (Leading Change: Making Transformation Work, 2010).

Kotters model of managing the change process insists on the significance of communication for buy-ins. In this process, the company involves as many people as possible to support the change process. Fiat-Chrysler merger brought several stakeholders together including the US government, creditors, investors, customers, Italian government etc. Empowerment actions are necessary to make the change successful.

The management team will be responsible for removing obstacles and enabling constructive response and great support from leaders. The management team should also create short-term wins that easy to achieve and encouraging the team players not to give up.

The change process comes with several setbacks and obstacles that can easily make a person give up but, according to Kotters model, this should not be the case.

Finally, the change team needs to make change stick and clear any loopholes that can make the change to breakdown. Reinforcing the value of successful change through recruitment, promotion, and new change leaders will be instrumental in making change stick in any organization (Avery, 2010).

Plan of Action for Managing the Change

Various organizations come up with varied plans to manage change. The plan to manage change should be one that leads to the success of the organizational change. In the event, I was in charge of managing change in the Fiat-Chrysler merger I would come up with an all-inclusive plan to manage change. The action plan will comprise of several items such as the following.

The action plan will outline the areas, which need change in the organization- structure, policies, practices, attitudes, people, decision-making, the rewards people get and many other areas. The action plan will also exhibit the key stakeholders in the change plan and their readiness and capability for change. The action plan will also define the key roles each person will take in the change process (Gottlieb & Conkling, 1995).

Mainly the resource allocation process will be in the action plan in order to ensure equal allocation of resources. Resources in this sense will include money, time, and people in the organization. I believe this action plan will be helpful in solving the challenges most organizations face while undergoing organizational change.

In the event, the change management team employed the above action plan resistance to change by the stakeholders of Chrysler Company will be minimal. This is because the change action plan outlines the process of change and defines each persons role in achieving the set objectives.

The plan equally involves all the stakeholders hence there will be no chances of people feeling left out in the process of change. In the end, the organization will be comfortable and adapt to the organizational changes the new management will have put in place.

References

Avery, L. (2010). Newsmakers the people behind todays headlines. Detroit, Mich.: Gale.

Bracken, P. (2002). Corporate Disasters: Some Lessons for Transformation. Ft. Belvoir: Defense Technical Information Center.

Clark, J. (2012). Mondo Agnelli: Fiat, Chrysler, and the power of a dynasty. Hoboken, N.J.: Wiley.

Cohen, D. S. (2005). The heart of change field guide: tools and tactics for leading change in your organization. Boston, Mass.: Harvard Business School Press.

Collins, J. C. (2001). Good to great: why some companies make the leapand others dont. New York, NY: HarperBusiness.

Cummings, T. G., & Worley, C. G. (2009). Organization development & change (9th ed.). Australia: South-Western/Cengage Learning.

Denison, D. R. (2001). Managing organizational change in transition economies. Mahwah, N.J.: L. Erlbaum.

Edmonds, J. (2003). Managing Change (4th ed.). Oxford: Elsevier Science & Technology.

Freyssenet, M., Shimizu, K., & Volpato, G. (2003). Globalization or regionalization of the European car industry?. Houndmills, Balsingstoke, Hampshire: Palgrave Macmillan.

Gottlieb, M. R., & Conkling, L. (1995). Managing the workplace survivors: organizational downsizing and the commitment gap. Westport, Conn.: Quorum Books.

Kogut, B. M. (1993). Country competitiveness: technology and the organizing of work. New York: Oxford University Press.

Leading Change: Making Transformation Work. (2010, November 10). Manila Bulletin, 24, 13-56.

Liff, S. (2007). Managing government employees: how to motivate your people, deal with difficult issues, and achieve tangible results. New York: American Management Association.

Ortmeier, P. J., & Meese, E. (2010). Leadership, ethics, and policing: challenges for the 21st century (2nd ed.). Upper Saddle River, NJ: Prentice Hall.

Sebastiani, F. (2011). Officina Italia: la FIAT secondo Sergio Marchionne. Matera: Altrimedia.

Reasons for failure

Feasibility study is an essential element in project management. Project managers need to carry out comprehensive feasibility study before spending money on projects. Fiat 500 emerged as one of the biggest product flops in 2011 despite its efficiency in fuel consumption.

It lied on the sixth among the most flopped products in the US market. A key reason that led to failure of Fiat 500 project was failure to carry out adequate market feasibility. An Italian company (Chrysler Group LLC) produces the Fiat 500 car. The companys main target market for the product was America. The company did not carry out adequate market study to establish taste and preferences of the people of America.

Another factor that led to flop of the product was delay in decision making on which stores to us for sale of the product. The decision makers were indifferent on whether to us Chrysler dealership or open new dealership in the US. During this period of indecision the company had an opportunity to take advantage of low supply of small cars from other companies. This is because Tsunami in parts of Japan interrupted supply of such vehicles.

Therefore, there was a problem in distribution channel which resulted to unavailability of the car. The third factor that contributed to flop of the product was inadequate publicity. There was no adequate fund for marketing the product. This resulted to low customer awareness and hence reduced sales. High price of Fiat 500 also played a role in failure of the project. Some dealers complained about the pricing of the car (Bhasin, 2011, p.1).

Strategies for improvement in future projects

Successful implementation of projects is a challenging task. Project managers have a lot to take into consideration before they succeed in these ventures. The ultimate goal of each and every project manager is to ensure that benefits outweigh costs and project financers get a return out of their investments. However, it is not only cost optimization that defines success of a project. Other factors such as product position strategies are of essence in defining success of a project.

For instance, before launching a product, project manager should ensure that the product meets the needs of the target market. Also, the product should be better than alternate product in the market. Second factor to consider is the penetration strategy. Areas to consider when coming up with penetration strategy of the product are distribution channels and pricing. A company launching a new product should ensure that there are adequate distribution channels.

This will ensure that the product is readily available. A company should also come up with a favorable price that will allure the target market segment. This price should be competitive and the product should provide value for money that is, it should be of high quality. Finally, there should be adequate publicity before launching the product. A company launching a new product needs to create massive awareness of the product before the launch.

The company should carry out prelaunch survey and check whether the product meets customer needs. This can be done using prototype models. Results of such surveys give room for adjusting final product before launch. The company needs to allocate adequate resources for marketing the product. This will ensure that there is adequate awareness of the product in the market. It will also help build customer confidence (Kerzner, 2010, p.34). In summary, price, product, place, and promotion are essential to ensure successful product launch.

References

Kerzner, H. (2010). Project management best practices: Achieving global excellence. Hoboken, New Jersey: John Wiley and Sons.

Bhasin, K. (2011). The Launch Of The Fiat 500 Was Supposed To Be A Huge Deal In The US, But Its Not. Web.

Executive Summary

The motor vehicle market is a flooded one; each and every day, a new player enters into the market, and this makes the already murky situation a lot more competitive. For a brand new device manufactured by a company known for, underperformance, a combination of several marketing strategies should be implemented to get the required effect in the shortest possible time. The book calls for proper market research with the aim of identifying what each player fails to do. After determining this, all the efforts are made to improve on strategies and develop several competitive advantages for the former market players (Albert 2006).

Fiat 500 is a brand that is introduced by an Australian company that is venturing into this market for the first time. After carrying out market research, it was determined that the market needed a car that would offer the user easy operational navigation, offer the strength of a sports car yet the class and comfort of a limo. The Fiat 500 model, therefore, boasts providing these two and low fuel consumption, thus dispelling the notion that all race cars are fuel guzzlers. This is in addition to other several multimedia provisions that are aimed at offering the occupants quality entertainment providing the feeling of real value for money (Jeffery 2001).

The strategy that the car intends to use to win a larger proportion of the market is to position itself as a leader in quality. To achieve this, there are only two strategies, either to offer cheaper price or to enhance the quality. Cars are gadgets to which people attach a feeling of dignity and pride. Introduction of one at a low price would lead to questions on the quality of the product, and, therefore, Fiat 500 offers relatively competitive prices while assuring its users of the quality through a provision of a twelve months or sixty thousand kilometres premium warranty.

SWOT and issue analysis

With its introduction, it is predicted a good early performance of the supercar. This is major because it targets at a specific segment of the market that for a long time has been left unattended to by other market players who have played in the market before. The car offers dual usage, for lovers of sports this would be the car of choice, with durability comparable to no other in the market and the strength of a stallion. It has the power to go over rugged terrain and still stay in good condition. Therefore this car is ideal for races. Despite this strength, the car comes in a sleek soft finish and a convertible cover back that makes it ideal for a family outing. This is further enhanced by the increased number of seats, the car is a double door, but on the inside, the space can be increased by rolling up the additional two seats to occupy the space that was initially the trunk. (Jeffery 2001).

Its fuel consumption becomes yet another competitive advantage. Unlike other cars in its category, the Fiat 500 runs on unleaded petrol which it still consumes very economically. A liter of this cheap brand of petrol, that is also very environmentally friendly, is adequate to power the car for an approximated thirty five kilometers. This is because of the fact that the car is a single engine but a promise of a dual engine for the lovers of dual engine being introduced later in the year. This would make the car receive appreciation from the low and middle class section of the market which coincidentally forms the larger proportion of the market. Those who are environmental conscious would also favor the car purposely because the car does not pollute the environment. This contributes to the fact that the car is very timely as this is time that more and more activism is picking pace gunning for lesser and lesser production of the green house gases.

The price of the car is most likely to be a competitive strength; it is a little less expensive than any other super cars with similar features in the market. This will attract the low and middle class segment of the market which, as a matter of fact, forms a bigger percentage of the market.

The performance of the car model can, however, be negatively affected by some of its weaknesses which include the lack of information about the brand and its image. Currently, not so many people know of the presence of Fiat 500 in the market and the advantages it offers, and this greatly hampers its sales. Furthermore, the fact that the car has a metallic housing means that it is a little heavier than any other car in its category (Tony 2012). A segment of the market that does not fancy the weight may not appreciate the product.

One of the opportunities that the model aims to exploit is that there has been an increased demand for sports cars. It introduces a twist to the numerous range of sports cars in the market that one can easily convert from a the strong racing mode car to the highly comfortable family car that can be used to several other uses without one feeling ill placed. The high demand thus means that the car is a very timely entrant into the market, so if the marketing procedures should go as planned, then the sales will boom. Besides, the car also assures of cost effectiveness; it deals with the need for one to have some additional entertainment gadgets such as an IPod while on a drive, and a user gets service for his/her money (Stefan, Christopher & Jochen 2008 ).

The performance of the product in the market faces a number of threats, and these include intense competition from other products with superior qualities, Volvo and volks wagen continue to introduce newer brands too and this is a big source of threat to the performance of these cars. With the competition, there comes the need to keep lowering prices, and this could make the company run into loses. Finally, the product has a compressed life cycle, and this can lead to a shift of customers within a short period of the brands presence in the market (Tony 2012).

Learning reflection

At the onset of the project, hopes were high that one would learn the tricks used in the market to position a brand. This goal was met when the group determined the ways of identifying the opportunities and the strengths that the product had and how to overcome them. The greatest problem encountered in the process of developing the project was the lack of resources, most specifically, books and journals on the manufacture and sale of motor vehicles. However, these were overcome with visits to some of the manufacturing firms where information was offered voluntarily. One can easily say that the environment is not as messy as anticipated, and a new product is still doing well capturing the attention of the target market. Studying in groups has a key importance in the life of a student as it improves the interpersonal skills of the group members (Richard 2003).

Reference List

Albert, N 2006, Creating a winning E-Business, Cengage, New York.

Bracey, B & Culver, T 2009, Harnessing the Power of Cell Phone Technology for Education: A Multi Stakeholder Approach, University of Washington, Washington.

Jeffery, F. B 2001, Introduction to Business Law, Boston University Press, Boston.

Richard, B 2003, Vocational business training, developing and motivating people, McGraw-Hill, NewYork.

Stefan, L, Christopher, W & Jochen, S 2008, Designing E-Business systems markets, services and networks. 7^th workshop on E-business, Springer, Paris.

Tony, D 2012, Mouse that roared: The classic hatch now has a gusty engine with added greenness, The Australian Financial review, Sydney.

Fiat is a manufacturer and a seller of the common Fiat brand vehicles based in Italy and with many sales branches around the world. It has been successful for many years in the production of its vehicles and has made a lot of returns from that. However, the company has faced a lot of challenges, especially the effects of the global financial crisis, factors that have caused it to undergo a recession and a great fall in its business resulting to very low returns. On the other hand, the company has undergone a lot of pressure from its competitors in Italy and also other car manufacturers from prominent countries like Germany and Japan and this has resulted to a lowered competitive advantage. All these factors have contributed to what has been referred in the vehicle business world as the fall of Fiat.

In addition, the company suffered a lot of pressure, both internal and external, which forced it to experience a severe downward trend. The effects of the global oil crisis and the high rates of political instability in Italy cost the company a lot and forced it into a large debt burden by the mid 70s. The company had a lot of struggles within its management and as a result of the stiff competition from its main competitors like the Volkswagen and Japanese car manufacturers especially due to the lack of flexibility in its manufacture strategies that did not allow it to meet the rising requirements of its target market in Italy and around the world. The greatest challenge for the company was its penetration into the world market as the competition there was very stiff and most of its competitors were considered as offering better services, higher quality and more competitive and friendly prices. All these resulted to a lot of problems and complications within the company (Hoffman 46).

Though the management of Fiat was trying all it could to contain the situation, the company continued to fall further especially in its sales and image, even as it plunged deeper into debts that could not be easily covered. The climax of the situation was experienced in 2002 when the company was left with no other option rather than instilling restructuring strategies as well as seeking for more sources of income and lowering its spending. The company undertook a lay-off in its labor sector and over 14, 000 workers were laid off within a span of one year. This cost the company a lot as there were thousands of families that depended on it for their income and hence there was a public unrest as a result of the lay-offs. The international bodies, especially the humanitarian ones, were also opposed to its decision resulting to lowered acceptance both within the country and around the world. This further resulted to loss of a large part of the market share and lowered returns, leaving the company in a lot of debts and losses.

However, all was not lost. After what was seen as the final blow for the company and as the fall of Fiat, the new CEO of the company made proposals for what was later to be referred to as the turn-around of the company and the rise of Fiat. He laid down a lot of strategies that were to see the company transform and gain its lost glory through restoration of its place and its market share in the market.

There were a lot of strategies that were considered in ensuring the corporate turn-around of the company. First, the company planned to enhance its partnership with GM so as to reduce the risks it faced operating as a single entity. This way, it would be cautioned against large losses and also would undergo a facelift that would elevate it to a higher position in the market.

The company came up with strategies that would enable it gain a lot of income so as to be able to settle its debts and also to be able to cater for its operations. It also embarked on selling of some of its sectors, such as the aerospace department, so as to concentrate on the production of vehicles. This way, the company was able to concentrate all its resources and efforts to one sector, a factor that ensured increased quality of products and service delivery and resulted to customer satisfaction.

In addition, the company formulated a strategy of reorganization and restructuring of its management and the staff so as to maximize the labor output and create satisfaction within the employees. The whole management was scrutinized and all the management personnel that were noted as lacking a culture for growth of the company were laid off while more talented workers filled their slots. Also, the structure was re-organized so as to reduce the hierarchy that was in existence and ensure that the management and employees interacted in a better way. This factor was bound to increase the productivity of the company. This in return ensured that all the labor was properly utilized and hence it was economical for the company to maintain the number of employees it had at that particular moment (Hoffman 51).

Further, the company formulated an investment strategy that focused available funds into the sales and marketing of its products so as to increase customer awareness and attract many prospective buyers of its products. This was expected to raise the companys competitive advantage against its competitors as well as enlarging its market share.

Another strategy that was used by the company was the redesigning of the brand for the company, a factor that was aimed at lifting the face of the company so as to create an image for the company and also uplift the trust and loyalty of its clients.

Through the use of different corporate turnaround strategies, Fiat was able to overcome its main challenges that had caused its fall and was able to rise again and maintain its position as a competitive car manufacturer in the world. This way, the company was able to increase its profits and also to utilize more innovations and inventions that made its production better and more competitive in the market.

Works Cited

Hoffman, Richard. Strategies for corporate turnarounds: What do we know about them? Journal of General Management. 1989: 46-66. Print.

According to the PESTEL analysis approach, there should be key drivers of change that need to be understood together with their differentiated impact in the Irish market. There is a need to consider the future impact on the environment due to the business’ endeavors.

For most organizations to get their foot out of the mud, most managers must look into the business environment of the company as stated by The Economist Newspaper Limited 2009. This will involve the use of the PESTEL analysis. PESTEL is a combination of the factors that exist within the business environment as stated by The Times Newspapers Ltd. (2003). The term refers to the Political, Economic, Social, Technological, Environmental, and Legal status in the organization’s macroeconomic.

Considering the Irish economy as a case study, the political environment of the Irish territory will be part of the macroeconomic of the company. The political environment must have the stability of the government, the taxation policies, the foreign trade regulations, and the Social welfare policies may affect the business environment.

The economic environment of the Irish products will include the availability of disposable income, the general business cycles, the trends of the GNP, the Interest rates of investments into the economy, the supply of money, inflation, and unemployment rates are key economic factors to consider. All these factors are at some point a result of the government policies that have been implemented and the set sanctions of trade.

The social factors to look out for are the distribution of income among the Irish society, the changes anticipated in the lifestyle trends of the society, the population demographics, attitudes to work and leisure among people, the level of consumption and education, and finally the social mobility that exist. The society in which a company is to trade in is a main determinant of the expected financial outcome.

The technological aspects to consider are the new inventions of the times, the spending of the government on the various technological research works, there is also the rate at which technology transfers and finally consider the rate of obsolescence among the Irish society. the government ought to support technological developments that will enhance business efficiency and progress.

The key environmental aspect of a macroenvironment is details of the environmental protection laws, level of energy consumption in the society, the method of waste disposal. These factors look deep into the environmental agendas of the key business environment. The environment should be conducive for any business engagement. The business should incorporate policies and strategies that help conserve the environment.

The legal aspects include consideration of the laws on competition, employment health and safety, and the safety of the products, which in this case are varied in nature and serve different purposes. The legal environment of the firms is clearly outlined and should be adhered to by all the business operations.

FIAT Analysis

The approach adopted by Sergio Marchionne applies the first 4 aspects of the PESTEL analysis i.e. PEST. The foreign trade regulations agreed upon by Congress require that Chrysler remains an American household name that caters for the American working class (merger saved close to 300, 000 jobs).

The economic aspect is catered for in pricing and product considerations where the Dodge remains synonymous with masculinity and the smaller cheaper cars are targeted at consumers with low bargaining power. Also, Marchionne aims to introduce bigger Chrysler cars like the Dodge into the European(especially Italian Market) while in turn bringing smaller cars like the 500 minicars to America. This also applies to the socio-cultural aspect as it looks into the tastes and preferences of the consumers.

The technological aspect is seen in the consideration of Fiat sharing its innovations with the Chrysler brand to make a better product as well as adopting new technology as suggested in his conversation with House Speaker Nancy Pelosi recounted in the interview with John Reed of the Financial Times*.

According to the PESTEL analysis approach, there should be key drivers of change that need to be understood together with their differentiated impact on the American Economy. These factors determine the level and pace of development of any organization. There is a need to consider the future impact on the environment due to the business’ endeavors.

The PESTEL model as stated by Oxford University Press (2007) addresses the five forces influencing the development of a business. These forces in the case of Chrysler include the buyers who are American citizens, the suppliers of the materials for competing in car manufacturing, competitor firms such as Mercedes Benz and Renault which create a lot of market pressure, also some substitute producing firms that also affect the market structure e.g. Toyota cars instead of Fiat. All these factors create a competitive rivalry. This rivalry is important since the client or end-user of the automobile will be able to enjoy a variety of quality goods at an affordable price. “You only had to read last week and this week’s Motors to see that car prices in Ireland are at an all-time low and that some of the offers available on new cars are not likely to be repeated for quite some time” (Comyn, 2010). The latter statement is a clear indicator of how a stable political state like Ireland has maintained investor interest. The country has the quality and affordable cars to serve its ever-growing economy. The principles of the PESTEL analysis are prevalent and apply in the country hence making it the best environment for the car business.

Conclusion

In conclusion, Chrysler has acquired new management and new strategies for making the company a worthwhile investment. The Chief Officer of Fiat, an Italian automobile manufacturer, is now running the company. The Chief Officer, Sergio Marchionne is known to have lead Fiat to new management that has seen the company increase its profits and elevate its efficiency levels. The company using the PESTEL analysis will be able to uplift the lagging Chrysler company. Fiat would through PESTEL analysis enhance its business environment in collaboration with Chrysler namely the political, social, economic, environmental, and technological.

References

Oxford University Press., 2007. PESTEL analysis of the macro-environment. Web.

The Economist Newspaper Limited., 2009. Fiat and Chrysler forge a strategic alliance, Web.

The Times Newspapers., 2003. SLEPT analysis with example, Web.

Reasons for failure

Feasibility study is an essential element in project management. Project managers need to carry out comprehensive feasibility study before spending money on projects. Fiat 500 emerged as one of the biggest product flops in 2011 despite its efficiency in fuel consumption.

It lied on the sixth among the most flopped products in the US market. A key reason that led to failure of Fiat 500 project was failure to carry out adequate market feasibility. An Italian company (Chrysler Group LLC) produces the Fiat 500 car. The company’s main target market for the product was America. The company did not carry out adequate market study to establish taste and preferences of the people of America.

Another factor that led to flop of the product was delay in decision making on which stores to us for sale of the product. The decision makers were indifferent on whether to us Chrysler dealership or open new dealership in the US. During this period of indecision the company had an opportunity to take advantage of low supply of small cars from other companies. This is because Tsunami in parts of Japan interrupted supply of such vehicles.

Therefore, there was a problem in distribution channel which resulted to unavailability of the car. The third factor that contributed to flop of the product was inadequate publicity. There was no adequate fund for marketing the product. This resulted to low customer awareness and hence reduced sales. High price of Fiat 500 also played a role in failure of the project. Some dealers complained about the pricing of the car (Bhasin, 2011, p.1).

Strategies for improvement in future projects

Successful implementation of projects is a challenging task. Project managers have a lot to take into consideration before they succeed in these ventures. The ultimate goal of each and every project manager is to ensure that benefits outweigh costs and project financers get a return out of their investments. However, it is not only cost optimization that defines success of a project. Other factors such as product position strategies are of essence in defining success of a project.

For instance, before launching a product, project manager should ensure that the product meets the needs of the target market. Also, the product should be better than alternate product in the market. Second factor to consider is the penetration strategy. Areas to consider when coming up with penetration strategy of the product are distribution channels and pricing. A company launching a new product should ensure that there are adequate distribution channels.

This will ensure that the product is readily available. A company should also come up with a favorable price that will allure the target market segment. This price should be competitive and the product should provide value for money that is, it should be of high quality. Finally, there should be adequate publicity before launching the product. A company launching a new product needs to create massive awareness of the product before the launch.

The company should carry out prelaunch survey and check whether the product meets customer needs. This can be done using prototype models. Results of such surveys give room for adjusting final product before launch. The company needs to allocate adequate resources for marketing the product. This will ensure that there is adequate awareness of the product in the market. It will also help build customer confidence (Kerzner, 2010, p.34). In summary, price, product, place, and promotion are essential to ensure successful product launch.

References

Kerzner, H. (2010). Project management best practices: Achieving global excellence. Hoboken, New Jersey: John Wiley and Sons.

Bhasin, K. (2011). The Launch Of The Fiat 500 Was Supposed To Be A Huge Deal In The US, But It’s Not. Web.

Will Fiat be successful in the United States this Time?

For the longest time automotive industries have been looking into secrets that have made small car companies such as Toyota attain a competitive edge in the marketplace. While other companies have failed to penetrate the marketplace, Toyota has been able to achieve this with ease. Unlike Toyota, Fiat is among the world major automotive companies that have failed in penetrating the international market (Schwartz, 2009).

With the increasing marketing opportunities in the US, Fiat has since 2011 staged a reentry strategy into the US market. Fabbrica Italiana Automobili Torino, commonly known as Fiat, is back in the US after 27 years of absence. However, its recent launch of Fiat 500 has been marred by mishaps: while Chrysler has rapidly improved, the sale of this new make has fallen short of consumers’ expectation.

Due to its history in America, Fiat’s reentry into America is bond to face challenges. With the new subcompact car available in several variants, Fiat hopes to win the US market again (Schwartz, 2009).

While the company is associated with poor quality and poor customer services, its reentry into the American market may be subject to challenge. However, on reviewing its current strategies, this paper argues that the company will successful in the United States this Time. To support this argument, this paper will look into the company reentry strategy.

The History of the Fiat 500

Founded in 1899, Fiat is an Italian car company. Fiat operates in over 80 countries across the globe. Despite its failure to expand into the US markets, the company introduced its Fiat 500 in the North American market in the year 2011.

With more than a million sales of the Fiat 500, the Fiat 500 is in more than 100 countries across the globe (Schwartz, 2009). Over the year, the company has won many international awards in the automobile industry. Some of these awards include the 2009 World Car Design of the Year, the 2008 European Car of the Year, and the Fiat 500 entry into the US Commercial.

Fiat’s Challenges

Fiat’s American history is marred with negative brand image. This image has a direct effect on the company’s reentry into the American markets. There are a number of reasons as to why Fiat left the American markets. Fiat was commonly known for the mechanical issues on its cars as well as poor customer service.

The company’s exit from the American markets led to the entry of brands such as Toyota (Schwartz, 2009). Over the years, the market successor companies have established new markets in America. Therefore, Fiat’s exit from the American markets and the entry of new brands into the US market are potential challenges to its reentry.

Current Approaches

There is a wide range of business practices Fiat would use to have a successful reentry in the American markets. To begin with, Fiat could immolate the current technology used by the Chrysler vehicles. By adopting this approach, the American audience would reference the quality they apparently offer in their vehicles.

Fiat could gradually begin by incorporating its vehicles into the Chrysler dealership showrooms (Schwartz, 2009). This approach would help its target market familiarize the vehicles to the Fiat brand. By taking advantage of Chryslers’ internet presence, Fiat will also be able to promote its reentry into the American markets.

In addition, to introduce a new car into the American market, Fiat has shared its new technology in launching its new “Dodge branded” vehicle (Schwartz, 2009). As far as its organizational structure is concerned, the launch of the new “Dodge branded” vehicle will present more opportunities than challenges in the American markets. Its recent merge with Dodge is a smart move mainly because the company will utilize a well-established brand to market its products.

As argued by (), customers are only interested in buying products from well-established brands. The significance of this approach is that, through Dodge, Fiat will be able to establish itself in the marketplace. In addition, Fiat can use the profits earned from this joint venture in funding its reentry into the American Automotive Market.

As the company enters into the American Market, it is important for Fiat to ensure that the reentry is different from that of the 1980s. To achieve a successful reentry into the US market, Fiat should change its ambition to market and connect their overrated products to its new consumers (Schwartz, 2009). Since 1980, Fiat has continued to revamp its car structures as well as their design.

It is necessary that the company understand both threats and opportunities upon reentering the US market. Using its most recent award on the “World’s Most Reorganized Cars of 2009,” Fiat could successfully establish its brand in America. Despite the fact that Fiat is an independent branded network of dealers in America, it is important to maximize its current relationship to its advantage (Schwartz, 2009).

While utilizing the existing relationships, the company will have an opportunity to reenter into the US market. Successful relationships in the new market will attract opportunities to learn competitors’ strategies. By learning competitor strategies, Fiat will attain a competitive edge in the American markets.

While reentering into the American market, it is important for Fiat to have an effective organizational structure. Traditionally, organizational structures play a major role in determining a company’s future direction. As far as the organizational structure at Fiat is concerned, there is need to elaborate both the implicit and explicit policies and rules (Schwartz, 2009).

The importance of elaborating the implicit and explicit policies and rules is that they provide a structure where the various responsibilities and roles are effectively coordinated, delegated, and controlled (Schwartz, 2009). Organizational structure is important since it determines the future direction of a given company.

In line with this view, Fiat should understand the importance of having in place an effective organizational structure. In this case, Fiat should adopt a decentralized organizational structure. This this kind of structure, the company will be able to make informed decision that will facilitate a successful reentry into the American automotive market.

In conclusion, this paper argues that although Fiat’s history in America directly effects its reentry into the American market, this paper has established that there is a possibility of a successful reentry into the American markets. However, its success into the American markets will greatly depend on how it will integrate the new opportunities in its reentry strategy.

Since most of the American have a negative record of the company, it is necessary that the company incorporate approaches that will convince these customers. As established in the case study, merging with successful companies such as Dodge will help Ford convince both the old and the new set of customers.

Reference

Schwartz, N. D. (2009). Fiat Gives Detroit a Lesson on Small Cars – NYTimes.com, Nytimes.com. Retrieved from https://www.nytimes.com/2009/07/15/business/global/15fiat.html?_r=0

Analysis of External Factors

Fiat Chrysler automobile company faces a lot of challenges even though most financial analysts believe that the merger was a significant step towards improving the performance of the parties concerned. Sergio Marchionne, the chief executive officer of Fiat, offered an expensive bet to companies that wanted to merge with it (Carney 2009). Most critics expected this offer to attract successful companies like DT Dobie and Ford. However, they were shocked when Chrysler’s offer was accepted by this company. The following issues are important in explaining factors that forced Fiat to merge with Chrysler even though it knew its financial challenges.

Michael Porter argues that threats of substitute products that arise due to changes in technology are serious problems for companies (Bainbridge 2012). The automobile industry is evolving and this means that all companies must realign their strategies to ensure they manage these challenges of changes in market trends (Sherman 2010). Porter explains that the presence of rivalry between suppliers make them to use unethical practices to have competitive advantages over others.

Chrysler was unable to withstand competition from other companies including Fiat; therefore, it was quick to accept Fiat’s offer to merge with it to ensure it reduced competition in the automobile industry. Thirdly, the need to manage Fiat’s brand forced it to merge with Chrysler to ensure it is associated with a company that has a rich tradition in car manufacturing; therefore, this was an effective way of managing threats of new entrants (Miller 2008). Porter argues that threats of new market entrants force companies to merge to have competitive advantages over others.

Moreover, Fiat had a poor customer care department and it was necessary to improve the services of this sector by merging with another company (Williams 2011). Lastly, Fiat did not have adequate funds to finance its operations because of the challenges it experienced between 2007 and 2008. The power of suppliers as presented by Porter forced these companies to merge their operations.

Chrysler had adequate funds to finance its operations, but did not have market for its expensive products (Maynard 2013). Therefore, it was necessary to combine their efforts to ensure they supported each other in different processes. Chrysler produced expensive automobiles that were beyond the consumer’s ability to buy them. Porter explains that when the bargaining power of buyers is low companies should merge their operations to reduce costs and lower the prices of their goods or services.

Chrysler’s Competitive Advantage

This company had a dark past and this had forced most people to despise its products because of poor financial performance. The merger with Fiat will ensure it streamlines its performance and this will attract clients to buy its products. It is necessary to note that the merger led to changes in the brand names used by these companies (Bainbridge 2012). They dropped their former names and adopted the new brand name that symbolised a new company under different management. This is a significant step towards reducing competition in the automobile market.

Secondly, Chrysler will expand its market because the merger ensured that these companies used similar advertising strategies. The products of these companies adopted similar production processes and thus this company took advantage of Fiat’s brand name to market its products (Snow 2011). Moreover, this company will reduce its costs because of the merger; therefore, it will be in a good position to reduce the prices of its products to attract clients (DePamhilis 2009). This will be a significant competitive advantage that will help this company to lower the prices of its products.

In addition, this company does not incur heavy taxation expenses because the cost is shared with Fiat. This means that it will have less pressure to make profits because of a reduction of its expenses (Rosenbaum 2013). Chrysler will get a better team of managers and subordinate staffs because of an increase in employees from Fiat. It is necessary to explain that mergers enable companies to rejuvenate their human resource by an addition of employees from another company (Filippell 2011). Lastly, an increase in capital will enable this company to get discounts when purchasing its raw materials. This means that it will enjoy the benefits of economies of scale and this will help it to lower the prices of its products.

Recommendations

The marriage between these companies is yet to achieve its fruits. However, there are hopes that their performance will improve if they align their finances and employees according to their goals. The following issues are important in promoting excellent performance in Fiat Chrysler Automobiles.

First, Fiat and Chrysler should realise that they have become one and this means they need to combine their efforts to ensure they achieve their goals. They must work as a team and ensure there is coordination between their departments to facilitate efficiency in decision making. Secondly, there is the need for them to ensure that they merge their departments to reduce the cost of running this company. This includes reducing the number of managers and eliminating departments that are not necessary. Employees must be educated on the need to embrace teamwork to ensure their activities are indistinguishable. This will promote order and unity amongst workers and ensure there is efficiency in service delivery.

References

Bainbridge, S. 2012. Mergers and Acquisitions, 3D (Concepts and Insights), Foundation Press, New York.

Carney, W. 2009. Mergers and Acquisitions: The Essentials, Aspen Press, New York.

DePamhilis, D. 2009. Mergers, Acquisitions, and Other Restructuring Activities, Academic Press, Massachussetts.

Filippell, M. 2011. Mergers and Acquisitions Playbook: Lessons from the Middle-Market Trenches, Wiley, New York.

Maynard, T. 2013. Mergers and Acquisitions: Cases and Materials, Aspen Press, New York.

Miller, E. 2008. Mergers and Acquisitions: A Step-by-Step Legal and Practical Guide, Wiley, New York.

Rosenbaum, J. 2013. Investment Banking: Valuation Leveraged Buyouts, and Mergers and Acquisitions, Wiley, New York.

Sherman, A. 2010. Mergers and Acquisitions from A to Z, AMACOM, New York.

Snow, B. 2011. Mergers and Acquisitions, Wiley, New York.

Williams, T. 2011. Mergers and Acquisitions, Cases and Materials, Aspen Press, New York.

Description of the case

Among the most attention-grabbing dramas to come out of the Great Recession was the marriage of Fiat and Chrysler. Financed and brokered by the United States government in an unmatched market intervention, the amalgamation brought two outstanding companies together whose histories were strangely similar but whose prospects had recently diverged.

Chrysler is an American symbol one of Detroit has framed titanic three in the auto industry. Chrysler is a company with a turbulent history having experienced several cycles of booms and busts. The company fell on hard times and needed a government bailout in the year 1979. Chrysler managed to pay up the government loan and continued to be successful in the auto industry for a better part of the years.

This improvement in its activities was under the leadership of the legendary Lee Lacocca. In the mid 1990s, Chrysler was a strong and growing company, and this aspect led it to be an acquisition target by Daimler-Benz. This ownership lasted from 1998 to 2007 when Cerberus Capital Management took over the company. In another twist and turn of events, Chrysler declared bankruptcy in 2009 having recorded a 36%sales fall.

In addition, the company’s market share dropped to 8.4%! During this period, Chrysler received $4 billion of the $13.8 billion in emergency loans from the $700 billion Troubled Asset Relief Program (TARP). Chrysler filed for bankruptcy on April 30, 2009, and by May 31, its reorganization became official (Clark, 2012).

On the other hand, Fiat is just as iconic as Chrysler Company. The Turinese Company was in particular a central pillar of Italy’s “miracolo economico” producing small but stylish and smart cars like 500 and 600. These emerged as key symbols of the nation’s speedy recovery from the desolation of World War 2. Fiat equally has a tumultuous history with the most notable one being in the late 1970s amid traumatic labour strife.

Thanks to the aid from the Italian state and creation of stylish new models, the company recovered from its collapse. The company did well in the auto industry and then faced its other challenge in late 1990s. Fiat fell apart during this time and was on the threshold of bankruptcy in the early 2000s. At this point, Fiat took a different step in trying to recover from the bankruptcy, which makes it different from Chrysler.

The Economist in 2008 described the move as a remarkable industrial and financial changeover that will be pored over in business schools for the rest of the times. This turnaround step for Fiat was under the management and leadership of Italian-Canadian CEO, Sergio Marchionne (Liff, 2007).

On June 10, the Chrysler-Fiat alliance became official, and this meant that Fiat CEO Sergio Marchionne took over as CEO. With the acquisition being official Chrysler underwent a significant organizational change starting with the leadership area. There was a change of the CEO and the name of the company.

The company attained the name of Chrysler Group LLC. In addition, Chrysler Group LLC management team included a nine member Board of Directors. The agreement was for Fiat to appoint three of the directors, one director appointed by the Canadian authorities, four to be appointed by the US government, and the other one by the United Auto Workers’ Retiree Medical Benefits Trust.

Organizational change in the company also included restructuring to concentrate on the Jeep, Chrysler, Dodge vehicle lines and the Mopar brand of aftermarket parts. Recently, Fiat increased its stake in Chrysler to 25%, which was through achieving the first three government-required milestones- producing a fuel-efficient engine in the United States.

The CEO reportedly stated that he hopes to take Chrysler Group LLC public before year-end together with a raise in its stake to 35%. In the event, Fiat meets these financial and developmental goals it will own 51% of the company.

The minority holders of the company include the US and Canadian governments of 8% and 2% respectively. So far, Chrysler has acknowledged to getting $13.8 billion in total aid and pledged to repay its loans by 2014. By the end of 2011, the company is to pay back the first $2.1 billion (Sebastiani, 2011).

Many people saw little chances of success with the Chrysler-Fiat merger. However, since this takeover by Fiat Marchionne has managed to turn Fiat losses into healthy profits by reducing Fiat’s managerial bureaucracy. The CEO has managed to change the managerial tone to a focus on profits and markets. This philosophy of reduced managerial bureaucracy has gone down to even Chrysler.

In regards to Chrysler, Marchionne stated in 2009 that their goals are straightforward as they look forward to breaking even with an operating profit of $5 billion by 2014. The organizational change in the company seems to be having positive impacts of the financial state of the organization (Denison, 2001).

In as far as, it concerns Chrysler; the company has exceeded its set targets having generated $763 million of operating profit in 2010. The initial expectation was to break even at $200 million for the full year.

Chrysler’s profitability is further held up by an increasing average transaction price that increased by 6.4% above the previous year’s average transaction price. These financial reports are a clear indication of the impact of the organizational change in Chrysler (Edmonds, 2003).

On the other hand, the current company plans on increasing the number of staff members on an annual basis. During the Daimler years, Chrysler employment level dropped from 123, 000 to just about 69,000 which was a 45%decline. From records, the company hired 82,280 staff world wide out of which 64,750 employees were within the United States.

In 2009, there was a further decline in the employment level with the company hiring 47,800staff. However, with the change in the organization there has been a remarkable change in the patterns of employment. Since the partnership with Fiat, Chrysler has begun work overhauling its model line up and has employed 5,000 employees, which include 500 engineers.

The company’s management has promised to hire 1000 more employees to work on its new line up. Currently, Fiat enjoys the status of employing over 80,000 staffs in Italy and another 190,000 employees worldwide. This is an indication that the merger of the two outstanding companies has a positive impact both in the financial and human resource aspect (Cumming & Worley, 2009).

Organizational change come challenges that the companies will have to face. Introduction to change management is a process that will take time for the other people to adapt and will require several support-mechanisms to achieve the goals of the change. In this part of the paper, we analyse the underlying problems the organization faced in the wake of organization change.

For a company to declare bankruptcy it implies the management and all other stakeholders have done their best to revive the company to no avail. In this case, to rescue Chrysler from its current crisis will call for rescuers carrying out the task from different aspects. Fiat-Chrysler merger faces several challenges and these are the stepping-stone over the challenges that will render the merger a success.

This change in an organization should be ready to achieve the main challenge Chrysler is facing which is bankruptcy. For Fiat to fall under the success stories in the merger, the management and other stakeholders will have to pull the company out of bankruptcy within the set period. Most companies, which try to make a comeback from bankruptcy, end up going back to bankruptcy or getting out of business for good.

The change in management will face resistance from different stakeholders concerning the steps it will take in getting the company out of bankruptcy. Most notable will be the creditors who may not be patient to the management’s approaches to reviving the company.

By the time Chrysler declared bankruptcy, it had already had a clear outline, which was to help it make a strong coma back from bankruptcy. The organizational change will mean the company following the plans of the new management comprising of Marchionne and the nine-member board of directors (Collins, 2001).

Problem Analysis

Over the years, Chrysler had a clear product line, which has seen it excel in the auto motor industry. A change in the organization will mean a change in the product line. Mainly, the Fiat-Chrysler merger looks at pruning the product line for the company, and this may be a considerable challenge. Change in any company is hard to take and the investor and stakeholders maybe resistant to leaving their ideas of production.

The approach Fiat-Chrysler merger is likely to employ under new management will involve critical analysis of the vehicles the company produces. There will be a need of getting rid of cars that are unpopular, unprofitable or too similar to other models out there. This move is likely to impact negatively on the company’s customers who still have their products and would wish to continue purchasing them from Chrysler.

Product pruning will be necessary to the new management can introduce a line of Fiat cars only popular in their native country-Italy. Another notable challenge with the new management is the selling of Americans on Fiat. The company will have to bring fresh offerings, and this will increase the company’s expenditure.

The new management aims at coming up with new models, which will be helpful in getting customers into the showroom. The new models will have to come at a lower cost than what most customers expect of Chrysler (Cohen, 2005). The main challenge under this step is the reception of the new models by the Americans.

The new management of Marchionne will have to come up with methods that will see to more customers purchasing the new models. Introducing new products to the market can be a challenging issue for any company and putting to mind that the management is new to the market.

It is unpredictable whether the Americans and other relevant stakeholders will embrace Fiat’s line of small and flashy cars, which are fuel-efficient. These are the additional challenges most companies face in the wake of organizational change, and Chrysler has no otherwise but to deal with the challenges (Freyssenet, Shimizu & Volpat, 2003).

Chrysler will also have to work with the new change of leadership starting from the top management. The current CEO of Chrysler, Bob Nardelli, will step down at the end of the company’s bankruptcy. This will mean a substantial change in the management area as the CEO for Fiat takes over. The company will once again have to deal and adapt to the new corporate culture.

The prior case when Chrysler faced change in change, in management, the partnership fell apart because of lack of understanding (Cummings & Worley, 2009). Fiat- Chrysler merger will be introducing a new culture of leadership- Italy, and the company has always been under the American management.

Introducing a new partner in the business is one thing but having one who speaks a different language and is an ocean away, it becomes a complex case. During this bankruptcy period, the company faces another challenge of boosting the morale of its employees. The staff members of Chrysler have been through bankruptcy more than once, and the trend can be heartbreaking for the employees.

The earlier Daimler-Benz merger failed terribly and with it came several cases of extensive buyouts and cutbacks. The employees will need a more promising decision on the effectiveness and success of the Fiat-Chrysler merger.

The new management will have to come up with an extensive plan, which will assure them of the people in charge. This will be a motivating factor to the already sceptical and angry employees of the company (Bracken, 2002).

In addition to the above challenges, Chrysler will also have to work towards maintaining satisfactory labour relations in these times of bankruptcy. The company’s bankruptcy plan calls for the union taking a 55% stake in the new company through an arm that provides retirement benefits to its members.

More so, the new management faces the challenge of helping the company to survive the current recession. Navigating the company through a punishing recession that has relentlessly affected both access to credit and consumer spending will be the new management’s main challenge (Avery, 2010).

The above case clearly outlines hoe change management should be handled in any company undergoing organizational change. Chrysler underwent a significant change in management and so far, he has managed to improve its financial and production status, which is a clear indication of well-managed change management.

The process for managing change bases on varied models and theories, which give, outlines to management in place. Managing change in any organization calls for the inclusion of all stakeholders of the company to achieve the company’s objectives.

For instance, in the above case of Fiat- Chrysler merger the decisions the new management makes will be in line with the interests of the stakeholders- customers, employees, investors, government, and any other party. One process of managing change is not to focus on the project management, but the impact the change will have on other people.

Most organizational changes fail because of the management neglecting the impact of change on the individuals concerned. People react to change differently, and in this case, it is up to the management to highly focus on this aspect (Kogut, 1993).

Tools of change management include change management process, resistance management, readiness assessments, and more so celebrating and recognizing success. The change management process refers to a sequence of steps that a change management team would follow to apply change management to change.

Just like any other company, change management in the Chrysler-Fiat merger involved the following steps- preparing for change, managing change, and reinforcing change. The company declared bankruptcy prior to the merger and took time to make the merger official. This duration was magnanimous enough for the company stakeholders to prepare for the change in management that was to take place in the company.

The creditors and employees had ample time to prepare for the change in management. Any change in management comes with varied changes that the customers, employees, and creditors will have to abide to so as the company can function normally.

For instance, the Fiat-Chrysler merger changed the production strategies that every stakeholder was accustomed to, and they had a reasonable time to adjust (Ortmeier & Meese, 2010).

Application of Change Management Principles

Readiness assessment is a component for change management process. This strategy assesses the company’s readiness to accept change. In the case of Chrysler, the company was ready for any change as the change would be beneficial to the company. Prior to the merger, the company had already declared bankruptcy, and this meant a merger was to save the company from its woes.

At this point, the project leader enlightens the relevant stakeholders of the scope of the change, the impact of the change. In addition, the step assesses the strengths of the change management team together with the sponsors. According to John P Kotter, a Harvard Business school professor, there are eight steps to a successful organizational change management.

The first, crucial step according to this model is the increase of urgency, which involves inspiring people to make real and relevant objectives that will lead to the success of the change. In any change, there has to be a guiding team to oversee the change process and get the vision for the change right.

The best example for this step is the change of the CEO of Chrysler and introduction a nine-member board of directors to oversee the change objectives in the organization (Leading Change: Making Transformation Work, 2010).

Kotter’s model of managing the change process insists on the significance of communication for buy-ins. In this process, the company involves as many people as possible to support the change process. Fiat-Chrysler merger brought several stakeholders together including the US government, creditors, investors, customers, Italian government etc. Empowerment actions are necessary to make the change successful.

The management team will be responsible for removing obstacles and enabling constructive response and great support from leaders. The management team should also create short-term wins that easy to achieve and encouraging the team players not to give up.

The change process comes with several setbacks and obstacles that can easily make a person give up but, according to Kotter’s model, this should not be the case.

Finally, the change team needs to make change stick and clear any loopholes that can make the change to breakdown. “Reinforcing the value of successful change through recruitment, promotion, and new change leaders” will be instrumental in making change stick in any organization (Avery, 2010).

Plan of Action for Managing the Change

Various organizations come up with varied plans to manage change. The plan to manage change should be one that leads to the success of the organizational change. In the event, I was in charge of managing change in the Fiat-Chrysler merger I would come up with an all-inclusive plan to manage change. The action plan will comprise of several items such as the following.

The action plan will outline the areas, which need change in the organization- structure, policies, practices, attitudes, people, decision-making, the rewards people get and many other areas. The action plan will also exhibit the key stakeholders in the change plan and their readiness and capability for change. The action plan will also define the key roles each person will take in the change process (Gottlieb & Conkling, 1995).

Mainly the resource allocation process will be in the action plan in order to ensure equal allocation of resources. Resources in this sense will include money, time, and people in the organization. I believe this action plan will be helpful in solving the challenges most organizations face while undergoing organizational change.

In the event, the change management team employed the above action plan resistance to change by the stakeholders of Chrysler Company will be minimal. This is because the change action plan outlines the process of change and defines each person’s role in achieving the set objectives.

The plan equally involves all the stakeholders hence there will be no chances of people feeling left out in the process of change. In the end, the organization will be comfortable and adapt to the organizational changes the new management will have put in place.

References

Avery, L. (2010). Newsmakers the people behind today’s headlines. Detroit, Mich.: Gale.

Bracken, P. (2002). Corporate Disasters: Some Lessons for Transformation. Ft. Belvoir: Defense Technical Information Center.

Clark, J. (2012). Mondo Agnelli: Fiat, Chrysler, and the power of a dynasty. Hoboken, N.J.: Wiley.

Cohen, D. S. (2005). The heart of change field guide: tools and tactics for leading change in your organization. Boston, Mass.: Harvard Business School Press.

Collins, J. C. (2001). Good to great: why some companies make the leap–and others don’t. New York, NY: HarperBusiness.

Cummings, T. G., & Worley, C. G. (2009). Organization development & change (9th ed.). Australia: South-Western/Cengage Learning.

Denison, D. R. (2001). Managing organizational change in transition economies. Mahwah, N.J.: L. Erlbaum.

Edmonds, J. (2003). Managing Change (4th ed.). Oxford: Elsevier Science & Technology.

Freyssenet, M., Shimizu, K., & Volpato, G. (2003). Globalization or regionalization of the European car industry?. Houndmills, Balsingstoke, Hampshire: Palgrave Macmillan.

Gottlieb, M. R., & Conkling, L. (1995). Managing the workplace survivors: organizational downsizing and the commitment gap. Westport, Conn.: Quorum Books.

Kogut, B. M. (1993). Country competitiveness: technology and the organizing of work. New York: Oxford University Press.

Leading Change: Making Transformation Work. (2010, November 10). Manila Bulletin, 24, 13-56.

Liff, S. (2007). Managing government employees: how to motivate your people, deal with difficult issues, and achieve tangible results. New York: American Management Association.

Ortmeier, P. J., & Meese, E. (2010). Leadership, ethics, and policing: challenges for the 21st century (2nd ed.). Upper Saddle River, NJ: Prentice Hall.

Sebastiani, F. (2011). Officina Italia: la FIAT secondo Sergio Marchionne. Matera: Altrimedia.

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.