Chrysler and Fiat’s
Fiat is an automobile manufacturing company that is based in Turin, Italy. The company was founded in the year 1899. Fiat has been involved in the manufacture of numerous automobiles, including railway engines, farm tractors, aircraft, and military vehicles among others. The company is one of the most successful automobile manufacturers in Europe. It is ranked 4th largest automaker in Europe after Volkswagen, PSA, and Renault. Worldwide, Fiat is ranked 11th largest automobile producer. The company has acquired a number of other companies in a bid to expand its operations. In the year 2011, the company acquired Chrysler by becoming its majority shareholder (Terlep, Rogers and Henning para 1-2).
Chrysler is an automobile manufacturing company that is based in the United States of America. The company was founded in the year 1925 by Walter Chrysler. Chrysler, now owned by Fiat through majority shareholding, is one of the biggest automakers in America (Arslan and Altuna 175). It sells its products under Chrysler brand, as well as under the Fiat brand. In addition, the company also sells brands like jeep, Ram and Dodge. Chrysler has two divisions, namely Mopar and SRT. The former handles automotive accessories, while the latter deals in automobile performance. Worldwide, Chrysler is ranked he 12th largest automobile company. This essay analyzes how Chrysler and Fiat have used their brand portfolios to flourish in the world of automobiles.
Chrysler and Fiat’s brand portfolios in the world’s auto industry
Chrysler and Fiat are two big automakers in the world with some of the best brands in the industry. For instance, Fiat is the owner of Alfa Romeo and Lancia. In addition, it has shares in Maserati and Ferrari. On the other hand, Chrysler owns Jeep, Dodge and Ram. When the two companies came together in the year 2011, they expanded their brand portfolio in the market, a strategy that would give them competitive advantage.
According to Mr. Sergio Marchionne who is the CEO of Chrysler and Fiat, “the combination of Fiat, which also owns Lancia and Alfa Romeo as well as stakes in Ferrari and Maserati, with Chrysler and its Jeep and Dodge brands enables both to offer a broader portfolio of cars to the market” (Madslien para 6). Cars produced at Chrysler will also be available under Fiat brand, while cars produced by Fiat will also be available in the Chrysler brand. For instance, Jeep is a brand that is historically available under Chrysler. It will be available at Fiat under the name Alfa Romeo. In addition, it will be manufactured in Turin.
Since Chrysler is based in the United States of America, it is well established there and has a strong reputation. The company has a well established network in the US market. Known for the manufacture of trucks, Jeep brands, as well as Mini vans, Chrysler has been among the top three automobile manufacturers in the US. Its brand image in the US is strong, thus it has a good competitive advantage in the country. In Europe, Chrysler does not have such a strong brand. For instance, in the year 2010 its sales fell by a whooping 26.8%. It is important to note that there was a general drop in the sale of vehicles during that year, with Fiat also recording a drop of 17% (Madslien para 13).
On the other hand, Fiat which is based in Italy has strong roots in Europe. It is among the biggest seller of small cars all over Europe. Its small cars are present across the world. Fiat is mostly known for production of the Lancia brand across Europe. By the two companies forming an alliance, Chrysler has been able to market its brand in Europe, while Fiat has been able to penetrate the American market (Clark 56). Mr. Marchionne believes that the merger is an important one considering the limitations of each company. The two companies will complement each other to make a strong brand portfolio. “We’re already in the UK with Chrysler”, said Mr. Marchionne (Madslien para 11). The CEO has helped Fiat emerge strongly, and his leadership quality will be of much significance for Chrysler- Fiat alliance.
Short term brand revamping and overhauling
In the short term, the companies will have to restructure their management. The alliance will have to change the current structure and adopt a structure that will fit the alliance strategy. Prior to the merger, each of the companies had its own management structure that was fitted for its business strategy. Changing the structure in the short run will be important since the two companies will be able to effectively integrate in the market, both in Europe and in America (Warren 177).
After reorganizing the management structures of the two companies, it will be important for them to integrate in terms of corporate strategy. The parts of their business that are crucial should be integrated so that they can work together as a unit. For instance, the leadership of Chrysler should be integrated into that of Fiat. Fiat is known for its strong leadership under its CEO Mr. Marchionne. This will facilitate their corporate planning, which will help them gain a competitive advantage in the automotive industry. Leadership is one of the most important factors to the success of any organization since it facilitates innovation, building brand image and improving the reputation of an organization (Butler 99).
Long term brand revamping and overhauling
The two companies need to come up with a strategy to revamp their brands following their dismal performances prior to the merger. To do this, they will have to deal with the issues relating to their brand images. Recasting their brand images will be a favourable option. Chrysler will build its brand image in Europe, while FIAT will build its brand image in America. This will help the two build a strong market base in the two continents, and then they will be able to build their image in the rest of the world. An international company needs to flourish at home before exploring the outside market. Improving their image in America and Europe will, therefore, help them expand effectively in the global market (Jacobson 530).
The other issue that the alliance will need to deal with is that of labour unions. There are different labour requirements in America and Europe (Pitts and Richards 58). To have any chance of succeeding in the long term, the two companies will have to deal with these issues. Additionally, the global market is associated with numerous uncertainties that put an organization’s business under risk. The global market is highly complex, and an organization needs to come up with a comprehensive strategy in order to survive and succeed. This will be a challenge to Chrysler- Fiat alliance. The alliance will have to establish a strategy that will help them deal with the uncertainty involved in the market (Štrach and Everett 107).
Finally, the competition in the industry is high. There are automobile companies in Japan, Australia, as well as in America and Europe. All of these firms are competing for a bigger market share. For the alliance to survive in the long term, it needs to establish a strategy that will help it gain a competitive advantage over its rivals. Chrysler-Fiat alliance needs to develop a competitive marketing strategy and utilize technology to enhance innovation (Terlep, Rogers and Henning para 6).
Lessons from the Chrysler-Fiat Strategic Alliance regarding managing multinationals in the changing global business
The world of business is dynamic today since it is changing more rapidly than any other time in the past. Technology has facilitated innovation and increase in the level of competition among organizations. Companies need to have a strong global presence for them to secure any chances of success. Each organization has its own strengths and weaknesses. A firm needs to find a way of improving on its weaknesses, and at the same time capitalize on the strengths.
For instance, Chrysler’s main challenge in integrating into the global market is due to the fact that it is mostly known for producing big vehicles. Fiat is one of the best producers of small cars, which are in high demand in the global market (Kurczewski para 5). The alliance between the two companies will, therefore, help boost the sales of Chrysler, while at the same time boosting Fiat’s access to the US market. The lesson learnt from this alliance is that alliances can help the organizations involved complement each other in areas where they are weak and give them a strong global appearance. Alliances can be highly effective in the global market since they help organizations access markets that previously proved difficult to enter.
Works Cited
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Pitts, Harold D., and Richard Trumka. “Labor Union Bargaining: Trends in a Global Economy.” ICFAI Journal of Employment Law 6.1 (2008): 56-71. Print.
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Terlep, Sharon, Rogers Christina and Henning Eyk. “Fiat Weighs IPO after Absorbing Chrysler.” The Wall Street Journal. 2013. Web.
Warren, Elizabeth. Use of TARP Funds in the Support and Reorganization of the Domestic Automotive Industry. Philadelphia, PA: DIANE Publishing, 2010. Print.