Executive Summary
The primary goal of this research report will be to examine FCA and its sector. For FCA and for the industry as a whole, it describes two aspects of the general environment. Two of the most important drivers of competition for FCA are also examined in this report. Furthermore, it examines the external risks to FCA, as well as the current prospects for the organization. Afterward, it discusses its weaknesses, strengths, abilities, and assets. The paper will also evaluate why competitive pressures have intensified due to a growing number of automakers in the US market. Due to the fact that every automobile manufacturer is attempting to hold onto every market in order to keep their profits and revenues, traditional market segmentation has become increasingly confusing.
Consequently, there will be a focus on the factors to consider while deciding in a fast-paced market like the automobile industry. The paper will show that such factors include the wants of consumers and market needs. The research has also shown that automakers do not operate in the United States market alone as they sell their products in countries across five continents. Founded in 1925, Chrysler is a United States vehicle manufacturer. Fiat Chrysler Automobiles is another name for the company. The various strengths of Chrysler that have been illustrated in the paper include the establishment of operations all over the globe, including the United States, Japan, Mexico, and India. Second, it has a wide range of products to choose from. The company’s customer base grows, and the customer experience improves as a result of its extensive diversity. The paper also analyzes the marketing environment of the company, including the extensive technological and political environment that has been established.
Introduction
Chrysler is a US-based car manufacturing corporation with their headquarters in London. This brand is also known as Fiat Chrysler Automobiles in the industry. As a manufacturing giant in the United States, it is a household organization that has focused on car manufacturing. Since Walter Chrysler launched the corporation in 1925, it has been plagued with various challenges. Competition, loss of market share, and decreased productivity are all issues to be concerned about. In spite of this, the brand has been a top seller in the United States for many years now. Throughout the company’s history, it has been a major player in the automotive industry. Fiat Chrysler Automobiles is the current name of the corporation (Har, 2019). Founded in London, the corporation has its headquarters in the United States. Success stories involving the corporation have been linked to some of the greatest achievements. Nevertheless, the company’s success has been a roller coaster.
Chrysler is a globally recognized brand with a diverse product portfolio that includes nine well-known names. It is one of the four most well-known wheel brands in the United States. In 2017, it sold more than 2 million units in the United States, making it its most important market. There has been an emphasis on separation and advancement since Chrysler’s wattle in mid-2014. The trademark has also made several noteworthy accomplishments during the past four years. It’s nevertheless possible that a shrinking share of the overall business in certain merchanting areas is creating anxiety. It was also required to write numerous reviews in 2018 (Hitt, 2020). As long as the V.W. crisis is still unfolding, it is still important to think about wheel marks in terms of consistency. Middle Eastern regions, which are among the fastest-growing and offer considerable market expansion opportunities for automakers, are the focus of Chrysler’s deal-making efforts.
The primary goal of this research report is to examine FCA and its sector. For FCA and for the industry as a whole, it describes two aspects of the general environment. Two of the most important drivers of competition for FCA are also examined in this report. Furthermore, it examines the external risks to FCA, as well as the current prospects for the organization. Afterwards, it discusses its weaknesses, strengths, abilities, and assets.
Environmental Scan of the Industry
Multi-segmented environments make up the general environment. These elements include global, technological, economic, sociocultural, political, and demographic issues (Hitt, 2020). They have an impact on the entire industry and the businesses that operate in it. There is a primary focus on international markets and their impact. There are several factors that affect GDP, company savings, personal finances as well as surpluses and deficits, fiscal deficits, trade restrictions and interest rates. This section focuses on communication technology, research and development infrastructure, knowledge application and product innovation.
Another component is the political element of corporate regulation, policies, education, labor laws, deregulation initiatives, taxation rules, and antitrust laws (Har, 2019). In addition, social and cultural variables influence consumer attitudes and preferences, professional choices and environmental concerns as well as diversity in the workplace. The demographic factors include the distribution of income, ethnicity, geographic location, age differences, and the population’s total size. It is important to note that the impact of each category differs from industry to industry, as well as from company to company.
Technological Segment
Fiat Chrysler Automobiles and the automobile industry as a whole are impacted by a variety of technological forces. FCA and the financial sector as a whole are impacted by new technology, knowledge application, and systems developments (Hitt, 2020). Various aspects of the organization and the industry are impacted by these technological advancements. Customers’ tastes, wants, and expectations are considered by FCA in the development of its products and services. Tracking devices can be installed by the company using the most advanced GPS monitoring technology. It also improves the off-road capability of the company’s cars.
Automotive sector standards can be met thanks to this type of technology (Har, 2019). For organizations like Fiat Chrysler Automobiles, new technology has enhanced service and product quality, leading to increased customer loyalty. In addition to navigation systems, driving automation, in-lane guidance systems, remote control of vehicles and the Internet of Things, there are other technological elements to consider. Safety, comfort, engine capacity, fuel consumption, and automation are all influenced by the industrial segment. Information technology enables FCA to use the internet and digital platforms to promote its products.
Economic Segment
Additionally, the economic segment of the global environment has an impact on FCA and the automobile industry as well. The distribution, production, marketing, and sale of automobiles are affected by many economic factors. Market conditions that are favorable to the company’s profitability and worldwide standing are beneficial to the company (Hitt, 2020). The growth and success of automobile manufacturing businesses demonstrates the industry’s progress. Business operations and sustainability are directly impacted by poor economic conditions such as high inflation, the financial crisis, and the economic downturn. Purchasing decisions, stock levels, market stability, and budget deficits are all influenced by this part of the market.
Porter’s Five Forces Analysis
With this framework, businesses in a highly competitive industry can assess their market position and profitability in an objective manner. It assesses the amount of competitiveness based on five factors. Suppliers’ power and consumer bargaining power are only two examples of the factors that can affect a business’ success in this industry (Hitt, 2020). As a result of their structure, rivalry and current market conditions, companies use the five-forces framework to select which niches to target in a certain sector. On this basis, Fiat Chrysler Automobiles’ most important forces are the threat of substitution and the competition.
Competitive Rivalry
The level of competitiveness in the automotive sector is influenced by a variety of factors. Price, features, application, and public image are some of these forces. There is a lot of competition in the automobile industry, and FCA is no exception. There are a number of companies throughout the world that produce and sell items and services like FCA does. Chevrolet, Toyota, Hyundai, Ford, and Honda are some of FCA’s main rivals. FCA has been forced by increased competition to lower operational costs by leveraging localized production and market trends (Zander, 2018). Client acquisition methods are no longer as predictable as they once were.
Different tactics have been employed by Fiat Chrysler Automobiles in recent years to acquire an advantage over its competitors. To begin with, it has broadened the range of products it offers. Second, it has put a strong emphasis on long-term competitive advantage (Har, 2019). FCA has used acquisitions and mergers as a third strategy to combat fierce competition. Consolidating its market position through acquisitions and mergers with other businesses has helped it cut down on competition, reduce production and operating costs, and maximize profitability (FCA, 2019). Additionally, it has utilized digital advertising to raise brand awareness and brand recognition.
Bargaining Power of Buyers
Clients’ bargaining power has been influenced by the intense competition, dynamic consumer attitudes and tastes, constantly changing market conditions, and better access to information. Customer interaction, marketing, client experience, and quality have become the focus of companies in the sector. Ride-sharing services like Uber and Lyft have boosted consumers’ negotiating power, which has a negative impact on FCA’s profitability and income. Furthermore, customers have more power because they may compare the prices of vehicles from several manufacturers.
Fiat Chrysler Automobiles has recently used a variety of techniques to deal with the negotiating power of customers. To guarantee that its goods satisfy the needs and expectations of its customers, it has embraced customer interaction prior to product creation. In order to attract new customers, it has rebranded some of its items (FCA, 2019). For example, the company has incorporated equity into its brand image improvement, post-sale services, and research and innovation.
Threats of Substitutes
Customers’ negotiating power and severe competition are expected to put pressure on Fiat Chrysler Automobiles in the near future. The first forecast is that FCA will collaborate or enter into joint ventures with other firms in order to obtain economies of scale and lower production costs. FCA has a competitive advantage over GM since it has formed agreements with other important companies in the automobile industry (Zander, 2018). Second, the corporation was able to invest in research and innovation in a way it had never done before. It might place a higher emphasis on product creation and differentiation by providing a wider range of options, lower prices, and higher-quality, more useful, and more customizable goods. Third, FCA may work with rivals to expand the market rather than compete for a limited number of customers. Customers’ bargaining power will be addressed by shifting costs and offering appealing discounts.
Threat of New Entrants
Fiat Chrysler Automobiles is under attack from a variety of external factors. In the first place, the economic slump has a direct impact on the company’s financial stability and growth. It affects FCA’s income and growth rate through reducing vehicle purchases, financial recessions, and currency volatility (Zander, 2018). The second danger is posed by the constantly shifting preferences, wants, and desires of the client base. In the automotive industry, there has been a growth in the demand for safety, efficiency, comfort and style. In addition, the Federal Trade Commission (FTC) enforces rigorous antitrust rules and compliance policies on the FCA. These difficulties have a negative impact on sales growth (Pratap, 2019). FCA’s overall income and customer base are negatively impacted by fierce competition from its rivals.
Competition from rivals is the most important threat to Fiat Chrysler Automobiles. GM, Toyota, Honda, and Ford are all vying to overtake FCA on the global market in recent years, and the battle is fierce (Fitriani et al., 2021). The corporation has a variety of options for dealing with the competition. Invest in innovation, development, and research in order to produce better products than its competitors. To be successful, it needs to focus on client interaction and retention. It should also be vigorous in its marketing efforts.
Bargaining Powers of Suppliers
The Porter 5 force model’s depiction of suppliers’ bargaining power shows how suppliers exert pressure on businesses by using various techniques, such as lowering product availability, diminishing quality, or raising pricing. Buyers pay the price when suppliers have a lot of negotiating power (business organizations). High supplier bargaining power can also raise industry rivalry and reduce Fiat Chrysler Automobiles N V’s profit and growth prospects (Pratap, 2019). As with a weakening of supplier power, a strong profit margin and substantial future growth potential can make an industry more appealing (Har, 2019). Fiat Chrysler Automobiles N V accounts for only a small fraction of the total sales of suppliers, which increases the bargaining power of those suppliers. Suppliers also have bargaining leverage because substitute products aren’t readily available.
SWOT Analysis
Strength
FCA has a number of notable advantages that give them competitive advantages. The corporation has operations in many nations throughout the world, including the United States, Japan, Mexico, and India. Second, it has a wide range of products to choose from. It carries brands such as Ram, Fiat, Dodge, Chrysler, and Abarth ‘s (FCA, 2019). The company’s customer base grows and the customer experience improves as a result of its extensive diversity. Prioritizing research and development in order to provide cutting-edge products that meet the demands and aspirations of customers is the third strength of the company. It aids in enhancing productivity, safety, and the ability to retain clients. As a result of FCA’s well-established brand and solid market position, the company has seen steady revenue growth (Pratap, 2019). The company’s other asset is its ability to differentiate its products depending on their features and prices. To meet the needs of different customers, FCA offers high-quality products at reasonable costs. It creates a variety of niche and focused products. Both Ferrari and Maserati are geared toward the wealthy, while Fiat Professional is aimed towards the middle class.
Figures in Appendix A compare the sales of three different companies. The Ford company, Chrysler business, and the General Motors company are the three major automobile manufacturers. This proves that Chrysler is one of the most popular companies in America.
Weaknesses
For starters the main weaknesses include delays and shortages of spare components. FCA has come under fire for the lack of spare parts for a wide range of brands in its product line. Its after-sales service in foreign markets, on the other hand, does not meet the required standard. FCA lacks a sufficient number of conveniently placed service centers to which customers may bring their cars for maintenance and repairs. Customers who have to travel long distances to find FCA-operated service garages are inconvenienced (Pratap, 2019). Another concern is the reduction in market share in a number of its key customer bases. There are many factors that contribute to the reduction in FCA’s shares in countries like Brazil, Argentina, and Canada. These include bad market conditions, political pressures, severe rivalry and economic swings (Fitriani et al., 2021). Due to safety concerns, the company has forced to recall its defective and malfunctioning vehicles. Revenue losses are caused by car recalls. Another factor that reduces profits is the slow product launch and mass sales.
The graph in Appendix B depicts the annual net profit of three American corporations. Chrysler’s net income each year has fallen over the years as a result of the company’s problems, as shown in the graph.
Opportunities
For FCA, there are a variety of opportunities that are available to them. For the corporation, personalisation of transportation will open up new markets. To add to the company’s product line, FCA uses new technical inventions (Priya, 2018). There are a wide range of options here, from self-driving cars to eco-friendly hybrids and electrics to robot-steered vehicles. In addition, the reach of digital marketing campaigns can be significantly increased (Fitriani et al., 2021). Hybrid and automated vehicles, in my opinion, present the most important prospect for technological advancement. It opens up a plethora of possibilities for the creation of game-changing products. In order to take advantage of this opportunity, the corporation should invest extensively in R&D.
Threats
Just having more competitors may have a significant impact on a business’ bottom line, and this is especially true for Chrysler. This would lead to a fall in profitability because the company’s efficacy and market value would be reduced. A third concern to the corporation is the loss of trust and confidence in its dealers, according to (Priya, 2018). Dealers tend to be the most vocal advocates for a firm. If modifications were made in the northern region of the United States where Chrysler has a major market, the company would be harmed. To put it another way, buyers are more likely to buy things from a company if they can get them at a lower price. A decline in sales and profits will occur as a result of this. Since they prefer working with different companies, dealers are likely to leave the industry.
Conclusion
In conclusion, Chrysler has had its share of difficulties in the past, but they are today the most popular car company in the United States. They have had to go through a lot to get where they are now. Decisions that benefit both this business and its clients are guided by the financial SWOT analysis. In a review, the paper has demonstrated that competitive pressures have intensified due to a growing number of automakers. Due to the fact that every automobile manufacturer is attempting to hold onto every market in order to keep their profits and revenues, traditional market segmentation has become increasingly confused.
There are many factors to consider while deciding in a fast-paced market like the automobile industry, such as the wants of consumers. Automakers do not operate in the United States only; they sell their products in countries across five continents. The paper has also illustrated that Chysler has a number of notable advantages that give them competitive advantages. For instance, it has been revealed that, the corporation has operations in many nations throughout the world, including the United States, Japan, Mexico, and India.
Second, it has a wide range of products to choose from. It carries brands such as Ram, Fiat, Dodge, Chrysler, and Abarth ‘s. The company’s customer base grows and the customer experience improves as a result of its extensive diversity. However, the paper has shown that the company has weaknesses such as the lack of spare parts for a wide range of brands in its product line. In addition, its after-sales service in foreign markets, on the other hand, does not meet the required standard.
References
FCA. (2019). 2018 Annual Report. Web.
Fitriani, N., Alam, S., & Sobarsyah, M. (2021). Merger analysis on global automotive industry: A case study at Daimler-Chrysler Automotive company. Hasanuddin Journal of Applied Business and Entrepreneurship, 4(1), 96-101.
Har, S. M. (2019). An analysis of corporate governance in internal and external factors of Fiat Chrysler Automobile. Sage
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2020). Strategic management: Concepts and cases: Competitiveness and globalization. Cengage Learning.
Pratap, A. (2019). SWOT analysis of Fiat Chrysler Automobiles (FCA).
Priya, M. (2018). An analysis of impact of Cibil Rating while sanctioning finance to the applicants. Sage.
Zander, H. (2018). Fiat Chrysler Automobiles N V Porter Five Forces analysis. Web.
Appendix A
Appendix B
