2009 chrysler-fiat strategic alliance
TRANSCRIPT
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2009 Chrysler-Fiat
Strategic Alliance Case Study
MGT 5545
Group 5: James Henry-Rhoads and Hang Truong
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Image from: http://www.npr.org/programs/atc/features/2007/may/chrysler/chrysler.html
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Image from: http://www.npr.org/programs/atc/features/2007/may/chrysler/chrysler.html
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How Automobiles have Evolved
• https://www.youtube.com/watch?v=VdS1Mgu11vg
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Competitors
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Auto Industry Bailout
• Total size of bailout: $80 billion
• Chrysler’s total Treasury debt peaked at $12.5 bilion
• U.S. Treasury expects to write off $14 billion
▫ Even though there will be this write off, the bailout is still considered successful because the companies have survived thus far.
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http://www.nada.org/NR/rdonlyres/B7D968E7-8070-4701-93E6-6B95EB83AA0D/0/Chrysler_Restructuring_Plan_Full_021709.pdf
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Fiat
• Fabbrica Italiana Automobili Torino or Fiat was founded in 1899
• Very well known in Europe
• Still 30% owned by Angelli family
• Existing partnership with Mazda
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Recent Timeline of Events1998: Daimler-Chrysler partnership2000: Fiat enters partnership with GM2004: Sergio Marchionne becomes CEO of Fiat2005: GM sells shares in Fiat and is forced to pay $2
Billion on a put option for the right to sell after significant losses due to a failed partnership
2007: Daimler sells remaining shares to Cerberus Capital Management for $6 Billion
2009: Auto bailout and Chrysler bankruptcy. Chrysler is issued new U.S. Treasury loans to continue operations. Fiat takes a 20% stake in Chrysler which is also financed by the U.S. Treasury
2011: Chrysler-Fiat has paid back all Treasury loans2013: Fiat owns 61.8% of Chrysler and would like to
purchase the remaining shares owned by the UAW to gain 100% ownership of Chrysler.
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Fiat’s Return to America
• Fiat had been gone from the American market for decades
• Introduced Fiat 500 to America
▫ Sales were slow at first, but continue to improve
• Recently introduced Chrysler 200
▫ Which is actually a re-badge of Lancia
▫ Lancia is another Italian car owned by Fiat
• 2014 Dodge Dart will be a re-badge Alfa Romeo 169
• http://www.youtube.com/watch?v=lB0q_jkjq5U
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Alfa Romeo to be Reintroduced• After the success of the Fiat 500, Alfa Romeo
will return to the U.S.
• Three base models: Giulia, the 4C, and the Duetto sports car (shown in picture).
• Will capitalize on the strong marketing of the 500, and should benefit from the same novelty factor.
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Benefits for Chrysler
http://www.nada.org/NR/rdonlyres/B7D968E7-8070-4701-93E6-6B95EB83AA0D/0/Chrysler_Restructuring_Plan_Full_021709.pdf page 83
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SWOT Analysis
Chrysler
Strengths & Weaknesses
Opportunities & Threats
Fiat
Strengths & Weaknesses
Opportunities & Threats
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Strategic Alliance
• Complementary goals
• Reasons for forming this Strategic Alliance:
▫ Chrysler survives as a company and has new global opportunities to expand its brand
▫ Fiat can expand into North American market
• Type of Strategic Alliance: Equity
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Organization Structure
• Integrated Global Structure
▫ Global Geographic Structure
• Divisions are separated by regions
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Changes to Chrysler
• New technology to develop small powertrain engines
• Develop fuel efficient automobiles
• Develop low carbon emission automobiles
• New management: Sergio Marchionne
• Plant closures
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Chrysler in WorldwideChrysler has distribution centers in over 29 countries in Europe, including Italy. As well as 8 countries in Asia, 19 in Latin America, and 14 in the Middle East & Africa.
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Chrysler in the U.K.
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Chrysler: Dodge Charger
• http://www.youtube.com/watch?v=p47cJVUSkM8
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Fiat in the U.S.
• https://www.youtube.com/watch?v=XKUrYf1z9Bg
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Fiat near Kansas City
https://www.youtube.com/watch?v=H-fH73qIvsQ
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Update
• Consecutive quarters of positive net incomes
• Increased U.S. sales by 21%
• Increased U.S. market share from 10.7% to 11.4%
• Net profit of $2.2 billion
• Paid back auto bailout loan to the U.S. gov-$10.6 billion