Component-2

FIAT SPATop Competitors for FIAT SPACompetitors

FORD MOTOR COMPANY

PEUGEOT SA

Volkswagen AG

FORD MOTOR COMPANY Rankings#8 in FORTUNE 500 (June 2014)S&P 500 (June 30, 2014)#148 in FT Global 500 (June 2014)#8 in FORTUNE 1000 (June 2014)The country that gave us Sophia Loren and Leonardo da Vinci also gave us the century-old Fiat. The group's cars range from models like the popular Fiat Nuova 500 to the Alfa Romeo,Ferrari(85% owned), andMaseratibrands. Fiat holds a53% stake inChrysler, and has management control of the US carmaker. Fiat reorganized its operations in early 2011and sent its agricultural and construction equipment (led by 89% ownedCNH Global), commercial vehicles (Iveco),and most of the rest of its no automobile operations to the newly createdFiat Industrial.

PEUGEOT SA Company ProfilePeugeot S.A. enjoys its space under L'Arc de Triomphe, besting rivalRenaultto claim the top spot in the battle for auto sales in France.Peugeot makes cars and light commercial vehicles under the Peugeot and Citron brands.Peugeot isamong the top manufacturersin European passenger car and commercial vehicle sales.Also part of Peugeot's automotiveoperationsareFaurecia(auto parts),GEFCO(transportation and logistics), and Banque PSA Finance (financial services for dealers and customers). Other group products include motorcycles and scooters.Peugeot makes most of its sales in Europe. The Peugeot family controls about 38% of the voting stock.Volkswagen AG RankingsDAX 30#50 in FT Global 500 (June 2014)Volkswagen AG Company ProfileWith cars named for climate patterns, insects, and small mammals, Volkswagen (VW) leads the Continent as Europe's #1 carmaker. Along with Golf (Gulf Stream reference) and the New Beetle, VW's annual production ofmore than7 million cars, trucks, and vans includes such models as Passat (trade wind), Jetta (jet stream), Rabbit, and Fox. VW also owns a garage full of luxury carmakers --AUDI,Lamborghini,Bentley, and Bugatti. Otherbrands includeSEAT(family cars, Spain) andkoda(family cars, the Czech Republic).Late in 2009 VW acquired a 49.9% stake inPorschefor about4 billion (almost $6 billion) as the first step incombining the two into anintegrated car company.Target marketFiat targets all upper class and middle class consumers as theyve all luxury brands like Ferrari, Meserati, and Alfa so they do products for high class peoplePESTEL

POLITICAL (1) EU Enlargement:Since 2007 there have been twenty-seven EU member states including Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary, Slovenia, Malta, Cyprus, Romania and Bulgaria. For Fiat, a car company that has its base in the EU, this means more countries for Fiat to trade with within European barriers.(2) War in Iraq:Ever since the War in Iraq (2003) the oil price has been increasing. The price increase of gasoline at the gas station has had an immense effect on the demand of cars, because oil and cars are complementary products. The rise of the price of one, causes a decline in the demand of the other one. Needless to say, this also impacts Fiat.(3) Unstable Current Situation in the Middle East:The recent events in Egypt, Tunesia and Libya are disturbing politics in the Middle East. Libya one of the OPEC countries is caused the oil price per barrel to increase by +- 15$ over the past 7 days. Again, an increase in the price of fuel has an immediate impact on the demand for cars. (4) The Corporate Average Fuel Economy (CAFE):The Corporate Average Fuel Economy regulation is a piece of legislation which requires all participating car- makers to manufacture automobiles with a 27.5 mpg average (NHTSA, 2007). For car manufacturers who do not have the technology to or research and development capacity to be able to make engines at this economy, it will require money and time to be able to hit the targets. ECONOMICAL: (1) China and the WTO:China is one of the largest markets for cars. According to industry forecasts, China will be the third largest market for automobiles in the near future. Another important point to notice is that China joined the World Trade Organization in 2001. Chinas entrance into the WTO could have been an advantage (new markets) or a threat (new competitor) for FIAT. Considering the fact that Fiats market share internationally is not that strong and that FIAT sells mostly on the EU market; one can conclude that Fiat has had a more negative effect from China joining the WTO, than a positive one.(2) Strong Position of China:In the production of passenger cars, Asia-Oceania leads with a share of 53% of the world production, followed by Europe with 31% and America with 14% (2009).(3) The automotive industry crisis of 2008-2010:Theautomotive industry crisis of 20082010was a part of a global financial downturn. The crisis affected European and Asian automobile manufacturers, but it was primarily felt in the Americanautomobile manufacturing industry.(4) The current global economy:At present the global economy is experiencing a downturn. This has meant that businesses are experiencing loss or profit and downsizing issues. This has been seen in FIATs operating profit falling by almost a third from October 2008-09 (Financial Times, 2009). (5) Volatile fluctuating exchange rates:Volatile fluctuating exchange rates mean that for exporters, returns can be hard to predict. Hedging can be applied but this costs money in the form of commission and can be a gamble in the exchange rates become more advantageous (BBC, 2008). As Fiat is attempting to sell more cars through the Chrylser alliance the issue of volatile fluctuating rates in it is markets can become very important. SOCIAL: (1) Growth of the Middle Class: New opportunities arise for FIAT due to the growth of the middle class in emerging countries. (2) Social Awareness: Another arising issue is the social awareness of pollution which leads people to use public transportation which is also supported in Europe, for instance, by government policies. This causes frequent use of cars to slightly falter, and has an impact on demand. It also encourages car companies to invest in R&D (alternative fuels). TECHNOLOGICAL: (1) Energy Crisis: The automotive industry was weakened by a substantial increase in the prices ofautomotive fuels linked to the2003-2008 energy crisis. Car makers are researching into alternative fuels. (2) Alternative Resources:The most important technical advantage car companies are investing in, is the possibility of implementing alternatives to fuel. Oil is becoming a scarce resource, and the parties controlling it are becoming more and more unpredictable. (E.g. Iraq 2003 and the current situation in Libya) ENVIRONMENTAL: (1) Terrorism: Acts of terrorism, such as the 9/11 attacks have an immediate effect on consumer behavior. The war on Iraq can also be included in this list. Consequences of these events are that consumers develop some type of grudge against oil controlling countries and change their behavioral patterns such as for example, buying more fuel efficient cars. (2) Increasing Competition: Emerging countries (BRIC), Asia and Africa are developing at a rapid pace. This creates new competitors in all markets including the automotive industry. Fiat will also feel this increased competition, and will have to arm itself against it. (3) Global Warming: Global warming and pollution reduction are becoming ever more prominent on the world stage. Natural resources such as oil are thought to be running out which means that petrol prices are increasing, It opens a new market for fuel efficient and alternative energy cars.LEGAL: (1) Kyoto Protocol: In 1998 Italy undersigned the Kyoto Protocol, hence Fiat has the responsibility to do its part. The agreement states that the signees must reduce greenhouse gas emissions by 8% compared to 1990 levels in the period of 20082012. The protocol not only has an effect on the production process, but also stimulates research into alternative and more efficient fuel. This is very important in the European Union where the Automobile Manufacturers Association negotiated a voluntary commitment with the European Commission in order to reduce CO2 emissions.

Porters Five Forces:FORCE THREAT

The threat of Entry Low

The treat of powerful buyers Moderately High

The threat of powerful suppliers Low

The threat of substitutes High

The threat of rivalry High

The 5 forces of competition as developed by Michael Porter is a tool that helps us evaluate the industry competition.Fiat has recognized that there is fierce competition in the industry and took a large stake in the North American manufacturer, Chrysler in order to broaden its scope and increase market share. Fiat was also a promising bidder in the sale of GMs European subsidiary but this did not pass.The threat of ENTRY LOW.(1) Cost of entry: The cost of entry is the initial capital required to set up a new firm. The startup cost of an automobile firm is extremely high. The automotive industry is very capital intensive. A car manufacturer needs large plants and modern machines in order to produce on an efficient scale. In addition, the automobile industry is a very mature economy of scale. The previous mentioned facts make it difficult to enter the automobile industry. (2) Knowledge and Technology: Ideas and Knowledge that provide competitive advantages prevent others from using it and thus creates a barrier to enter the market. Fiat has extensive knowledge and experience in the automobile industry. Research is conducted by Centro Richerche Fiat (CRF) and Elasis. About 3.5% of net revenues from industrial activities are used for R&D. Furthermore, Fiat has renowned technological advantage because of acquisitions and mergers. (3) Brand identity: Brand equity is crucial in the automobile market. Fiat is a globally recognized and established brand. It owns brands like Ferrari, Alfa Romeo, Lancia and Maserati. On eleven occasions FIAT Auto models have won the Car of the Year Award, the car industrys most prestigious recognition worldwide. The award has been won eight times by FIAT, twice by Alfa Romeo and once by Lancia. The awards indicate that FIAT is able to manage brand identity in order to avoid the threat of new entrants. (4) Government regulation: Fiats products and activities are subject to many environmental laws and regulations on local, national and international level. Regulations govern products with requirements for emission of polluting gasses, safety and production plants with requirements for emissions, soil contamination, etc. Regulations bring about additional compliance costs. Any change in policies or regulations have a great impact on the companys future prospects and earnings. (5) Distribution Channels: For new entrants it is extremely difficult to establish distribution channels. Fiat has an advantage of well established distribution channels across the world, especially in Europe. As a result of the partnership with Chrysler Group, Fiat will be able to expand its product portfolio in the US. This guarantees and ensures Fiats customers to find Fiat group cars easily and have more assistance worldwide. (6) Mergers: Entry barriers are quite high in the automobile sector. However, established companies are entering new markets through strategic partnerships or through buying out or merging with other companies. In 2009, Fiat signed an agreement with Chrysler. As a result of the strategic alliance, they have the resources, technology and a worldwide distribution network to compete effectively worldwide. The treat of POWERFUL BUYERS MODERATELY HIGH.Buyers do not have the ability to vertically integrate backward. If they want a car then they have to purchase it from a (specialized) dealer. However, there is evidence that consumers are becoming more aware of the power that they hold over the market and are practicing negotiation skills more frequently (Bonser et al,, 2006). This behavior can potentially decrease profit margins for suppliers. As many analysts have underlined, FIAT lacks of the fundamental ability of understanding customers needs and tastes; this is relevant in order to produce and offer car models able to satisfy customers expectations. The threat of POWERFUL SUPPLIERS LOW.(1) Large number of suppliers: The bargaining power of suppliers is (very) low in the automobile industry. A car consists of many parts that are provided by many suppliers. The power of the suppliers is limited because suppliers are so numerous in the industry. Suppliers of Fiat can be divided into two groups. The first group involves two subsidiaries of Fiat (Magnetti Marelli and Teksid). It supplies all the leading car makers (included Fiat) in Europe, North and South America and Asia. In the second group there are hundreds of smaller firms that supply parts and components to Fiat. In recent years, FIAT has expanded its production abroad and so it has fostered the expansion of many Italian suppliers as well. (2) Low switching costs: Manufactures can easily switch from one supplier to another supplier. In the car industry, it is easy to find alternatives suppliers for parts. The threat of SUBSTITUTES HIGH.Substitutes performance: The performance of the substitute sector will play an important role in the success of Fiat. If the price of a competitor increases or the price of the segment falls, it will have an effect on the quantity demanded in the market. Product differentiation: Product differentiation is equally as important. There are many cars that are similar to for example, the Fiat Punto. Fiat has to face though competition when rivals like Peugeot, Ford and Opel launch their city cars. Switching costs: There is a high treat of this force because it is easy for Fiat buyers to sell their cars and switch to a competitive brand. Buyers willingness: Products that are economically priced, or have performance tradeoffs will have an effect on the buyer willingness to commit. Although the Fiat cars have gained a negative reputation and as a consequence, it is difficult for Fiat to be a substitute and competitor for the other carmakers.The threat of RIVALRY HIGH.High concentration on national and international markets: Rivalry among the competitors is very strong in this industry due to the concentration on both the national and international markets. Major car producing nations like the US, Japan, Italy, France, the UK, Germany, China and India experience this intense rivalry. Product differences: Competitors have similar products and there is a reasonable lack of differentiation opportunities. This results in more competition. Loss of domestic market share: In a constantly changing market, Fiat Auto faces strong competition, mainly coming from abroad, in particular, from US car manufacturers such as General Motors, Toyota in Japan, Tata Motors in India and Korea. Due to increasing competition, FIAT's domestic market share has declined. Price wars: High levels of rivalry are indicated by such actions as price wars, advertising campaigns and product developments keep them on the edge of innovation and profitability. These actions have an impact on the revenues of the car makers. Competition, particularly in pricing, has increased in recent years. The demand for automobiles has decreased and total global production for the automobile industry significantly exceeds demand. Overcapacity combined with high levels of competition and poorly performing economies, could strengthen pricing pressures. Fierce competition results in price discounts and pressures on profit margins in the industry. It is becoming more difficult for FIAT to increase or maintain vehicle prices. Lack of scale compared to peers: Fiat lacks the scale to compete with large players in the markets in which it operates. Many of its competitors such as Ford, Toyota and Volkswagen are larger in size. Fiat top competitors, with larger scale and more financial resources, limit the groups ability to compete effectively. Strategic partnerships: Fierce competition leads to strategic alliances. Car producers are trying to find new ways to reduce overhead and increase revenue. Partnerships help to create synergies (cf. joint ventures and alliances).

SWOT

Since the appointment of CEO Sergio Marchionne, the company has been restructured and more organized in the way it is run. The decisions come from the top and are clearly implemented. Fiat is stillpursuing a global strategy. Through its alliance with Chrysler it will be able to re-penetrate the North American market, they used the Chrysler 500 as its premium model, which had a great success in Europeand in America. This is a breakthrough in Fiat history at the dawning of a new age. Strengths:(1) Know How: Fiat has had a long experience of the auto industry and contributed to the development of this industry. (2) Control: Fiat has control over historic Italian firms: Ferrari, Alfa Romeo, Lancia and Maserati.(3) Design: Its strength in design- Italian style differentiates itself from competitors. Great names and designers, such as Giorgetto Giugiaro. (4) Strong management team: Strong management team including Sergio Marchionne. More open- minded than the previous era of the Agnelli brothers. (5) Reliable: According to the Reliability Index (2009), Fiat cars are more reliable than the industry average. (6) Evocative Power: Evocative power FIAT golden years (50s and 60s). Some models, such as 500, are evocative of the glorious age of the Italian style.(7) Small Cars: They are good at producing small cars. (8) Qualified people: FIAT has qualified personnel in its research centers. (9) Environmental Commitment: FIAT environmental commitment also on a European level. Opportunities: (1) Form alliances with companies such as PSA Peugeot Citroen, who produce cars of similar price and size and quality.(2) In some developing countries, cars tend to be simpler (no AC) therefore they require less money to produce. (3) There is potential to expand operations in emerging markets such as India, and China. (4) There is an absence of market penetration in developed markets such as the U.S.(5) Due to the integration of the Eastern European countries in the EU, there is access to cheaper labor within the European Union. Threats: (1) Exposure to exchange rate volatility due to the economic crisis.(2) Strength of Korean and Japanese car makers is increasing and becoming more prominent in the automotive market.(3) Italians are less loyal to domestic brands which undermines Fiats loyalty to domestic customers.(4) According to the IMF the global economy is still in a downturn. This will cause a slow in sales and revenue from all fiats markets.(5) Impact of regulation on the value chain flexibility. While changes in taste and technology require constant re- configurations in the automotive value chain, theregulatory framework may make this task more difficult and costly. Weaknesses: (1) Too European: Fiat could be seen to rely on the European market too much in terms of sales and production with only one plant outside of the region, which is Brazil. (2) Lack of Scale:Due to the fact that they are too European it shows a lack of scale compared to their peers. However, Italy is still their biggest market with 24.1 % of revenue for fiscal year2008 (Datamonitor 2009)(3) Profit vs Losses:Although Fiat finished 2008 with its best trading profit ever, the group made a los of 410m Euros in the first quarter of 2009. (4) Marketing:Fiat should focus more on understanding its customer needs and increase its local responsiveness. FIAT is not able to use Marketing as an important source in order tounderstand market trends. The result is the FIATs attempt to build something which is perfect from an Engineering perspective but absolutely far from customers needs andtastes. Fiats culture is to far from dealers and customers that represent the FIAT market. (5) Management culture: The management takes the concept of mature market to serious and so focuses on services, assistance and price cuts (through promotions) more than on innovation andbrand asset management. (6) Engineering supremacy: The supremacy of Engineering, Fiat is creating a product that is perfect from an engineering perspective but not close enough to the customer perspective(7) Economies of scale: FIAT tries to implement economies of scale, although it has not the financial power to sustain them. In addition, this brings the company to focus on quantity rather thanquality and innovation.(8) Outsourcing: The policy of outsourcing has been wrongly implemented. (9) Anonymous models: After the old models, the Panda and the UNO, FIAT models have not been recognizable. This is of huge concern because it means that FIAT is not able to exploit in theRight way the great potentials that are offered by the Centro Stile.

Balance sheetFinancial Statements For Fiat Spa (F)Year over year, Fiat S.p.A. has been able to grow revenues from 83.8BEURto 86.6BEUR. Most impressively, the company has been able to reduce the percentage of sales devoted to income tax expense from 0.75% to -1.08%. This was a driver that led to a bottom line growth from 44.0MEURto 904.0MEUR.

Currency inMillions of EurosAs of:Dec 312010RestatedEURJan 012012RestatedEURDec 312012RestatedEURDec 312013RestatedEUR4 YearTrend

Revenues35,610.059,559.083,765.086,624.0

TOTAL REVENUES35,880.059,559.083,765.086,624.0

Cost Of Goods Sold30,611.050,810.071,422.074,326.0

GROSS PROFIT5,137.08,749.012,343.012,298.0

Selling General & Admin Expenses, Total2,922.05,255.07,163.07,073.0

R&D Expenses974.01,381.01,801.02,212.0

Other Operating Expenses90.049.068.0-77.0

OTHER OPERATING EXPENSES, TOTAL3,986.06,685.09,032.09,208.0

OPERATING INCOME1,151.02,064.03,311.03,090.0

Interest Expense-908.0-1,521.0-1,822.0-1,843.0

Interest And Investment Income683.0352.0279.0211.0

NET INTEREST EXPENSE-225.0-1,169.0-1,543.0-1,632.0

Income (Loss) On Equity Investments120.0146.074.074.0

Currency Exchange Gains (Loss)-19.0-19.032.022.0

Other Non-Operating Income (Expenses)-166.0------

EBT, EXCLUDING UNUSUAL ITEMS861.01,022.01,874.01,554.0

Merger & Restructuring Charges-118.0-1,177.0-15.0-300.0

Gain (Loss) On Sale Of Investments16.08.0-89.012.0

Other Unusual Items, Total-53.02,079.0-246.0-251.0

Other Unusual Items-14.02,100.0-138.0-114.0

EBT, INCLUDING UNUSUAL ITEMS706.01,932.01,524.01,015.0

Income Tax Expense484.0534.0628.0-936.0

Minority Interest In Earnings-80.0-199.0-852.0-1,047.0

Earnings From Continuing Operations222.01,398.0896.01,951.0

EARNINGS FROM DISCOUNTINUED OPERATIONS378.0------

NET INCOME520.01,199.044.0904.0

NET INCOME TO COMMON INCLUDING EXTRA ITEMS520.01,199.044.0904.0

NET INCOME TO COMMON EXCLUDING EXTRA ITEMS142.01,199.044.0904.0

Ratios Profitability - Fiat Spa (F)Return on AssetsIndustry Comparison2.12%Return on EquityIndustry Comparison15.69%

Return on CapitalIndustry Comparison4.69%

Margin Analysis - Fiat Spa (F)Gross MarginIndustry Comparison13.75%Levered Free Cash Flow MarginIndustry Comparison-0.72%

EBITDA MarginIndustry Comparison7.51%SG&A MarginIndustry Comparison8.02%

Asset Turnover - Fiat Spa (F)Total Assets TurnoverIndustry Comparison1.0xAccounts Receivables TurnoverIndustry Comparison28.9x

Fixed Assets TurnoverIndustry Comparison3.9xInventory TurnoverIndustry Comparison6.7x

Credit Ratios - Fiat Spa (F)Current RatioIndustry Comparison1.4xQuick RatioIndustry Comparison1.0x

Long-Term Solvency - Fiat Spa (F)Total Debt/EquityIndustry Comparison323.52%Total Liabilities/Total AssetsIndustry Comparison89.10%

Growth Over Prior Year - Fiat Spa (F)Total RevenueIndustry Comparison7.24%Tangible Book ValueIndustry Comparison32.78%

EBITDAIndustry Comparison3.05%Gross ProfitIndustry Comparison0.13%

ReceivablesIndustry Comparison-4.60%InventoryIndustry Comparison11.45%

Diluted EPS Before ExtraIndustry Comparison2,195.09%Capital ExpendituresIndustry Comparison-7.13%

Cash From Ops.Industry Comparison24.39%Levered Free Cash FlowIndustry Comparison-66.42%

Chrysler Group

Top Competitors for Chrysler GroupChrysler hopesits crisisremains in its rearview mirror. After engineering anautomotive resurrection by choosing a back-to-basics alliancewithFiat, the carmaker continues to manufacture its Chrysler brands,including Dodge, Fiat, Jeep Grand Cherokee, Jeep Wrangler, Town & Country, and Ram vehicles at more than 30 plants. It ships some 2.4 million vehicles every year. Chrysler's trademarked MOPAR (MOtorPARts) automobile parts and service division carriesalmost 300,000parts, options, and accessories for vehicle customization. Chrysler Group emerged from a US government backedChapter 11 bankruptcy in mid-2009. Fiat controls the company. It filed an IPO in 2013 but withdrew it in early 2014.

COMPETITORSFORD MOTOR COMPANY

PEUGEOT SA

Volkswagen AG

FORD MOTOR COMPANY Rankings#8 in FORTUNE 500 (June 2014)S&P 500 (June 30, 2014)#148 in FT Global 500 (June 2014)#8 in FORTUNE 1000 (June 2014)The country that gave us Sophia Loren and Leonardo da Vinci also gave us the century-old Fiat. The group's cars range from models like the popular Fiat Nuova 500 to the Alfa Romeo,Ferrari(85% owned), andMaseratibrands. Fiat holds a53% stake inChrysler, and has management control of the US carmaker. Fiat reorganized its operations in early 2011and sent its agricultural and construction equipment (led by 89% ownedCNH Global), commercial vehicles (Iveco),and most of the rest of its nonautomotive operations to the newly createdFiat Industrial.

PEUGEOT SA Company ProfilePeugeot S.A. enjoys its space under L'Arc de Triomphe, besting rivalRenaultto claim the top spot in the battle for auto sales in France.Peugeot makes cars and light commercial vehicles under the Peugeot and Citron brands.Peugeot isamong the top manufacturersin European passenger car and commercial vehicle sales.Also part of Peugeot's automotiveoperationsareFaurecia(auto parts),GEFCO(transportation and logistics), and Banque PSA Finance (financial services for dealers and customers). Other group products include motorcycles and scooters.Peugeot makes most of its sales in Europe. The Peugeot family controls about 38% of the voting stock.Volkswagen AG RankingsDAX 30#50 in FT Global 500 (June 2014)Volkswagen AG Company ProfileWith cars named for climate patterns, insects, and small mammals, Volkswagen (VW) leads the Continent as Europe's #1 carmaker. Along with Golf (Gulf Stream reference) and the New Beetle, VW's annual production ofmore than7 million cars, trucks, and vans includes such models as Passat (trade wind), Jetta (jet stream), Rabbit, and Fox. VW also owns a garage full of luxury carmakers --AUDI,Lamborghini,Bentley, and Bugatti. Otherbrands includeSEAT(family cars, Spain) andkoda(family cars, the Czech Republic).Late in 2009 VW acquired a 49.9% stake inPorschefor about4 billion (almost $6 billion) as the first step incombining the two into anintegrated car company.Target Market

Chryslers target market is usually mid level as they are in to premium /luxury products .Their focus is on selling high class people and they make products for them

PESTEL

Political factorsThe firm should be ware with all rules and regulation governing the production of cars, such as fuel efficiency cars which are highly emphasized, vehicle emissions, safety and standard issues should be given priority.

Economic factor At the beginning of the simulation the economy were in good conditions, GDP growth were projected to raise from 1% to 1.5% in period 1 and inflation to decline from 2,5% to 1.5% these were fluctuation hence economy decline at end of simulation.

Social FactorsCars is one of agent which pollute environments due to emission of Co2 and noise, large cities, has affected with these emission and lead to diseases related to breath and skin. Many traffic jams which are time consuming, and increasing road accidents.

Legal Factors The firm should comply with all laws and regulation with its operations, such as gas emission laws, safety and standard issues, vehicles regulations, compatibility spares manufactures

Technological factors Cars manufactures are starting to introduce Alternative Energy Vehicles, which are using electricity only (rechargeable batteries), fuel cell, hydrogen, solar or hybrid. Despite of its expensiveness it will be solution to energy efficiency and lowering pollution, but during simulation we were not accessed to develop purely cars, or hybrid models despite of its existence. Other technologies such as synthetic materials, web procumbent technologies, JIT Management, advanced logistics computer-aided design software, increase efficiency and save money

Environmental factors, Environment pollution, is one of challenging issues threaten the world, car manufactures should pay attention in it issues, by transforming their technology into alternative energy vehicles, reduce emissions

SWOTOpportunitiesGrowing of economy this led to increase on purchasing power customers as well as growing of emerging markets

ThreatsNew laws might imposed regarding to gas emission and safety issues, increasing competitions from other firms, introduction of new technologies, as well as global economy downturn, development of hybrid technologies might be threat for car manufactures

StrengthAt foundation of the simulation, all firms started with one car in each at the Economy, Family and Truck, this give opportunity to fair competition due to the fact, all firms within simulation were started with zero competition, within these unexploited markets, hence the firs firms which is risk taker to possibly gain lions share compare to other firms which are risk averse.

WeaknessAll firms were started with same situation simulation, hence another firm can move into our future vehicle class before our firm decide to moveCritical success Factors, are those that differentiate one products or services from another in the eyes of consumes, can be threshold features and differentiators

Threshold features, are those taken for granted to consumers in decision of buying such as, fuel consumption, engine capacity and durability whilst differentiators would be features such as music system, climate system, GPS, Bluetooth technology.

During simulation, were able to upgrade or downgrade threshold features depending how it perform in market despite for that there were few options in case of differentiators this lead to many vehicles ended being similar across all firms hence difficult to distinguish from one to another.

Porters Five Forces:

Threat of New EntrantsThreat on new entrants during simulation it was limited hence it was impossible for new firms to enter during the course of exercise whilst in a car manufactures threats is low due to capital intensive(amount of capital required to invest is very huge) hence act as barriers for entry in high.Threats of SubstitutesCar manufactures, also has substitute, due to increased number of cars in roads and lead to congestion, high parking charges, high cost of running a vehicles, lack of infrastructure such as roads hence people prefer motor cycles, public transport, cycling as substitute to cars, decline in economy will force people to consider alternative of buy cars.

Bargaining power of buyersBargaining power of buyers is medium in sense that, during simulation exercise, there were few choices to distinguish against competitors this leads many vehicles appeared to be similar, due to the fact all firms were started in same position, this implies buyers will access to choose one cars and another.

Bargaining power of SupplierSuppliers of cars components are disjointed hence and their few, this led to car manufactures to have limited choices in terms of buying components for their cars, hence leads to high bargaining power of suppliers, which suppress profitability of car manufactures.

Competitive RivalryRivalry among existing firms is very high, due to the fact that all firms were started in similar situation. Firm E compete with 6 firms on which all implementing different strategies in order to perfume better in the market.Balance sheet

Currency inMillions of EurosAs of:Dec 312010RestatedEURJan 012012RestatedEURDec 312012RestatedEURDec 312013RestatedEUR4 YearTrend

Revenues35,610.059,559.083,765.086,624.0

TOTAL REVENUES35,880.059,559.083,765.086,624.0

Cost Of Goods Sold30,611.050,810.071,422.074,326.0

GROSS PROFIT5,137.08,749.012,343.012,298.0

Selling General & Admin Expenses, Total2,922.05,255.07,163.07,073.0

R&D Expenses974.01,381.01,801.02,212.0

Other Operating Expenses90.049.068.0-77.0

OTHER OPERATING EXPENSES, TOTAL3,986.06,685.09,032.09,208.0

OPERATING INCOME1,151.02,064.03,311.03,090.0

Interest Expense-908.0-1,521.0-1,822.0-1,843.0

Interest And Investment Income683.0352.0279.0211.0

NET INTEREST EXPENSE-225.0-1,169.0-1,543.0-1,632.0

Income (Loss) On Equity Investments120.0146.074.074.0

Currency Exchange Gains (Loss)-19.0-19.032.022.0

Other Non-Operating Income (Expenses)-166.0------

EBT, EXCLUDING UNUSUAL ITEMS861.01,022.01,874.01,554.0

Merger & Restructuring Charges-118.0-1,177.0-15.0-300.0

Gain (Loss) On Sale Of Investments16.08.0-89.012.0

Other Unusual Items, Total-53.02,079.0-246.0-251.0

Other Unusual Items-14.02,100.0-138.0-114.0

EBT, INCLUDING UNUSUAL ITEMS706.01,932.01,524.01,015.0

Income Tax Expense484.0534.0628.0-936.0

Minority Interest In Earnings-80.0-199.0-852.0-1,047.0

Earnings From Continuing Operations222.01,398.0896.01,951.0

EARNINGS FROM DISCOUNTINUED OPERATIONS378.0------

NET INCOME520.01,199.044.0904.0

NET INCOME TO COMMON INCLUDING EXTRA ITEMS520.01,199.044.0904.0

NET INCOME TO COMMON EXCLUDING EXTRA ITEMS142.01,199.044.0904.0

Ratios Profitability - Fiat Spa (F)Return on AssetsIndustry Comparison2.12%Return on EquityIndustry Comparison15.69%

Return on CapitalIndustry Comparison4.69%

Margin Analysis - Fiat Spa (F)Gross MarginIndustry Comparison13.75%Levered Free Cash Flow MarginIndustry Comparison-0.72%

EBITDA MarginIndustry Comparison7.51%SG&A MarginIndustry Comparison8.02%

Asset Turnover - Fiat Spa (F)Total Assets TurnoverIndustry Comparison1.0xAccounts Receivables TurnoverIndustry Comparison28.9x

Fixed Assets TurnoverIndustry Comparison3.9xInventory TurnoverIndustry Comparison6.7x

Credit Ratios - Fiat Spa (F)Current RatioIndustry Comparison1.4xQuick RatioIndustry Comparison1.0x

Long-Term Solvency - Fiat Spa (F)Total Debt/EquityIndustry Comparison323.52%Total Liabilities/Total AssetsIndustry Comparison89.10%

Growth Over Prior Year - Fiat Spa (F)Total RevenueIndustry Comparison7.24%Tangible Book ValueIndustry Comparison32.78%

EBITDAIndustry Comparison3.05%Gross ProfitIndustry Comparison0.13%

ReceivablesIndustry Comparison-4.60%InventoryIndustry Comparison11.45%

Diluted EPS Before ExtraIndustry Comparison2,195.09%Capital ExpendituresIndustry Comparison-7.13%

Cash From Ops.Industry Comparison24.39%Levered Free Cash FlowIndustry Comparison-66.42%

CNHCNH Global N.V. CompetitionCNH Global (Case New Holland) is one of the world's largest makers of agricultural combines and tractors (by sales volume). Its machinery, some 540 models,includes hay balers, and forage and specialty harvesting and auxiliaryequipment for both crop and livestock farms. CNH also builds light-industrial and heavy construction equipment, such as dozers,crawler and wheeled excavators, graders, and telehandlers, for building, quarrying, and demolition jobs.It has40 manufacturing facilities,and sells and services equipmentin 170 countries via 11,300 dealers.Financial services, CNH Capital America,are offered in North America and other major markets.Fiat Industrialowns 88% of CNH.Top Competitors for CNH GlobalCompetitors

Caterpillars

DEERE & COMPANY

KOMATSU LTD.

Caterpillars Rankings#49 in FORTUNE 500 (June 2014)S&P 500 (June 30, 2014)Dow Jones Industrials#81 in FORTUNE's Fastest-Growing Companies (September 2013)#137 in FT Global 500 (June 2014)#49 in FORTUNE 1000 (June 2014)CNH INC. Company ProfileWhether digging,loading,paving, or moving, CNH does it all. The company is the world's #1 manufacturer of construction and mining equipment, which includes excavators, loaders, and tractors, as well as forestry, paving, and tunneling machinery. It also manufactures diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. SubsidiaryCNH Financial Servicesoffers a slew of financing, leasing, insurance, and warranty products and servicesfor dealers and customers. Among Caterpillar's other services are remanufacturing through CNH Remanufacturing Services and rail-related upgrade, repair, and maintenance services through Progress Rail Services.DEERE & COMPANY Rankings#80 in FORTUNE 500 (June 2014)S&P 500 (June 30, 2014)#310 in FT Global 500 (June 2014)#80 in FORTUNE 1000 (June 2014DEERE & COMPANY ProfileDeere & Co. isinterestedin seeing its customers go to seed and grow. The company, one of the world's largest makers of farm equipment, is also amajor producer of construction, forestry, and commercial and residential lawn care equipment. Deereoperates through three business segments: the agricultureand turf and constructionand forestry segments make up its equipment operations;a creditsegmentprovides financial services. Deere, famous for its "Nothing Runs Like A Deere" marketing,sells John Deere and other brandsthrough retail dealer networks and also makes products for outletsHome DepotandLowes.KOMATSU LTD. RankingsNikkei 225KOMATSU LTD. Company ProfileDespite aname thatmeans"little pine tree," Komatsu produces an evergreen line-up of big equipment. The company is the world's #2 construction equipment maker, behindCaterpillar. Komatsu builds andsellsbuilding and mining equipment, from bulldozers and wheel loaders to dump trucks and debris crushers. Komatsu also producesindustrial machinery, such as laser-cutting tools, wire saws, and sheet-metal presses.Other lines include generators, light armored vehicles, and diesel engines.Its engineering and constructionarm supplies prefabricated structures, contracting, real estate sales, and leasing services.Komatsu Americarepresents its chief operations in North America.Target marketCNH target all agriculture and constructional companies. For agriculture they have products like new Holland tractors etc which farmers holding up high output from farms and there constructional companies they are products are usually for constructional and they have buses which is usually for transportation companies

CNH Global (CNH) SWOT Analysis

StrengthsGeographically Diverse BusinessGeographically diverse business and revenue should help shield the business from shocks in any one part of their business. Different countries or locations around the world have different characteristics. Those characteristics do not always match, therefore, a company can lower their risk by investing in part of the world with low correlations. The lower the risk, the better. This lowers risk and increases the value of the business over the long-term. This statement will lead to an increase in profits for this entity."Geographically Diverse Business"is an easily defendable qualitative factor, so competing institutions will have a difficult time overcoming it.New Holland tractorNew Holland Tractor"has a significant impact, so an analyst should put more weight into it."New Holland Tractor"is a difficult qualitative factor to defend, so competing institutions will have an easy time overcoming it.

Top of FormBottom of FormWeaknessesHeavy reliance on few suppliersThese statements will have a short-term negative impact on this entity, which subtracts from its value.OpportunitiesInfrastructure Spending

Plans to spending large amounts of money in infrastructure should increase the demand for construction related businesses. Significant spending on school construction, highways, utilities, and the power grid. IT spending will also increase to cope with the increase in demand for information to provide advanced services. Material suppliers and manufacturing industries will also benefit. Many countries around the world are increasing their infrastructure spending in order to increase the economy. Infrastructure Spending will have a long-term positive impact on the this entity, which adds to its value. This statement will have a short-term positive impact on this entity, which adds to its value.

ThreatsHousing CrisisHousing crisis lowers the company's assets and equity and makes it harder to do business in the market. Lower equity lowers the amount of money that can be loaned and thus limits the ability of the company to generate additional income from loans. Pressure on mortgages, home equity growth will slow. A major source of past revenue and profits will decrease and lead to a decrease in future cash flow and stock value. Utility companies will see less grow as the growth rate of new housing developments slows. A slowdown will also affect landscaping companies.Volatile Commodity PricesVolatile commodity prices increase the risk to the company, since a sudden change in commodity prices can hurt profits and increase the chances of bankruptcy. It also makes long-term forecast more difficult and long-term investments to meet demand more difficult. "Volatile Commodity Prices"has a significant impact, so an analyst should put more weight into it."Volatile Commodity Prices"will have a long-term negative impact on this entity, which subtracts from the entity's value. This statement will have a short-term negative impact on this entity, which subtracts from its value. This statement will lead to a decrease in profits."Volatile Commodity Prices"is a difficult qualitative factor to overcome, so the investment will have to spend a lot of time trying to overcome this issue.

Porters Five Forces

Bargaining Power of Suppliers Low/Medium CNH does not face a very high risk regarding the power of suppliers due to the availability of raw materials. There are dozens of large companies that provide the appropriate resources CNH needs to operate. If costs increase dramatically for whatever reason or if there is another difficulty, CNH may desire to change their suppliers and can do so without a severe setback. Our suppliers play a key role in our commitment to excellence. We have high standards for specifications, delivery, and price (CNH Corporate Overview). This statement shows the power of CNH and their ability to eliminate uncompetitive players in the market as well as the emphasis they place upon having successful supplier relationships. CNH makes their own engines and assembles their own machinery, which saves them a large amount of money in the long run. If this were not the case, outside suppliers who conduct these services would have a stronger sense of power on price or other production decisions. The CNH Inc. Page 19 raw products such as steel, rubber, plastic, and other raw materials are the only concerns of CNH and can be obtained through numerous manufacturers. Although these raw product industries have control over individual resource prices, the costs to customers will remain comparative to maintain a competitive position among other suppliers. As a result, these companies will be competing in somewhat of a price battle and CNH will have less of a concern with the power of their suppliers. Bargaining Power of Customers Medium The size of potential customers is one of the major determining risk factors with the bargaining power of customers. Larger potential revenues from examples such as large multi-national corporations or even third-world countries have much more influence on CNH than do smaller organizations. A country can exert tremendous pressure on corporations to comply with the countrys requirements and needs. Large corporations can have significant influence due to their size and the amount of product they can potentially purchase from the manufacturer (Foothill). These larger potential customers have more influence and potential revenue to provide, leading to a larger dilemma with CNH finding ways to meet terms with these organizations in order to receive substantial revenues. Medium and small corporations have little influence in terms of volume, but other factors can give them an advantage during negotiations, such as little or no switching costs and the vast number of competitors (Foothill). Although smaller organizations may attempt to compete upon price much more intensely due to the variety of competition, these small companies have less to offer a company as large as CNH and typically search for the best price rather than the highest quality product or service. Since CNH has such a strong emphasis on service and relationships, this places them in a position where they are able to hold their ground against many smaller entities and CNH Inc. Page 20 focus their main customer efforts on their nationwide and global growth with larger corporations and various countries throughout the world. Threat of New Entrants Low Many barriers to entry have created severe difficulties for new entrants to enter Caterpillars industry. The industry is highly capital intensive. A new entrant not only faces high investment, there is already a significant competition and large players around which demoralizes the new entrant (Haisten). One main obstacle is the establishment of dominant competitors who have controlled the industry for many years. It is extremely challenging to try and enter an industry where the competition is massive and the companies revolve around sustained competitive advantages. Aside from the existing corporations, the industry includes an incredibly large initial capital investment. The industry costs of machinery and manufacturing are hard to tackle as a new entrant and are difficult to compete unless the organization is large-scale. Maintaining any profits for many years is another challenge. The overhead and associated costs with entering the industry are challenging to surpass as a new entrant. The combination of listed factors in this industry proves that CNH does not face a strong threat.

Threat of Substitute Products Low CNH has a significantly low threat of substitute products due to various reasons. In the agricultural machinery industry, the equipment used by CNH is the most efficient technology for the associated costs of operation. Due to the highly specialized purposes of the machinery produced, there may be some overlap between possible uses, but the machines face no risk of substitution (Haisten). There is no other viable option for buyers to consider for the task CNH Inc. Page 21 to be completed in a resourceful and timely fashion. For example, if a company were to refuse the services of heavy machinery and focus on standard human labor as an alternative, the timeframe and associated expenses would be wasteful in comparison to what the major competitors in the agricultural industry have to offer. CNH does not have to necessarily concern itself with substitute products, but rather on maximizing the reliability and functionality of the machinery they currently produce. Competitive Rivalry within an Industry High Hundreds of competitors in a worldwide industry have created a significant threat to Caterpillar. They operate in an environment with 50 top competitors controlling roughly 80% of the market (Haisten). Since CNH focuses more upon their service rather than diversification, the door is left open to other competitors to take advantage of new opportunities. Several competitors provide products that offer benefits to other industries such as the military or consumer products. For example, Deere & Company offers a variety of products to consumers regarding lawn care. However, in an attempt to counter the issue of competitive diversification, CNH is beginning to focus on global expansion instead. The company said it expected growth of more than 10 percent in China and 8 percent in India in 2010. That is much more robust than the 3.5 percent growth CNH predicted for the United States and the 1 percent growth in Europe (FundingUniverse). CNH must continue to find ways to remain competitive in an industry filled with so many extremely competitive organizations.PESTLE AnalysisPolitical Federal support for overall fleet Efficiency improvement via Super Truck programGrowing support for alternate fuel (NG/Bio-fuel) and hybrid technologies

Environment Rising awareness and marketAdoption for CNG/LNG/hybrid vehicles.Growing demand from clients of fleets to provide green freight transport solutions.

SocialLikely introduction of mega trucks (GVWR up to 93,000 lb.) expected to negatively impact downsizing.

Mega Trends pointing to rising hub and spoke logistics andDriving the need for best-in-class fuel EconomicalFleet operators continue to face liquidity crunch.

Reduced profit margins and aConsequential need for low TCO products

Market opportunity for entry and growth of low-cost trucks

Technology Developments in complementary technologies such as turbochargers andAfter-treatment systems are enabling Downsizing.

Significant improvements in NG/hybrid technologies are expected toIndirectly drive downsizing. Legal GHG 2014-2018 mandate that regulates emission and fuel efficiencyLevels for HD trucks

Regulations expected in the comfort and convenience segment and rising importance for driver comfort.

Balance sheet of CNHCNH Industrial N.V. may have more financial risk than other companies in the Machinery industry as it is one of the most highly leveraged. Its Debt to Total Capital ratio stands at 79.63%. However, an examination of near-term assets and liabilities shows that there are enough liquid assets to satisfy current obligations. Cash Collection is a strong suit as the company is more effective than most in the industry. As of the end of 2013, its uncollected receivables totaled 16.8BEUR, which, at the current sales rate provides a Days Receivables Outstanding of 235.82. Last, inventories seem to be well managed as the Inventory Processing Period is typical for the industry, at 92.55 days.Currency inMillions of EurosAs of:Dec 312010RestatedEURDec 312011RestatedEURDec 312012RestatedEURDec 312013EUR4 YearTrend

Assets

Cash And Equivalents3,686.05,639.04,611.04,705.0

Short-Term Investments112.068.04.0--

Trading Asset Securities--86.090.074.0

TOTAL CASH AND SHORT TERM INVESTMENTS3,798.05,793.04,705.04,779.0

Accounts Receivable15,612.015,409.016,477.016,832.0

Other Receivables1,573.01,837.01,615.01,728.0

TOTAL RECEIVABLES17,185.017,246.018,092.018,560.0

Inventory3,898.04,865.04,843.05,464.0

Other Current Assets11.047.056.0140.0

TOTAL CURRENT ASSETS24,892.027,951.027,696.028,943.0

Gross Property Plant And Equipment9,310.09,831.010,039.010,342.0

Accumulated Depreciation-6,027.0-6,307.0-6,317.0-6,346.0

NET PROPERTY PLANT AND EQUIPMENT3,283.03,524.03,722.03,996.0

Goodwill1,848.01,937.01,907.01,823.0

Long-Term Investments737.0616.0470.0495.0

Deferred Tax Assets, Long Term1,308.01,284.01,228.01,212.0

Deferred Charges, Long Term1,235.01,478.01,789.02,076.0

Other Intangibles477.0486.0466.0464.0

Other Long-Term Assets1,093.01,296.01,583.01,932.0

TOTAL ASSETS34,873.038,572.038,861.040,941.0

LIABILITIES & EQUITY

Accounts Payable4,077.05,043.04,838.05,336.0

Accrued Expenses--1,128.01,186.01,266.0

Short-Term Borrowings5,626.0------

Current Portion Of Long-Term Debt/Capital Lease--9,235.08,761.07,542.0

Current Portion Of Capital Lease Obligations--5.06.06.0

Current Income Taxes Payable508.0660.0217.0303.0

Other Current Liabilities, Total2,570.0512.01,273.01,223.0

Unearned Revenue, Current--983.01,073.01,379.0

TOTAL CURRENT LIABILITIES12,781.017,561.017,348.017,049.0

Long-Term Debt13,069.010,968.011,862.014,134.0

Capital Leases--43.043.048.0

Minority Interest740.0838.0748.052.0

Pension & Other Post-Retirement Benefits2,157.02,158.02,213.01,967.0

Deferred Tax Liability Non-Current52.0111.0168.0219.0

Other Non-Current Liabilities2,258.02,479.01,851.01,968.0

TOTAL LIABILITIES30,317.033,320.033,485.035,385.0

Common Stock--1,913.01,919.018.0

Retained Earnings3,573.01,822.02,417.03,810.0

Comprehensive Income And Other243.0679.0292.01,676.0

TOTAL COMMON EQUITY3,816.04,414.04,628.05,504.0

TOTAL EQUITY4,556.05,252.05,376.05,556.0

TOTAL LIABILITIES AND EQUITY34,873.038,572.038,861.040,941.0

Ratios Ratio data TTM as of 06/30/2014Profitability - Cnh Industrial Nv (CNHI)Return on AssetsIndustry Comparison3.90%Return on EquityIndustry Comparison15.26%

Return on CapitalIndustry Comparison5.80%

Margin Analysis - Cnh Industrial Nv (CNHI)Gross MarginIndustry Comparison20.99%Levered Free Cash Flow MarginIndustry Comparison-0.97%

EBITDA MarginIndustry Comparison12.40%SG&A MarginIndustry Comparison8.59%

Asset Turnover - Cnh Industrial Nv (CNHI)Total Assets TurnoverIndustry Comparison0.6xAccounts Receivables TurnoverIndustry Comparison1.5x

Fixed Assets TurnoverIndustry Comparison6.1xInventory TurnoverIndustry Comparison3.4x

Credit Ratios - Cnh Industrial Nv (CNHI)Current RatioIndustry Comparison2.9xQuick RatioIndustry Comparison2.2x

Long-Term Solvency - Cnh Industrial Nv (CNHI)Total Debt/EquityIndustry Comparison396.65%Total Liabilities/Total AssetsIndustry Comparison86.40%

Growth Over Prior Year - Cnh Industrial Nv (CNHI)Total RevenueIndustry Comparison4.30%Tangible Book ValueIndustry Comparison59.07%

EBITDAIndustry Comparison-1.06%Gross ProfitIndustry Comparison1.68%

ReceivablesIndustry Comparison7.07%InventoryIndustry Comparison18.25%

Diluted EPS Before ExtraIndustry Comparison-4.86%Capital ExpendituresIndustry Comparison10.89%

Cash From Ops.Industry Comparison-15.30%Levered Free Cash FlowIndustry Comparison29.49%