1. What are your views of the 2009 Chrysler-Fiat strategic alliance and its future prospects in the auto industry?
The alignment between Fiat and Chrysler does not exactly save Chrysler. It gives Fiat an entry into the U.S. In short, Fiat is to get 35% of Chrysler, will not pay any cash for the stake, and it will give Chrysler access to its technology. Fiat had publicly said it wanted a production base in North America for its Alfa Romeo brand--and presumably the Fiat brand, too. Through its35% interest that it is getting in Chrysler, it would presumably have access to a U.S. plant to build its cars. The case is intended to have students look at the 2009 Chrysler-Fiat strategic alliance, ...view middle of the document...
Fiat is strong in small cars and in their engines and transmissions, as well as in luxury cars and diesel engines. For Chrysler getting the technology could be a huge help, but the American company will still need the money and ability to create new cars even with Fiat technology. The alliance might help Chrysler if it needs to get more money from the American government in its battle to survive. Fiat needs a manufacturing base if it intends to reenter the American market. It makes no sense to import small or low-priced cars, or even mid-level cars from Europe, as the strong European currency makes that a money-losing proposition. If Fiat could manufacture in the U.S, it could build some variations of its cars for Chrysler. How this would fit with the cars scheduled to come from Nissan is another question. The problem is that it could take years for Fiat to pass on technology and build engines and transmissions for new Chrysler products, or even to build Fiats and badge them as Chryslers. Fiat was not only a survival matter for Chrysler but also became a part of taking care of the company’s sake bankruptcy. Fiat will share its technology with Chrysler to build small cars, and will let Chrysler to gain a new distribution network in the European markets. In other hand, some weaknesses will knock the strategic alliance with the two companies, technology sharing and mismatch of brand portfolios. This is a major problem and can cause issues related to the goals of both companies. Knowledge sharing in R&D, control, regulatory and antitrust issues distribution and ownership problems will be major weaknesses.
3. Analyze Chrysler and Fiat’s brand portfolios in the world auto industry. How do you see both companies revamping and overhauling their brands in the short and long terms?
The problem is that Chrysler-Fiat can compete with other car manufacturers; however it could take years for Fiat to pass on technology and build engines and transmissions for new Chrysler products, or even to build Fiats and badge them as Chryslers.
4. What did you learn from the Chrysler-Fiat Strategic Alliance regarding managing multinationals in the changing global business? What role did the U.S. government play in the formation of this alliance?