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Case 7 : 2009 Chrysler-Fiat

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1. While this was not the most ideal situation for Chrysler, I think the alliance with Fiat was a necessity. Chrysler had a tremendous loss in profits, had to lay off many workers, and was going to have to file for bankruptcy. This was a great option to help them stay afloat and get help from an outside source. Obviously for Fiat this was a good move. They did take a risk since Chrysler was going into bankruptcy, but they were able to acquire it for a reasonable price and also help themselves to re-enter into North America with a company that already had a solid market share. Fiat most recently purchased the 41% of Chrysler they did not own. The company is definitely on the upswing and will be able to better compete with GM and Ford.
2. Before 2009 strategic alliance:
Chrysler – Strengths of Chrysler were they have a strong brand name and recognition within North America. In addition, their Jeep and minivan lines are very popular. They were one of the top three recognized auto brands in North America. Weaknesses were there was no presence in overseas in Europe, they were going into bankruptcy, and their de-merger with DaimlerChrysler hurt them financially. They also remained behind the other manufactures for quality and satisfaction with consumers and had little or no sub-compact cars.
Fiat – Strengths of Fiat were they had reinvented themselves overseas in the European markets and are one of the most visible brands of small brand cars in Europe and quality is very high in the cars. They also provide technologies in R&D on a global level with a good learning curve. Some weakness of Fiat was they had no existence in North America and had not been successful previously. They also had a limited global product portfolio.
After 2009 strategic alliance:
Chrysler – After the alliance strengths of Chrysler are they are able to enter and have a presence in Europe and the overseas market, their Jeep brand and minivan continue to be popular, they were able to realign and strategize, with Fiat’s knowledge and technology to compete in the small car technology. Weaknesses are since they have no presence in the global market, they will have to rely heavily on Fiat in that regards. They also bring a very limited technology and portfolio in small cars and have to continue to rebrand themselves from past history.
Fiat - Strengths of Fiat is they have been reinvigorated in Europe and has become one of the most visible brands of small brand cars in Europe. They have introduced many more models and quality has continuously improved. They also have a solid CEO leadership. Weaknesses are they lack marketing to compete in global markets with other auto manufactures and they have a very limited product portfolio in the global market.
3. In comparison to sales in 2008, Chrysler and Fait were at $59 billion and $83 billion were significantly lower than General Motors, Ford, Volkswagen, and Daimler who were all over $149 billion and Chrysler and Fiat were much lower that Toyota at the top with $230 billion. In overall market share from Table IV, General Motors was still the highest at 19.1% followed by Toyota, and Ford. Chrysler came in fourth ahead of Volkswagen of North America and Fiat does not even compete in the U.S. market. Although everyone did have a drop in percentage change that year. This shows Chrysler still has a strong market share and foothold in North America, but do not have a global presence. Fiat is well known for small cars along with VW, and both are well known in Europe, but VW at least brand visibility in the North America whereas Fiat does not. Ford is competitive with large trucks but is still working on becoming a player in the overseas market, Daimler is known more for luxury and has high visibility both overseas and North America, Toyota takes over in hybrid cars and along with General Motors has a diverse portfolio and competes very well globally as well as in North America.
4. Chrysler has strong brand portfolios in the North American industry but virtually nonexistent overseas. Whereas Fiat has a strong portfolio in Europe and is highly regarded and well known, it is virtually non existence in the North American auto market. In regards to their brands, with the joint alliance, Chrysler and Fiat can combine R&D to save costs and technology sharing to work on helping Chrysler with a small car competition since Chrysler is lacking in this category. They should work on improving their brand recognition and quality overall with the technology and brands. Chrysler has mainly been a Jeep and minivan company in the past years so whether they will combine and help Fiat in the European market is something in the long run that will be considered because Fiat is not known for these products at all and normally in Europe big vehicles are no relevant.

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