(Teaching Note copyright Syed Tariq Anwar)
The case is intended to have students look at the 2009 Chrysler-Fiat strategic alliance, its current issues, and future viability in the global auto industry. The new landscape of the American auto industry and the role of Fiat is analyzed in the cross-border tie-up. After de-merging with Daimler in 2007, Chrysler did not do well because of the 2008-2009 global financial crisis and its bankruptcy filing. Chrysler’s other problems included its financial constraints and heightened competition in North America. The company had no choice but to look for a partner. During this process, Chrysler explored the possibility of a tie-up with GM, Ford, Volkswagen, Tata Motors, Nissan and Fiat. Eventually Chrysler decided on creating a strategic alliance where Fiat agreed on taking a 20 percent stake in Chrysler. In the next five years, the tie-up may increase Fiat’s ownership of Chrysler to 35 percent. Both companies show compatibility in their product portfolios, global operations, and technology sharing areas.
The primary objective of this case is to analyze and discuss Chrysler’s 2009 strategic alliance with Fiat and its current and future prospects. Issues that are at the helm of this tie-up are technology sharing, global integration, quality control, and reorganization of brand portfolios. Students need to look at the intricacies of strategic alliances between two or more companies as well. As of May 2009, Chrysler is going through its Chapter 11 and corporate restructuring in the U.S. The company continues to shrink in terms of its manufacturing and global operations.
Suggested Teaching Approach and Student Assignments
Since the case is timely, it is recommended that class discussions should be based on the companies’ histories and their evolutionary growth (see Tables 2 and 3)....