Case Study: Chrysler-Fiat Partnership
Case Study: Elements of Success or Failure
Maurice D. Wilcher, MBA
University of Phoenix School of Advanced Studies
Case Study: Elements of Success or Failure
Forces Leading to the Partnership:
When America 's economical crisis reached its apex, domestic car manufacturers were at the forefront of struggling industries, and Chrysler was one of the hardest hit (Car and Driver, 2008). In 2008 the automotive giant, along with fellow industry stalwart General Motors, received a $17.4-billion reprieve from the American Government to keep from closing its doors altogether (Car and Driver). Chrysler did lose a lot of respectability, and was ordered to cease and desist with any new product development until the company proved it could be a viable business (Gluckman & Kurczewski, 2009). However, the loan from the government proved to still not be enough to get Chrysler back on its feet, and in 2009 the company filed for Chapter 11 bankruptcy (Groth, 2011). Fiat faced its own organizational struggles in 2003-2004 before new CEO Sergio Marchionne led the Italian automotive manufacturer back to respectability (Gluckman & Kurczewski). Still, after watching European car sales fall to a 17 year low and needing a boost to his company 's revenue, Marchionne saw the Chrysler situation as a way to get into the American market (The Economist, 2013).
Objectives Sought by Each Partner:
Chrysler 's objectives in the partnership with Fiat were pretty simple: it needed a financial boost to maintain its place in the industry and new technology if it wanted to grow and advance (Marrs, 2009). After egregiously unsuccessful partnerships with Daimler-Benz and Cerberus Management Group and a multi-billion dollar loan from the American Government ended with Chrysler filing for bankruptcy, the company was in desperate need of a method to regain viability (Marrs; Krisher & Strumpf, 2009; Gluckman & Kurczewski, 2009). Although Chrysler received no money in the deal, it will
Maurice D. Wilcher, MBA
University of Phoenix School of Advanced Studies
Case Study: Elements of Success or Failure
Forces Leading to the Partnership:
When America 's economical crisis reached its apex, domestic car manufacturers were at the forefront of struggling industries, and Chrysler was one of the hardest hit (Car and Driver, 2008). In 2008 the automotive giant, along with fellow industry stalwart General Motors, received a $17.4-billion reprieve from the American Government to keep from closing its doors altogether (Car and Driver). Chrysler did lose a lot of respectability, and was ordered to cease and desist with any new product development until the company proved it could be a viable business (Gluckman & Kurczewski, 2009). However, the loan from the government proved to still not be enough to get Chrysler back on its feet, and in 2009 the company filed for Chapter 11 bankruptcy (Groth, 2011). Fiat faced its own organizational struggles in 2003-2004 before new CEO Sergio Marchionne led the Italian automotive manufacturer back to respectability (Gluckman & Kurczewski). Still, after watching European car sales fall to a 17 year low and needing a boost to his company 's revenue, Marchionne saw the Chrysler situation as a way to get into the American market (The Economist, 2013).
Objectives Sought by Each Partner:
Chrysler 's objectives in the partnership with Fiat were pretty simple: it needed a financial boost to maintain its place in the industry and new technology if it wanted to grow and advance (Marrs, 2009). After egregiously unsuccessful partnerships with Daimler-Benz and Cerberus Management Group and a multi-billion dollar loan from the American Government ended with Chrysler filing for bankruptcy, the company was in desperate need of a method to regain viability (Marrs; Krisher & Strumpf, 2009; Gluckman & Kurczewski, 2009). Although Chrysler received no money in the deal, it will
References: Car and Driver. (2008). Domestic automakers get reprieve. Retrieved from http://www.caranddriver.com/news/domestic-automakers-get-reprieve-car-news Cox, R Ebhardt, T. (2013). Marchionne holds talks to push ahead Fiat-Chrysler merger. Retrieved from http://www.bloomberg.com/news/2013-06-07/fiat-in-talks-to-push-ahead-with-chrysler-merger.html Edgar, W., & Lockwood, C Egan, B. (2012). Strategic alliances and partnering with competitors. Retrieved from http://www.simpleseogroup.com/strategic-alliances-partnering-with-competitors/ Gluckman, D., & Kurczewski, N Groth, A. (2011). From Jan. 20, 2009 to today: More on why the Fiat-Chrysler merger makes sense. Retrieved from http://www.businessinsider.com/fiat-chrysler-merger-success-2011-7?op=1 Hughes, D., Williams, T., & Ren, Z Krisher, T., & Strumpf, D. (2009). Done deal: Fiat buys Chrysler assets. Retrieved from http://abcnews.go.com/Business/story?id=7804697&page=1 Marrs, T Rosevear, J. (2013). Fiat moves closer to a merger with Chrysler. Retrieved from http://www.dailyfinance.com/2013/07/03/fiat-moves-closer-to-a-merger-with-chrysler/ The Economist Trujillo, M. (2013). Full merger moves forward for car companies Fiat, Chrysler. Retrieved from http://thehill.com/blogs/transportation-report/automobiles/304383-full-merger-moves-forward-for-car-companies-fiat- chrysler Vlasic, B. (2012). A merger once scoffed at bears fruit in Detroit. Retrieved from http://www.nytimes.com/2012/01/10/business/chrysler-and-fiat-merger-shows-fruits-of-teamwork.html?_r=0