Fiat and Chrysler create an alliance
Toward to an eventual merger…
Since 1990, we have seen a high wave of mergers. Many companies where merging in order to respond to their environment and there is a reason for this. Indeed, in a world of globalization where the key trend is to become bigger and bigger in order to survive, it is of the utmost importance to position your strategy and strategic stakes based on your other competitors and your environment. According to that, as we have already studied some merger that were a success (AirfranceKLM) or a failure (DaimlerChrysler) and know what went well or wrong, we can apply what we have already learn on the Fiat Chrysler case that are at that time in an alliance and that will possibly merge in the next 2-3 years. What we are going to study during this case are the factors that will push them to merge. It is important for this study to take in consideration some external factors (that will play on the decision to merge or not) as the survivor theory, the political influence, and that consolidation is unavoidable (see endgame theory) in a world of globalization. If they want to make successful merger integration, Fiat and Chrysler will have to face some huge challenges. They will have to take great consideration of the cultural differences and for that we will study those two different cultures that will enable us to make some conclusions. Indeed, the American management style which is present in the two companies enables the possible merger not to face possible cultural mismatch, even if some cultural problem will still remain. This cultural point has been analyzed with some relevant theories like collaboration/subjugation, merger syndrome, strategy for post merger outcomes (best of both), The endgame theory and so on. Previous studies on Airfrance/KLM and Daimler/Chrysler, have enable us to have some notions on how to drive the best way possible a merger integration process. Furthermore, by analyzing deeply the FiatChrysler case, their prospective merger, we are able to make some recommendations that will boost their chances of success. Finally, after establishing this report, we have raised three questions that Fiat Chrysler should take in consideration: * What are the essential factors for a successful merger? * Why Fiat could succeed where Daimler failed?
* Why would not Fiat and Chrysler stay in status of alliance? Contents
What external factors would drive this prospective merger?5
Analyze the respective cultures of Fiat and Chrysler and the challenges that the merger would face during the post-merger integration stages.11
Discuss the type of management practices that you would recommend are employed to ensure successful integration of Fiat & Chrysler.19
Number of words: 4387
Executive Summary: 388
Question 1: 813
Question 2: 1367
Question 3: 906
At a time where consequences of the economic crisis are less noticeable, the car market begins to grow better by the improvement shown in 2011 (provisional figures show an increase of 6%). The main car markets are Europe, the USA and the emerging country like China, India or Brazil. The best car manufacturers are General Motors, Toyota and Volkswagen. However, results depend on the market. Indeed, the Italian car market does not follow the global trend since a fall of 20.7% was recorded. The leading brands in this market are Fiat (including Alfa Romeo, Lancia ...) and Ford. There are also luxury car brands like Lamborghini or Ferrari (controlled by Fiat). At the end of January, the three best-selling cars are Fiat with 20.87%, Ford with 9.32% and Volkswagen with 7.85% (Lauraux, 2011). These figures show clearly that Fiat is the market leader. On the contrary, the U.S. market is...