Case: Fiat’s Strategic Alliance with Tata. IB-Sec A &C.
Please use the following questions as guideline to prepare the case: (Follow instructions in outline except those mentioned below.. 1. Given that, Fiat existed and operated in India for long why did it decide to form a strategic alliance with Tata? * Frequent bottlenecks with earlier smaller JV partner(premier) * felt the need for bigger player- with financial and management compatibility * Long term approach
* Respected name and trust on “TATA” brand
* Strong foothold of TATA in promotion, distribution and dealership across India. * Seriously challenged with the problems unique to India. Did not have a clue how to solve them on their own e.g inability to deal with labour, handling the distribution channel, after sales, limited knowledge about consumers etc. * Fiat was having the lowest market share in the Indian market among 11 players , hence the immediate need * The goodwill enjoyed by TM, and the company's reach were expected to improve Fiat's image in India.
2. Given Fiat’s alliance experience with GM and other partners, do you think it will make a good partner for Tata? Why? * What caused the GM-Fiat Alliance to fail?
* Contractual Safeguards were not in place to safeguard both the parties * Mutual ownership had a greater stress on control killing the spirit of alliance * GM and Fiat entered into an alliance at a crisis situation(of fiat) * Continuous Financial trouble faced by Fiat prior 2004. * The inflexibilities arose due to “mutual ownership participation” * Improper due diligence with finance led to Strategic, Political and social complications with the JV * Excessive dependency of Fiat and GM in decision making process or vice versa Why Tata make a good partner for Fiat?
* Both Fiat and Tata shared a common set of values and identified the common ground to work , right in the initial stages of the agreement...
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