Case Study: Chrysler-Fiat Partnership Essay

When Americas economical crisis reached its apex, domestic car manufacturers were at the forefront of struggling industries, and Chrysler was genius 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 prorogue from the American Government to keep from closing its doors altogether (Car and Driver).Chrysler did lose a lot of reputability, and was ordered to cease and desist with any red-hot production development until the accompany proved it could be a vi satisfactory lineage (Gluckman & Kurczewski, 2009). However, the loan from the government proved to still not be complete to get Chrysler back on its feet, and in 2009 the company filed for Chapter 11 unsuccessful person (Groth, 2011). Fiat faced its own organizational struggles in 2003-2004 before impertinent chief operating officer Sergio Marchionne led the Italian automotive manufacturer back to respectability (Gluckman & Kur czewski). Still, after watching European car sales fall to a 17 year low and needing a boost to his companys revenue, Marchionne saw the Chrysler situation as a way to get into the American trade (The Economist, 2013).Objectives Sought by to each whizz PartnerChryslers objectives in the partnership with Fiat were pretty simple it needed a fiscal boost to maintain its place in the industry and new engineering if it wanted to grow and advance (Marrs, 2009). After egregiously unsuccessful partnerships with Daimler-Benz and Cerberus attention Group and a multi-billion dollar loan from the American Government finish with Chrysler filing for bankruptcy, the company was in desperate need of a mode to regain viability (Marrs Krisher & Strumpf, 2009 Gluckman & Kurczewski, 2009).Although Chrysler received no m cardinaly in the deal, it will pop as a new, leaner group minus billions in debt, 789 underperforming dealerships, and onerous labor costs, not to mention gaining Fiatstechnology to realize new environmentally friendly, fuel efficient, high-quality vehicles (Krisher & Strumpf). Fiats objective in the partnership was to provide a financial boost to its own company without accumulating additional debt (Ebhardt, 2013).Fiat, Italys largest auto manufacturer, would like to expand its market to baffle a global competitor. Fiat CEO Sergio Marchionne believes that to compete with General Motors, Volkswagen, and Toyota, the interconnected Fiat-Chrysler will need to produce 5.5-6 million cars a year, compared to its current produce of 4.1 million (The Economist, 2013).Basis of Dialogue Leading to the PartnershipThe basis of a dialogue leading to a potential partnership was the concept of a mutually beneficial situation for all parties involved (Cox, 2013). Fiat has the capital, new technologies to develop high-efficiency cars, and reverence from Ferrari and Maserati fans that will allow Chrysler to regain its place among line of longitude domestic auto manufact urers in the United States (Groth, 2013). Fiat will parting with Chrysler its platforms and powertrain technology, including engines, transmissions, and fuel-saving technology (Gluckman & Kurczewski, 2009).Through Fiat, Chrysler will also get better distribution of its products in Europe, India, Brazil and China (Gluckman & Kurczewski). Chrysler is the 3rd-largest U.S. auto company and is a certain brand with the international appeal, customer base, and facilities that will allow Fiat to plump a serious competitor in the global automotive manufacturing market (Groth). Chrysler was also in no position to be patient for an broaden period of time. While its factories sat idled during the bankruptcy process, the automaker reportedly baffled 100 million per day (Krisher & Strumpf, 2009).Steps Taken by Each CompanyThe partnership between Fiat and Chrysler, which is still an ongoing process, is macrocosm approached in phases. Initially Chrysler agreed to give Fiat a 35% holding in r eturn for an influx of new engines and platforms, research and development, and avail retooling its plants (Marrs, 2009). This approach allowed both organizations to ease into the partnership, without either side immediately victorious on too much debt or risk (Cox, 2013). Analysts were notable to exactly predict the partnership between Fiat and Chrysler.In fact, Chrysler was in talks with General Motors before both companies began to experience serious financial hardships (Gluckman & Kurczewski, 2009). Looking to avoid the management mistakes that doomed Chryslers partnerships with Daimler and Cerberus, Fiat CEO Sergio Marchionne has made it clear that Fiat/Chrysler will run as one company (Trujillo, 2013). As Mr. Marchionne announced at a media briefing, This management police squad spends their time traveling and making decisions, but this thing runs as one house. There is no question about who runs what I run one company (Vlasic, 2013, pp. 4).