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Failed Strategy Analysis

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Fisker Automotive Founded in 2007 by Henrik Fisker and Bernhard Koehler, Fisker Automotive started with nearly $200 million in venture capital from Kleiner Perkins Caufield & Byers, Palo Alto Investors and the Qatar Investment Authority. Using these funds the company built their first car the Fisker Karma, a 100mpg plug-in hybrid sports sedan that sells for $88,000. After being awarded a government energy loan of $529 million the company claimed to be ready to begin production and was in the process of designing new models. While having sold around 2,000 of its high-end cars and, due to the various recalls and production delays the company has fired nearly 75% of its employees, missed its first loan payment to the government, and is now on its way to bankruptcy (Bloomberg News, 2013). The company had a plan for a different type of automaker, one that focuses more on branding and design instead of manufacturing. Nearly everything in the Fiskar Karma is outsourced to other manufacturers. With this plan, based on capital efficiency, the company says it can develop a car in two and a half years, half the time it takes a large company. The cost for adding a new car to its line-up is also one-third the $1 billion it costs a traditional carmaker. For example, Fisker avoided some $300 million in capital outlays by handing off manufacturing of the Karma to Valmet Automotive of Finland and avoiding the cost and time required for new facilities to be acquired or built (Fisker Automotive, 2008). That strategy seemed to be its down fall when their main battery supplier, A123 Systems, had performance problems with their products and filed for bankruptcy in October of 2012. This caused Fisker to have to recall over two hundred cars and offer an extended warranty to the hundreds of owners affected by the issue (Eisenstein, 2012). This vulnerability company started by

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