Ashley Cook
MGT 480
March 25, 2013
Case 7

The 2009 Chrysler-Fiat Strategic Alliance

1. The strategic alliance was defiantly needed. This was important since Chrysler has a tremendous loss in 2008 and had to lay off many of their workers. They were also going bankrupt, so this was the best option to keep them afloat. They could not keep up with the economy and needed to get help from someone. This deal made sense for Fiat, since they could get the company at a low price and re-enter into North America. They also have a good thing going in that fact that they own 21 percent since 2009, then can get it increased to 35 percent this year and eventually might have 51 percent of the company. This was not the most ideal thing for Chrysler, but it was necessary.

2. Chrysler has a brand name in North America, where Fiat lacks the visibility. Fiat has been very successful in Europe, where Chrysler does not have a strong dealer network there. Chrysler finds new markers by developing new range of vehicles. After the merger, Chrysler emerges from the bankruptcy and starts to restructure and Fiat gains a brand in North America and technology from here.

3. Chrysler had always been behind Ford and GM and was known as the “number three.” Since the merger, they were able to gain more in Europe and new technology. As they are still not the number one company they have bettered themselves and are on the rise. The other five companies are still on the rise as well, so Chrysler-Fiat will have to work extra hard to compete with all of the technology, market share and consumer satisfaction.

4. Chrysler’s strength has been in sport utility vehicles, pickup trucks and minivans. We do not know a great deal of Fiat’s degree of interest in these businesses. Nissan has an agreement with Chrysler whereby Nissan is to get a version of the Dodge Ram and Nissan is to build small cars destined for Chrysler. This will be hard to do in the short term as Chrysler and Fiat will have to share ideas on each of their brand portfolios and integrate them both together.

5. The partnerships are a great fit as it creates the potential for a powerful, new global competitor. They both gain access to new products and have more areas for distribution. They will save cost in the design, engineering, manufacturing, purchasing, sales and marketing. This transaction will enable Chrysler to offer a broader competitive line-up of vehicles. They will be able to say they meet fuel efficiency standards and adhere to conditions of the Government Loan. The partnership would also provide a return on investment for the American taxpayer by securing a long-term visibility of Chrysler brands in the marketplace.

6. Chrysler is suffering because of its past emphasis on trucks, its weak front-drive car entries and perhaps because of a weak reputation for quality. All the negative news of the past several months may have scared away potential customers, too. Right now, Fiat sells Ferrari and Maserati cars in the U.S., but in tiny numbers. There are plans to sell a few dozen very expensive Alfa models here in the near future