Fiat

FIAT An Italian Classic Re-Enters the American Market

Business Strategy - Adam Zoltowski | Kevin Rorick | Megan Anderson | Slava

AGENDA Who is FIAT?

The Equity Stake in Chrysler

Company Health

SWOT

Value Chain Implications

Recommendations and Evaluations

WHO IS FIAT? – A History

Fabrica Italiana Automobili Torino

Founded in 1899

From Turin, Italy

Helped shape and define the European automotive industry

WHO IS FIAT? – A History Deeply intertwined with Italian culture

Italy’s largest manufacturer

HQ in Italy with global manufacturing

WHO IS FIAT? – Workforce Challenges

WHO IS FIAT? – Workforce Challenges

Automobiles

AgriculturalandConstruc3onEquipment

CommercialVehicles

FerrariandMasera3

MetallurgicalProducts

Automo3veComponents

Produc3onSystems

PublishingandCommunica3ons

Services

WHO IS FIAT? – Current Product Offerings

WHO IS FIAT? – De-Merger

WHO IS FIAT? – Fiat Automotive

Fiat industrial Fiat Spa

THE EQUITY STAKE IN CHRYSLER

THE EQUITY STAKE IN CHRYSLER

“Integration of the two groups provides scale, global reach and complementary products and

technologies, enhancing the ability of each group to compete successfully in a tough automotive industry. One of the

strengths of the alliance is the ability to optimize utilization of our manufacturing facilities around the world.”

THE EQUITY STAKE IN CHRYSLER –Landscape

Fuel Efficiency

Global Reach

C

F GM

F

T

H304k

140k

180k

200k

70k

60k

THE EQUITY STAKE IN CHRYSLER –Landscape

Fuel Efficiency

Global Reach F

GM

C/F

T

H304k

140k

240k

200k

70k

60k

Fiat industrial Fiat Spa

THE EQUITY STAKE IN CHRYSLER – Different Brands

Smaller Cars

Designed for European Audience

Historically Associated with Italy

Highly Fashionable

Larger Cars, SUVs and Trucks

Designed for Rural and Suburban American Audience

Historically Associated with Detroit

Mainstream, Traditional

THE EQUITY STAKE IN CHRYSLER – the Fiat 500

Business Strategy

THE EQUITY STAKE IN CHRYSLER – Fiat 500’S Competition

Mini Cooper

Mazda 2

Ford Fiesta

COMPANY HEALTH – European Market

COMPANY HEALTH – Manufacturing

COMPANY HEALTH – Financials

2009 Market Share

6%

2009 Layoffs

4%

2009 -Loss of Revenue

14%

Revenue vs. net income (Millions of Euros)

COMPANY HEALTH – Profitability Ratios

COMPANY HEALTH – Liquidity and Equity Ratios

COMPANY HEALTH - Contributing Factors

Global economic crisis hit automobile industry

Collapse of financing - consumers struggled to access credit

Trend towards small cars with a lower profit margin for manufacturers

Increased investments reacting to new government regulation for fuel efficiency and emissions standards

R&D Costs Commodity Prices Oil Prices

Consumer spending Industry Revenue Available Credit

SWOT– Prior to Chrysler

Strengths Weaknesses

Opportunities Threats

Strategic Partnerships

Diversified Business Portfolio

Research and Development

Investment Rating

Weak Performance

Product Disruptions

Lack of Brand Equity in the US

Refocus on automotive compentencies

Develop New Strategic Partnerships

Invest in R&D of Fuel-Efficient Automobiles

Increase Activity in Emerging Markets

Revitalize Brand Improve Performance

Competitive pressure

Environmental demands and Government Regulations

Indirect Competition from alternative forms of transportation

Groundbreaking innovations that would make “green cars” obsolete

SWOT– Prior to Chrysler

Strategic Partnerships Diversified Business Portfolio

Research and Development

Investment Rating Weak Performance

Product Disruptions Lack of Brand Equity in the US

Develop New Strategic Partnerships Invest in R&D of Fuel-Efficient

Automobiles Increase Activity in Emerging Markets

Revitalize Brand Improve Performance

Competitive pressure Environmental demands and Government Regulations Indirect Competition from alternative forms of transportation Groundbreaking innovations that would make “green cars” obsolete

SWOT– The New Stake

Robust presence in North American market New distribution channels

Combination of Chrysler Tech and Fiat experience Access to “loyal customers”

Use of Chrysler workforce, plants and technology

Acquiring of traditional Chrysler’s competitors Acquiring of Chrysler’s financial obligations

Compatibility of manufacturing and assembly is not definite

Build new customer base on Chrysler’s momentum Freedom to brand themselves as they wish for

new market Shift manufacturing and assembly into US

Capitalize on Fuel Economy

Strong perception of the Fiat as a low-profile brand Cultural differences in understanding US market

Operational difficulties Losing momentum (not moving fast enough)

Depending too much on Fuel Economy Trend

Strengths Weaknesses

Opportunities Threats

VALUE CHAIN – Applying the SWOT to Illustrate Implications

R&D

Sales &

Mrkt Distribution Service

CRF & Centro Stile

Tech: Internet Services

HR: Hiring, Employee Relations, Labor Concerns

Finance: Compensation, Fund Disbursement

Legal: Union Concerns, Regulations Governing Emissions, Safety

Raw Materials /Commodities:

Metal Electronics Chemicals Rubber Oil Tools

Manufacture of: Parts Components Engines

Assembly of: Engines, Bodies, Electronics

Inventory MGMT Car Assembly

B2B & B2C

Shipping: Car Rail Water

Warehouses

B2B & B2C

Retail Online Dealers Sales through Equip Mfg

Parts Dist Repairs

Service Centers Finance & Insurance

Tech:

HR:

Finance

Legal:

Design MFG Assembly

Car Design

Supply

VALUE CHAIN – Applying the SWOT to Illustrate Implications

Tech:

HR:

Finance

Legal:

S: Robust presence in N. American market

S: Robust presence in N. American market

S: Robust presence in N. American market

S: Robust presence in N. American market

S: Robust presence in N. American market

S:Use of Chrysler workforce, plants & tech

S:Use of Chrysler workforce, plants & tech

S:Use of Chrysler workforce, plants & tech

S:Use of Chrysler workforce, plants & tech

W: Compatibility of mfg and assembly is not definite

O: Freedom to brand themselves

W: Compatibility of mfg and assembly is not definite

O: Capitalize on Fuel Economy

T: Strong perception of Fiat as a low-profile brand

T: Strong perception of Fiat as a low-profile brand

O: Capitalize on Fuel Economy

W: Tough Competition

O: Capitalize on Fuel Economy

T: Depending too much on Fuel Economy Trend

T: Depending too much on Fuel Economy Trend

O: Capitalize on Fuel Economy

O: Capitalize on Fuel Economy

R&D

Supply Sales

& Mrkt

Distribution Service Design MFG Assembly

O: Capitalize on Fuel Economy

S: Robust presence in N. American market

RECOMMENDATIONS Explore fuel economy options in product

offerings, re-invest in R&D

Aggressively increase marketing and sales efforts in the United States, address concerns

of past reliability

Optimize use of existing Chrysler’s North American manufacturing plants in the U.S. and

minimize pressure on Italian manufacturing without leaving the country

Perform additional studies to how Fiats cars fit into Chrysler’s market

Continue standardization process for better integration of two entities

Business Strategy

RECOMMENDATIONS Explore fuel economy options in product offerings, re-invest in R&D

Business Strategy

RECOMMENDATIONS Aggressively increase marketing and sales efforts in the United

States, address concerns of past reliability concerns

Business Strategy

RECOMMENDATIONS Optimize use of existing Chrysler’s North American manufacturing plants in the U.S. and minimize pressure on Italian manufacturing

without leaving the country

Business Strategy

RECOMMENDATIONS Perform additional studies to how Fiats cars fit into Chrysler’s market

Business Strategy

RECOMMENDATIONS Continue standardization process for better integration of

two entities

Business Strategy

THANK YOU