Mar 13, 2016
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