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
WHO IS FIAT? – Current Product Offerings Automobiles Agricultural and Construc3on Equipment Commercial Vehicles Ferrari and Masera3 Metallurgical Products Automo3ve Components Produc3on Systems Publishing and Communica3ons Services
WHO IS FIAT? – De-Merger
WHO IS FIAT? – Fiat Automotive
THE EQUITY STAKE IN CHRYSLER
Fiat industrial
Fiat Spa
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 Global Reach
F 200k
T
GM
70k
304k
H F
140k
180k
C
60k
Fuel Efficiency
THE EQUITY STAKE IN CHRYSLER –Landscape Global Reach
F 200k
C/F
T
GM
70k
304k
H 140k
240k
60k
Fuel Efficiency
THE EQUITY STAKE IN CHRYSLER – Different Brands
Smaller Cars Designed for European Audience Historically Associated with Italy
Highly Fashionable
Fiat industrial
Larger Cars, SUVs and Trucks Designed for Rural and Suburban American Audience Historically Associated with Detroit
Mainstream, Traditional
Fiat Spa
THE EQUITY STAKE IN CHRYSLER – the Fiat 500
THE EQUITY STAKE IN CHRYSLER – Fiat 500’S Competition
Mini Cooper
Mazda 2
Ford Fiesta
Business Strategy
COMPANY HEALTH – European Market
COMPANY HEALTH – Manufacturing
COMPANY HEALTH – Financials 2009 -Loss of Revenue
14%
2009 Layoffs
4% 2009 Market Share
6%
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 Strategic Partnerships Diversified Business Portfolio Research and Development
Investment Rating Weak Performance Product Disruptions Lack of Brand Equity in the US
Weaknesses
Strengths Opportunities
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
Threats
SWOT– The PriorNew to Chrysler Stake Strategic Partnerships Diversified Business Portfolio Research and Development 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
Investment Rating Weak Performance Product Disruptions Lack of Brand Equity in the US Acquiring of traditional Chrysler’s competitors Acquiring of Chrysler’s financial obligations Compatibility of manufacturing and assembly is not definite Weaknesses
Strengths Opportunities
Develop New Strategic Partnerships Invest in R&D of Fuel-Efficient Automobiles Increase Activity in Emerging Markets Revitalize Brand
Improve Performance 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
Competitive pressure
Threats
Environmental demands and Government Regulations Indirect Competition from alternative forms of transportation Groundbreaking innovations that would make “green cars” obsolete 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
VALUE CHAIN – Applying the SWOT to Illustrate Implications
R & D CRF & Centro Stile
Supply
Raw Materials /Commodities:
Design
MFG
Car Design
Manufacture of: Parts Components Engines
Metal Electronics Chemicals Rubber Oil Tools
Assembly
Assembly of: Engines, Bodies, Electronics
Distribution
Sales & Mrkt
B2B & B2C
B2B & B2C
Shipping: Car Rail Water
Retail Online Dealers Sales through Equip Mfg
Warehouses
Inventory MGMT Car Assembly
Tech: Internet Services HR: Hiring, Employee Relations, Labor Concerns Finance: Compensation, Fund Disbursement Finance Legal: Union Concerns, Regulations Governing Emissions, Safety
Service
Parts Dist Repairs Service Centers Finance & Insurance
VALUE CHAIN – Applying the SWOT to Illustrate Implications
R & D O: Capitalize on Fuel Economy T: Depending too much on Fuel Economy Trend
Design
Supply
MFG
Assembly
S: Robust presence in N. American market
S:Use of Chrysler workforce, plants & tech
S:Use of Chrysler workforce, plants & tech
W: Compatibility of mfg and assembly is not definite
O: Capitalize on Fuel Economy
O: Capitalize on Fuel Economy
Sales & Mrkt
S: Robust presence in N. American market
S: Robust presence in N. American market
S:Use of Chrysler workforce, plants & tech
O: Freedom to brand themselves
O: Capitalize on Fuel Economy
T: Strong perception of Fiat as a lowprofile brand
S:Use of Chrysler workforce, plants & tech
Finance
Service
S: Robust presence in N. American market T: Strong perception of Fiat as a lowprofile brand
T: Depending W: Tough O: Capitalize on Fuel too much on Competition Economy Fuel Economy Trend
Tech: HR:
Distribution
S: Robust presence in N. American market
W: Compatibility of mfg and assembly is not definite
Legal: S: Robust presence in N. American market
O: Capitalize on Fuel Economy
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
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
Business Strategy