Corporate Strategy of Fiat Chrysler: Opportunities, Threats, and Competences

This report analyzes the corporate strategy of Fiat Chrysler, focusing on external analysis, resources, and key competences. It examines the opportunities and threats in the automotive sector, as well as the core competences of the company. The report also discusses the SAFe criteria implemented by Fiat Chrysler in their strategy.

APPLIED
CORPORATE
STRATAEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
External analysis in order to examine Opportunities as well as Threats & assess the industry
attractiveness..........................................................................................................................1
Analysis of Resources aswell as key competences of the business entity to examine core
competences...........................................................................................................................4
SAFe criteria implemented to the strategy executed by the business organisation................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Corporate strategy defines as the direction and scope of actions taken by the companies
so that their goals and objectives will be accomplished. It has been said that each and every
business organisation has its unique and innovative corporate strategy applied by them at the
organizational premises in order to gain competitive advantage eat the marketplace. It is mainly
linked with the management of risk, resources as well as return commonly done by a business
organisation which gives the opportunity to the company in order to become leader at the
competitive marketplace within a particular sector. In the current report, Fiat Chrysler is chosen
as the base organization. It has also been said that popularly it is known as FCA, which is an
Italian-American multinational corporation established in the year 2014 by merging two
companies Fiat & Chrysler and turn into new holding company. The discussion about the merger
takes place between two automobile companies named as Fiat Chrysler and PSA group.
In addition to this, the present report includes analysis about external business
surroundings as well as industry analysis with the help of PESTLE & Porter Five Force
framework. Apart from this, it consists of resources along with key competences so that they can
develop their business strategies in an effective manner. At last, it includes SAFe criteria which
are applied to the strategy implemented by the business entity at the marketplace.
MAIN BODY
External analysis in order to examine Opportunities as well as Threats & assess the industry
attractiveness
It is important for an organisation to constantly analyse the business environment within
which it operates. This provides due assistance to the business entity in identifying the potential
factors of the environment that may place a significant impact over the operations of the
company. In this regard, not every factor will act as the opportunity for the entity. Some factors
will even serve as threats to the sustainability as well as financial performance of the corporation.
Fiat Chrysler has been functioning as a top notch firm within the bounds of automotive sector of
United Kingdom. The high quality and hi tech offerings of this entity has provided an edge to
this organisation over the rival firms operating within the confines of same business sector. Thus,
PESTLE analysis for Fiat Chrysler is presented as follows:-
PESTEL Analysis
Political:
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The strong political conditions of UK tend to create opportunity for Fiat Chrysler
providing assistance to it in effectively carrying out its business operations within the bounds of
automotive sector. By gaining knowledge of the diverse political regulations, entity can ensure
its sustainability in market for a considerably longer time period.
Economic:
The economic conditions of UK have worsened over the course of time because of the
onset of BREXIT in the country. This has resulted into the steep decline of value of pound
causing severe consequences for the sales and profit figures of Fiat Chrysler in market place. The
opportunity related to this factor is that the country is equipped with well versed infrastructure
that can be used by the automaker to gain a high position in market.
Social:
The changing needs and preferences of the population hold equal chances of acting as an
opportunity or threat for the companies. In this relation, it is required by Fiat Chrysler to carry
out constant market research to identify the latest trends or it will be out powered by rival firms
functioning within automotive sector.
Technological:
Constant upgradation is taking place in the technological domain of UK. Thus, it
becomes quite crucial for Fiat Chrysler to take into due account the opportunities and threats
linked to the employment of different technologies so that the management team of the firm can
implement the most effective ones in the long run and earn extensive profits and revenues.
Environmental:
Acting in the favour of environment is the primary responsibility of a business as it
accounts to its CSR. In this relation, it is identified that the management of Fiat Chrysler takes
several environmental initiatives to ensure it operates in eco friendly manner. The company
makes use of sustainable practices and also pledges to reduce its carbon footprints by a fair
margin to ensure least harm being caused to the environment.
Legal:
Every entity is expected to function in the interest of statute. This makes it important for
Fiat Chrysler to gain comprehensive knowledge about the laws and legislation pertinent to
concerned industry. The management of this company provides thorough knowledge about the
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statutory standards to its employees in a bid to make sure that the entity does not have to face
legal consequences as a result of non compliance.
Porter Five Force Analysis
It is identified that the automotive sector of UK is hyper competitive. This poses
significant threat to all the companies that are carrying out their business operations within this
industrial sector. As a result of the fierce competition prevailing within the respective business
sector, it becomes quite important for companies to analyse the competitive environment of
automotive sector. For the purpose of carrying out industrial analysis, companies around the
world make use of Porter Five Force Analysis. This is a strategic management framework that is
put to use by the business entities in order to identify the extent of competitive rivalry prevailing
within a business sector. In this relation, the management of Fiat Chrysler has decided to carry
out Porter Five Force Analysis of the organisation in order to identify its effective market
positioning in relation to other rival firms within the bounds of automotive sector.
Threat of New Entrants – Low
The extent of this force within the bounds of automotive sector is recognised to be low. The main
reason behind this is acknowledged to be the extensive capital investment that is required to be
made by the organisation if they seek to gain entry into this market. Further, it is identified that
automotive sector deals with several legal and environmental standards related to pollution,
carbon emissions, CSR etc. Thus, an entity which wants to enter the automobile sector needs to
have knowledge of these standards and thus comply with all of these to save it from negative
repercussions at all times. This creates opportunity for Fiat Chrysler to launch new and
diversified offerings at rapid intervals of time, thereby retaining its customer base for a longer
period of time.
Threat of Substitutes - High
The magnitude of this element in relation to the automotive sector is determined to be quite high.
This is because at present UK consists of several top notch companies functioning within the
bounds of respective industry. These corporations deal in similar product line thus posing threat
to the existence of many top notch brands operating in market place. This implies significant
threat for Fiat Chrysler, thus it is important for the management of this firm to come up with
differentiated offerings which can assist the respective automotive corporation in attaining an
edge over the rival firms.
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Bargaining Power of Buyers - Moderate to High
The extent of this force in context of automotive sector, ranges from moderate to high. The main
reason behind this is that the customers in the present era desire quality, technology and
innovation all in one vehicle design. Thus, it is important for Fiat Chrysler to take into account
all of these factors and sell cars at prices which are affordable by the customers at all times.
Bargaining Power of Suppliers – High
The magnitude of bargaining power held by vendors with respect to automotive sector is
recognised to be high. This is because automotive sector is concerned with quality and
innovation mainly which are desired by the customers. Thus, every organisation maintains
networking with few vendors only that they trust enough to provide the company with superior
quality materials.
Competitive rivalry - High
Excessive rivalry prevailing in automotive sector inflates the magnitude of this force. The
present of companies such as TESLA, General Motors, Nissan, Bentley Motors, Ford, Aston
Martin etc. pose threat to the market positioning of Fiat Chrysler in global market place. thus, it
becomes important for this organisation to adopt strategies which can render assistance to it in
having an upper hand over the rival firms.
Analysis of Resources aswell as key competences of the business entity to examine core
competences
RESOURCES
Human Resources –
The higher authorities of Fiat Chrysler is oneof the powerful and strongest resources for
the company as he is the person according to which each and every person act within the
organization. CEO of the company guide and direct the characteristics of staff members so that
they can enhance their performance which leads towards the attainment of organizational goals
and targets within stipulated time frame. Also staff of the company are also very skilled and
perform their functions for the attainment of set targets and create positive image of the company
at the competitive marketplace.
Physical Resources –
The equipment’s, tools and techniques as well as machineries used by Fiat Chrysler act as
one of the biggest strength for business strategy. They provide help to the company in order to
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effectively perform all the functions and operation in an effective and appropriate manner so that
the pre define goals and objectives will be accomplished.
Financial Resources –
Every sector requires lot of funds and investment, similarly Fiat Chrysler requires huge
amount of funds so that they can perform all the daily operations. Along with this, as per the
current competitive environment, organisation needs to change their techniques & technologies
which needs huge amount of funds.
Intangible Resources –
Apart from tangible resources there are various intangible resources which have the
capability to influence the performance of the company. One of the most effective resources
includes goodwill or brand image of Fiat Chrysler. Companyis one of the well known
automobile industry at the competitive marketplace where they have strong position at the
marketplace. This as a result provide help to the business organisation in order to gain high
amount of profit margin at the marketplace.
Apart from this, in reference to the negative publicity it acts as a threat for the
organization like Fiat Chrysler as the company operates at large scale and any sort of negative
publicity might affect the image of organization at global level. Furthermore, it willact as the
threat for the automobile industry as it will leads towards decline of sales and profitability.
VRIO ANALYSIS
VRIO’s model help a business entity in order to identify the areas which provides a business
organisation competitive edge at the marketplace within the similar industry. Examination of
valuable resources, skills, as well as competences is quite essential for the business organisations
so that they can develop their strategies accordingly. In this context, manager of Fiat Chrysler
usethe VRIO framework so that they can identify their core competences and resources.
V: Value creating elements
R: Rarity
I: Imitable
O: Organization Appropriateness
V R I O Strategicexecution
RESOURCES
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MichaelManl
ey
YES YES YES YES The CEO of Fiat Chrysler is the most
significant resource of the company. The
success and growth of the company is guided
and directed by high effective leadership style
for the attainment of organizational goals and
objectives.
Funds and
financial
terms
YES NO NO YES In order to perform all the task related to the
development and innovation of new and
innovative products and services requires huge
amount of funds and monetary values.
Design as
well as
engineering
excellence
NO NO NO YES Fiat Chrysler vehicles, are highly innovative
and unique which are designed for the comfort
and are unique. People are attracted towards
the products and services as their main focus
is to satisfy the needs and requirements of
customers.
V R I O STRATEGIC IMPLEMENTATIONS
COMPETENCES
Innovative &
creative
design
YES YES YES YES It is said that in context of R&D, Fiat Chrysler
invest huge amount when it comes to products
and services of the company. They adopt highly
advanced technology in order to gain
competitive advantage at the marketplace.
Merger
strategy
YES YES NO YES The Merger and diversification strategy of the
automobile company assist them in order to gain
highly competitive advantage and for
maintaining sustainability at the marketplace.
These strategies help them in capturing huge
market share which as a result beat the level of
competition at the competitive environment.
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Business
Model
NO NO NO YES Fiat Chrysler sales strategy is highly capable in
order to provide help to the business entity in
order to achieve their goals and targets in an
effective and appropriate manner. They adopt
systematic models with the help of which they
can easily maintain their sustainability at the
marketplace for long duration.
According to the above table, it has easily been identified that the biggest strength
resource for the company is their CEO or the top management team of the company. Fiat
Chrysler provides guidance and direction to their staff members in order to produce high quality
products and adopt various advance technology which leads towards the growth and success of
their business operations. Apart from this, innovative as well as creative thinking culture is the
another reason which makes them the top management team of the company within automobile
industry at the competitive marketplace. They have their own weakness which they convert into
their strength and grab opportunities at the competitive marketplace which leads towards the
growth and success of the firm at global level.
SAFe criteria implemented to the strategy executed by the business organisation
Over past few years, Fiat Chrysler is known for innovative and creative cars as the design
are highly attractive and can easily grab attention of people towards them. They have the
capability to create competition at the marketplace within automobile sector across the whole
wide world. It has also been said that the current strategy of the company is that they merge with
PSA despite of the virus attack. By passing the time, I it has been identified that the decision of
making merger between both the companies in the year 2021 is quite tough because of the
pandemic arise at the global level where lockdown in different countries has been faced which
affects the whole economic system in a biggest way. Their main motive is to merger both the
companies and introduces something new at the marketplace which increases their brand image,
sales and profitability at the competitive environment. Along with this, by launching new and
innovative electric cars at the marketplace the main aim of the organization is to capture large
market share by introducing high-tech features as well as excellent architectural design. The top
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management team of the organisation applied SAFe criteria in order to examine the feasibility,
suitability as well as acceptability of the generic strategy of the business entity in order to adopt
innovation in an effective manner.
Suitability: After considering the behavioural characteristics of consumers, management
team of Fiat Chrysler examined that at the current market situation customers prefer unique and
innovative products. It has been said that innovation define as the strategy which belongs to the
strength and opportunities of TOWS matrix according to which bringing up unique and
innovative products at the marketplace on a regular basis assist the organisation in a positive
manner. This is the strategy of adopting unique and innovation for entering and grabbing the
marketplace is best and most suitable with the help of which needs and requirements of
customers will be fulfilled by adopt advance and high-tech technologies.
Acceptability: It has been said that the generic strategy of Fiat Chrysler is to adopt
innovation in their products so that they can easily enter into the new marketplace by launching
electrical, fuel free, driverless vehicles which can easily be acceptable by customers in the
current era. In the present context of Fiat Chrysler, different stakeholders for the company
include customers, employees, government, shareholders, community and many more. Their
interest as well power in reference to the present strategy is going to be discussed as follows:-
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In this context, each and every stakeholder share their thoughts that innovation is the key
elements behind successful business entity and by coming up with new and innovative ideas on a
regular basis maintain the competitive advantage at the market area. There it has been identified
that every stakeholder accept the strategy in order to merge with PSA group at the competitive
environment and launch various unique and innovative products.
Feasibility: It has been said that the generic strategy of Fiat Chrysler in order to merge
with PSA group and launch new and unique products is quite feasible as it assist in the growth
and development of the company at the competitive marketplace. But there is a situation of
COVID19 affect the whole world and influence the economic system of the countries in a
negative manner. All these factors can affect the overall performance of the merger in a negative
manner. Therefore, it is required to measure both positive and negative aspects of the merger.
CONCLUSION
According to the above stated report, it is concluded that corporate strategy acts as one of
the essential factor which assist a business entity in order to maintain their long term
sustainability at the competitive marketplace. Each and every organization have their own goals
and objectives for which they develop various sort of strategies leads towards the successful
accomplishments of their targets. Apart from this, PESTLE analysis help in describing that it
becomes essential to identify the external environment as they have their own impact on the
profitability and goodwill of the company. In addition to this, it has also been concluded that
there are various substitutes available at the marketplace which has been identified by adopting
Porter’s five force model. At last with the assistance of VRIO model competencies as well as
resources can be identified which make them leader at the competitive market.
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