Applied Corporate Strategy: External and Internal Analysis of Fiat Chrysler

This report provides an analysis of the external and internal factors affecting Fiat Chrysler's corporate strategy. It covers the PESTLE analysis, Porter's five forces, and VRIO framework.

Applied corporate strategy

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Question 1 .......................................................................................................................................3
External analysis.........................................................................................................................3
Porter's five forces.......................................................................................................................6
Question 2........................................................................................................................................7
Internal analysis of the organisation..........................................................................................7
Value chain analysis of the organisation.....................................................................................8
VRIO framework........................................................................................................................9
Question 3......................................................................................................................................10
Evaluation.................................................................................................................................10
TWOS matrix............................................................................................................................10
Suitability..................................................................................................................................11
Acceptability.............................................................................................................................11
Feasibility..................................................................................................................................11
CONCLUSION .............................................................................................................................11
REFERENCE.................................................................................................................................13

INTRODUCTION
Companies plays a major role towards the increment of growth and development of
economy by offering number of job opportunities to individuals as well as increase their living
standards. In a business environment there are various factors which affects the operation of
company and that can be asses with the help of number of tools such as PESTLE, VRIO etc.
(Rastogi and Trivedi, 2016). The following report is based on Fiat Chrysler, which is an Italian
auto-mobile manufacturer and founded by Giovanni Agnelli in 1899. In this present report
discussion about PESTLE and porters five forces in order to identify threat & opportunities is
covered. Additionally, VRIO model is used to determine strength and weakness for selected
company.
MAIN BODY
Question 1
External analysis
Such analysis is a process of predicting and analysing what operational challenges an
organisation faces in relation to opportunities and threats of the macro environment than the
competitive forces.
Fiat Chrysler and Peugeot is also one of larger auto-maker companies after merger. Fiat
Chrysler, an Italian multinational company merging with a French multinational corporation
will soon be named as Stellantis, new name of the organisation. This merger therefore had its
own advantages and threats affected by the external factors that discussed through pestle model
as follows:
Political factors: For long term profitability of a business, political risks has to be kept
into consideration when a global entity has to expose itself to major or more dozen of countries
with their own political environment.
Opportunities: Political stability is important among major auto manufacturers across countries.
Fiat Chrysler closely determined these political factors and have been providing mandatory
employee benefits with effective wages according to overtime of workers under Wage legislation
act. Industrial safety regulations and work week regulations favoured trading partners and auto
manufacturers of the selected company (Mihailova, 2020). The law of tax rates, incentives and

product labelling will also help newly merged organisation in maintaining their standards.
Intellectual property protection law will safeguard the new deals of the company.
Threats: Bureaucracy among auto manufactures may increase the level of corruption in the
industry. Also company can face military invasion risk as well as trade and tariff regulations in
relation to consumer goods. The legal framework required for any enforcement of contracts
within or outside countries can become a challenge for the merger organisation.
Economic Factors: The aggregate demand and investments done in organisations by
determination of many factors such as economic cycle, foreign exchange rates, inflation
rates,interest or saving rates etc. As these norms affect the competitive advantage of industry
firms.
Opportunities: Fiat utilizes many economic indicators such as growth rate, inflation rate,
percentage of consumer spending etc. to predict its future growth and forecast the
competitiveness of various sectors in market industry.
Threats: With rise in financial market efficiencies, Fiat auto-mobiles may come across the need
to raise more capital in local consumer goods market. Also level of skilled workforce in auto
manufacturers may increase competition. Rise in labour costs may affect the productivity of the
organisation resulting in more unemployment rate.
Social factors: Culture of organisation impacts the society as whole including shared
beliefs and attitude of consumers. These factors help the chosen entity understand their customer
population and help them construct marketing plans and campaigns.
Opportunities: The selected enterprise may use these factors to study power structure of society,
demographics and education level of employees at the workplace and consumers culture.
Leadership of the organisation influence the entrepreneurial spirit and attitude in the society
(Gupta, Gupta and Gupta, 2019).
Threats: The rising environmental and health consciousness among society has become a
challenge to Fiat. Since consumers from different backgrounds believing in various social
conventions and hierarchies sometimes are against various actions of the company harmful for
environment or affecting them socially.
Environmental factors: Environment standards of a region or place has its own norms
to follow in multiple market industry that impacts the profitability and productivity of the
organisation. Also in many countries, they have their own laws of liability and environment.

Opportunities: There can be many steps by chosen auto maker company that they can
undertake for better waste management in the goods and consumer sector. These may include
use of recycled items and following of pollution control environmental laws that will help
company establish goodwill in the society. Also right attitude towards using ecological products
and support to renewable energy will positively impact its consumers.
Threats: Climatic conditions such as change in weather, caught up endangered species etc. may
become an problem to resolve for company sometimes. Hereby, the company should have
enough tools to predict and capital, reserves for any natural calamity or circumstance occurring
in future.
Legal factors: There are certain laws to be followed by auto manufacturers in market
such as Anti-trust law, intellectual property law, discrimination law, employment and health &
safety laws etc (Ofosu-Boateng and Jiping, 2020).
Technological factors: Technology up gradation impacts an organisation's product
offerings and cost structure on a broader level sometimes. Therefore, the rate of technological
diffusion of chosen company should be consistently measured and analysed according too the
growth of competitive markets around.
Porter's five forces
This framework undertakes by entities of company in order to analyse structure of
industry along with potential probability of their existing strategies by understanding the
competitiveness of business atmosphere. Porters five forces analysis with relevance to Fiat as
follows:
Industry rivalry: Fiat company is an auto-mobile company and due to which the level of
rivalry in this industry is very high. Intense competition leads company towards focusing on
existing consumer trends & local production in order to cut down overall operational costs.
Additionally, rivalry leads to higher uncertainties and growth. By which the partnerships in
automotive firm is increases.
Bargaining power of suppliers: The bargaining power of suppliers in automotive
industry is low instead of some large suppliers on whom brands rely exclusively for specific
parts. Due to large number of suppliers across the worlds, the bargaining power of consumers is
remains low (Zhang, Leng and Zhou, 2020).

Bargaining of consumers: The bargaining power of consumers in automobile industry
has grown very high because of several components. Such as growing control in hands of
consumers charging taste of buyers, availability of information leads consumers to make final
decision. This company offers its fleet members exclusive deals and discounts to the dedicated
consumers in order to better maintain the services facilities. All these factors represents the battle
of market shares among all brands of same industry and due to which the bargaining power of
consumers will grow and companies will focuses on trends and preferences of consumers for
remaining their preferred brands.
Threat of substitution: Threat of substitution in automotive company comes from
various sources such as competing brands, competing services such as ride sharing and other
sources of transportation such as buses, trains, flights etc. Ample number of competing brand are
present in market which offers similar products and services. In which the quality and
technology of product is primary differentiators in automobile industry and that aids company in
combatting with threat of substitution. Competing brands includes BWM, Hyundai, Toyota etc.
and competing services like Lyft & uber. Fiat Chrysler maintained their position at marketplace
and that ultimately maintains loyalty of consumers. So the threat of substitution remain moderate
for selected firm.
Threat of new entrants: Auto mobile industry is growing rapidly and due to this the
entry and exit of barriers is also growing highly. In which the merger and acquisition is the best
option in order to form alliances for faster growth. So the threat of new entrant would be low for
selected company.
Question 2
Internal analysis of the organisation
By conducting internal analysis an, organisation gains useful data related to valuable
resources within the organisation and their effective usage. This data helps the organisation
construct effective plans for allotment of resources in a way which increases profitability of the
organisation. The multinational auto-mobile company Fiat Chrysler Auto-mobiles has several
resources which are provided below:
Human resources: These resources include abilities of the workforce employees by the
organisation and their contribution in helping the organisation achieve various objectives. Fiat

Chrysler corporation has developed capable and skilful workforce which includes engineers, car
designers mechanics which build effective and attractive auto-mobiles for the company
(ÖNEREN, ARAR and YURDAKUL, 2017). This is a strength for the company as these
employees help the company construct unique products which are effective in gaining more
consumers and giving the company competitive edge over their rivals.
Physical resources: These resources include property owned by the organisation which
are in sight of outside parties and help the organisation offer products or services which increase
their profitability. According to the official website of the organisation 16 of their 100 global
manufacturing plants which are located in Italy have been affected by global pandemic. The
company is facing manufacturing crisis due to spread of coronavirus and their dependency on
china based suppliers for raw material has affected manufacturing process which has resulted in
closing of several European manufacturing units. This is weak resource for the company as it
will affect long term organisational goals of the company.
Organisational resources: The resources attained by the company for smooth
functioning of various operations conducted at the premises of the company. The respective
enterprise has abundant competent organisational resources which help the company meet the
demand of consumers in various international markets. The organisation promotes their products
by participating in trade fairs and motor sports along with providing test drives to their
consumers and well known journalists. The organisation also uses social media for connecting
with their consumers effectively.
Technological resources: Advancements in field of technology play a significant role in
the development of an organisation. The organisation has several R&D centres across the globe
for developing futuristic vehicles such as self driving auto-mobiles and electric vehicles at low
costs. The respective corporation has implemented a cost effective plan in order to include self
driving vehicles in their brand portfolio (Abalkhail, 2019). This includes partnering with Waymo
which is global leader in automation technology for developing self driving auto mobile for
personnel use and gaining leading position in automatize vehicle industry. These technological
competencies are a strength of the company as they help the organisation attract more
consumers in cost effective manner.
Intangible resources: This kind of resource built by an organisation includes brand
equity, public image of the company and goodwill of the brand. The respective conglomerate has

huge brand equity due to associated heritage in the auto-mobile industry. The organisation has
built loyal consumer base for various models such as Alfa Romeo, Abarth and Lancia due to
their iconic status in the car industry. The organisation participates in various motor sports events
since the early 20th century, this has created the public perception of their products in association
with superior quality and high speed. This brand image is a strength for the organisation as it
creates loyal consumers for the organisation.
Value chain analysis of the organisation
This framework gives the company accurate information related to different operations
conducted by the organisation in order to give effective commodities to their consumers. The
value chain analysis for auto-mobile manufacturing corporation Fiat Chrysler is provided below:
Inbound logistics: This part of value chain analysis for the respective organisation
includes efficient collection and storage of materials gained from suppliers across the globe. The
organisation has distribution channels for gathering required material across the globe (Wellner
and Lakotta, 2020).
Operations: The respective company uses automatise equipments for effective and swift
mass production of vehicles. The organisation has manufacturing plants in Europe, South
America and Asia to fulfil the demands of their consumers.
Outbound logistics: The corporation has uses advanced technology for secure storage
and delivery of goods in various showrooms around the world. The overall look of showrooms
reflects the brand image of the company and is situated in locations which are accessible to the
consumer.
Marketing and sales: The organisation markets their products through various activities
such as advertising in digital, electronic and print media along with developing interactive spaces
in social media. The organisation builds their brand by participating in trade shows , sponsoring
various sports tournaments and selecting famous personalities as their brand ambassadors such as
Jennifer Lopez and Charlie Sheen. The organisation has undertaken various CSR initiatives to
enhance their brand image in the consumer's psyche.
After sales services: The organisation provides various after sales services to their
consumers which includes repair and maintenance of vehicles with a specific time limit,
checking of vehicle in order to modify or change any parts which may cause a problem in the
future and call centre services to solve any issues related with the product.

VRIO framework
Basis Valuable Rare Inimitable Organised
Technological
resources
Yes Yes No Yes
Human resources Yes Yes Yes Yes
Brand image Yes Yes No Yes
Physical resources No No Yes Yes
Organisational
resources
Yes No Yes Yes
Core competencies: In the context of Fiat Chrysler, the technological resources of the
organisation such as investment in development of self driving vehicles and electric powered
vehicles give the company enormous advantage over their opponents. The cost effective strategy
adopted by the organisation to build self driving vehicles in their company allow the organisation
to grab huge share of the self driving vehicle market (Safari, Farhang and Rajabzadehyazdi,
2016). The organisation has invested in utilising best talent available for designing and
constructing fast and comfortable auto-mobiles. This decision of the organisation to enhance
their manufacturing equipments and improve the technological features provided in their
products has benefited the organisation by attracting consumers from their opponents and helped
the organisation grow exponentially.
Question 3
Evaluation
TWOS matrix
Opportunities- Company has
strong presence in many
regions. Employees are highly
experienced & capable.
Threat- spreading environment
awareness, there are several
substitutes available at market
place.
Strength – highly skilled With the assistance of Unique brand image of

employees will able to meet
with innovation and new
technologies.
innovative approaches, entities
of Fiat company is able to
meet the demands and
preferences of consumers.
company aids to grab more
consumers from alternatives
product or service options.
Higher innovation will
provides competitive edge to
Fiat which become difficult for
other companies to copy their
technology.
Weakness – Property owned
by company becomes lower
due corona virus and by which
many European manufacturing
units get closed.
With the assistance of strong
position, they will able to
recover their loss due to
impact of coronavirus.
It is important to use better
resources for ganging edge
over rival companies.
There are certain number of strategies that is used by entities of company for the
sustainability at marketplace for long time. They adhere innovative and creative methods for
providing products or services to consumers. In which the most effective strategies could be
offering innovative products such as electric cars. As well as they can expands their business at
new location by margining local companies (Mugo, 2020). At the end number of stores can
opened in different countries like Asia, America etc.
Suitability
From above mentioned strategies one suits most for Fiat as it assist them in increasing the
image and value of brand at marketplace. It has analysed that working in luxurious industry
reaches at stagnation point which improves the product portfolio by considering suitable and
appropriate mode to gram more consumers.
Acceptability
There are four main parts of stakeholders which relies on power & interest, are as
follows:
keep satisfied: They are individuals which have high power & interest, therefore it is vital
to keep satisfied them for achieving predefined goal.

Monitor closely: These individual have low interest but have high power in business so
need to manage very closely in order to stay remain with company for longer time.
Keep informed: It considered those stakeholder who have low interest and high power in
business thus it is important to provide essential information to them on regular basis.
Monitor: It involves those who have low interest along with low power thus it is not vital
to impose more efforts.
With relevance to acceptability strategy one is highly acceptable. It is important to hold
stakeholders satisfied so that they will stay with fiat company for long-time (WORTHINGTON,
2016). It has been analysed that consumers are the most essential stakeholders of company. In
industry it is vital to satisfy the consumers for generating trust and loyalty to accomplish
predefined goal.
Feasibility
From Feasibility concept, primary strategy to increase the product mix is most effective
as it aids in influence more consumers in low cost. Other strategies such as opening stores &
exploring business in different nations will required a lot of investments (Harris, 2017). So it will
be feasible for fiat to enhance current product mix by increasing wide ranges of product like
electric cars.
CONCLUSION
From above discussed report it has been concluded that there are various tools like
PESTLE, VRIO porters five forces etc. for determining the external and internal conditions of
company. For the future growth & success number of strategies are devised. These strategies are
evaluated on the basis of some factors such as feasibility, acceptability & sustainability.

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