This document discusses the importance of corporate strategy and its role in achieving business goals. It explores the strategic models used by Fiat Chrysler and analyzes its business situation. The document covers external and internal analysis, TOWS analysis, and value chain analysis.
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APPLIED CORPORATE STRATEGY
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TABLE OF CONTENTS INTRODUCTION...........................................................................................................................3 MAIN BODY..................................................................................................................................3 Fiat Chrysler business situation..................................................................................................3 External Analysis.........................................................................................................................3 Internal Analysis..........................................................................................................................5 TOWS Analysis...........................................................................................................................8 Stakeholder Analysis.................................................................................................................11 SAF (Suitability, Feasibility and Acceptability) Matrix............................................................12 CONCLUSION..............................................................................................................................12 REFERENCES..............................................................................................................................13
INTRODUCTION Corporate strategy is a strategic plan of the company that defines the firm overall aim and direction and the way in which will be gained within strategic management activities. It is essentialforthecompanybecauseitenablestoallocateitsresources,buildscompany's expectations and enhances competitive positioning in the business market. The main objective of this strategy is to achieve all goals financial and non-financial within defined period. There are various companies which have put high efforts to develop effective corporate strategy so that it enables to gain high profitability in business (Hernandez and Menon, 2019). To understand role of corporate strategy has an example of Fiat Chrysler. It is an Italian/American multinational corporation and has become world's eighth largest auto maker that is headquartered in London, UK, UK. It posses wide product line and offers them across the world to the customer, In this report will discuss various strategic models like porter's five force, Value chain analysis in the Context of Fiat Chrysler . MAIN BODY Fiat Chrysler business situation External Analysis Porter's five force model It is a strategic framework that is undertaken by company in order to analyse competitive environment of business in its business market. It is essential for the organization because it supports to adjust strategy accordingly competitive situation and improves potential benefits of the business. This strategic model is applied by Fiat Chryslerplc for analysing intensity of competition in retail industry wherein it operates. This model comprises five forces such as: Bargaining power of suppliers (High) All most all companies in the retail market buys raw material from suppliers. While skilled suppliers have less availability in UK's market, so they are in dominant position and can decrease margin of the retail company's which Fiat Chryslerplc can generate over the product from customers. For example powerful suppliers have strong negotiating power for extracting higher price from the retail industry. Thus, higher bargaining power of suppliers directly reduces overall productivity of retail companies like Fiat Chrysler plc (Feldman, 2020).
Bargaining power of buyers (High) High availability of auto mobile companies in UK' market increases bargaining power of buyers. For example there are various auto mobile companies like Fiat Chrysler sells similar product like maserati, jeep, ram, fiat, lancia etc.at different prices that brings opportunity for buyers because they get alternative options to buy products. So, they go only those retail companies which offers product with high quality at minimum price which directly impact on Fiat Chryslerprofitability. It denotes that bargaining power of suppliers is too high, so they always seek for discounts and offers (Oertwig and et.al., 2017). Threats of new entrants Threats of new entrant is lower because there are big four companies like Ford, Toyota which already has established good brand image in the UK's market and sells wide line product to the customer and have captured good market share over its products In the auto-mobile industry. So, it will be difficult for the new entrant to establish their business or in a case if the new entrant open it's business. In that state new entrants initially has to sell good quality product at lower price but it is not possible for the new entrants because general motors already sells vehicle product with high discounts. Overall, there is very less threat of new entrants in retail industry. Threats of substitute product or services (Moderate) Threats of substitute product is moderate because most of the retail companies i.e. Fiat Chrysler , Toyota and Ford posses' wide product line and services which meets all customer's needs and expectations. Still, there has very fewer threats of substitute product and services for the Fiat Chrysler . However, Fiat Chrysler always try to lead innovation in it'sexisting product and improves customer's shopping experience. But it can get threat from Tesla in future because it also posses similar product like Fiat Chrysler but still planning to introduce new features in it's existing product portfolio. Rivalry among the existing competitors (Low) Fiat Chrysler has established strong brand presence in the UK's retail industry so it is considered one of the most powerful competitions for auto-mobile companies. Fiat Chrysler is act as market leader in the business because it offers product at lower price so but it is highly pressurized from the nearest rivals in term of price wars that has introduced by Tesla and Toyota which directly affects profit margin of Fiat Chrysler (Mukherjee, 2018).
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From the above analysis can be understood that Fiat Chryslerplc has good competitive positioning in the business market but still it gets negative impact from the suppliers and buyers. But It has planned to recruit suppliers across the world so that they get high quality raw material at lower price through it will enable to generate high profit margin. To decrease bargaining power of buyers it has goal to introduce new product services and improves quality of existing products that will support company to sell product at good price. Thus, Fiat Chryslerplc will tackle current situation of business. Internal Analysis Value Chain Analysis It is a strategic analytical tool that is organized to examine opportunity and find competitiveopportunities.Thismodelplayssignificantroleafterdevelopmentofvision statement. It also allows company to categorize their resources on the basis of their potential so that it can enable to achieve it's proposed goals and objectives over the time period. This framework is applied for the fiat Chrysler in order to categorize essential activities to find competitive opportunities through which it get long-term and short-term competitive advantage. The model comprises two type activities I.e. primary and secondary (Cillo and Pradella, 2019). Primary activities The primary value chain activities of Flat Chrysler is directly involve in manufacturing and selling the goods to targeted customers. This activities comprise various primary activities such as inbound logistics, operations, outbound logistics, marketing and sales, and services which undertakes by company in it's business. Inbound Logistics It is essential to build strong relationship with suppliers as their support is important to have, store and distribute them. Fiat Chrysler Auto-mobile N V always focuses in product development phase through it can face various challenges. It focuses on every aspect of transformation such as from raw material to finished product so that it does not have to face any challenges in respect of product quality or service. Operations
It is another important activity that arises when raw material receives by Flat Chrysler N V and it ready to transform raw material into final product and introduce in the business market. Operational activities includes different type of activities i.e. machining, packing, handling and testing. However, equipment repairing and maintenance are also involved in this category. Operation management of Fiat Chrysler also perform this activity like manufacturing and service operation. This activity is essential for enhancing productivity, maximizing the potential as well as ensures competitive success of the company. However, high productivity of Flat Chrysler Auto mobile N Vsupports to maximize economic growth, improve profitability of business in the auto mobile sector (Marković, Aćimović and Mijušković, 2019). Outbound Logistics It involves those activities which delivers the product to the user by passing thorough differentintermediaries.Outboundlogisticsactivitiesarerawmaterialhandling,storage, planning,orderprocessing,transportinganddeliveringtotheendcustomer.Operation management of Flat Chrysler N V always examine and optimize the outbound logistics to explore sources of competitive advantage and gains all projected objectives of the company. This outbound activities are highly essential for the company because these are required to manage timely along with optimal cost while product delivery processes puts minimum negative impact on the quality and increase level of customer's satisfaction as well as maximizes growth opportunity. Marketing and Sales Itisanotheressentialstageofprimaryactivitiesinwhichstagehighlightsthe differentiation and benefits points to follow customers that they offer better product as compared competitors. As know only producing high quality product and sells them at affordable prices cannot develop value unit for the Flat Chrysler Auto mobile company. In this stage, marketing an sales managers plays vital role to create values of proposed products such as they perform different marketing and sales operations i.e. Sales force, advertising, promotional activities, pricing, quoting, channel selection and building good relation with channel members. Fiat Chrysler put more investment in the marketing and selling activities so that it can create awareness in customer's about product and services which excites them to buy its new vehicle
products. Thus, company enables to establish strong brand image, stay competitive dynamics in the Automotive sector (Salvi and Pahurkar,2016). Services Fiat Chrysler offers pre-sale and post-sale services to the customer in order to make loyal customers for the company. Post-sale services are considered as marketing and promotional activities because it makes feel customers that they are valuable part of the company. But company does not have good support activities which is essential for protecting brand reputation instead of using it as advertisement tool in order to spread positive word of individual mouth. So, marketing and sales management of Fiat Chrysler requires to pay attention on this activity in effective manner (Mudambi and Puck 2019). Secondary activities There are various secondary activities that are undertaken by company in coordinating and help primary value chain activities. Fiat Chrysler company gets advantage from the secondary activities as well which are mentioned below: Firm Infrastructure It is one of the essential element of secondary activities which indicates wide range of activities i.e. quality management, accounting, legal input handling, financing, planning and strategic management who keeps attention on day to day process of product development. Effective infrastructure management of Fiat Chrysler Auto-mobile N V allows company to keep control overall infrastructure activities like costs that leads strengthen the competitive positioning of the business in the Auto-mobile sector. It is one of the major strength of businessthrough which company always gets competitive advantage from business market. Human Resource Management ItisanotheressentialresourceofFiatChryslerAutomobileNVwhereinHR professionals involves in various activities of the company like recruiting, selecting, training, rewarding, personnel management and performance management activities. Effective HRM allows Fiat Chrysler to decline competitive pressure on the basis of motivation, efficient workforces and commitment. With the effective HRM practices, company always enable to gain
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cost minimization objectives by examining hiring, training costs with their productive returns. But still, company requires paying attention on employees' performance because all members do not put sufficient efforts like others. Only, HR professionals of the Fiat Chrysler can play vital role in improving productivity, efficient of individuals in the workplace so that company can receive effective outcomes in the business. \ Technology development It is another aspect of secondary activities and it is essential for all businesses. For example in modern era, overall all value chain activities are properly dependent on technological support. Fiat Chrysler needs technological integration in manufacturing, distribution, marketing and HR activities so that it can gain all proposed objectives over the time period. However, company uses highly advanced technologies like automation software, product design research, technology supported customers and data analytics. Technological development factor is another important factor that helps to gain long-term competitive advantage in its competitive market. Procurement Procurement is the processes that involves in various activities i.e. purchasing inputs that may wide range from equipment, machinery, raw material, suppliers etc. that are important items which are required to produce the finished product. The procurement process of Fiat Chrysler is quite effective because operation management keep attention on each aspect from raw material to end product. From the above discussion over value chain analysis can be understood that Fiat Chrysler needs to pay attention on employees performance and technological development through it can maximize economic growth of business. Otherwise, HRM, infrastructure and primary activities are the major strength of business through which it can achieve all projected goals and objectives within time frame. TOWS Analysis TOWS Analysis is very helpful tool to different companies and businesses in market place, and that’s why Fiat Chrysler Automobiles (FCA) also has required to employ this tool in its business environment for gaining some appropriate business strategies in market place.
TOWS tool generally indicate four major internal factors of a business, named; strengths, weaknesses, threats and opportunities, and after knowing the impact of all these internal factors, business can simply make appropriate business strategies to its venture (Holmqvist and Ruiz, 2017). This tool has been applied below for FCA. TOWS AnalysisStrengths (S):FCA is highly reputed automobile brand in themarket,andithas collection of some exclusive vehicles. Company’s business expansionprocessisvery excellent,becausebyusing own expansion strategy, FCA has successfully expanded its business operations in many countries.Company’sJeep modelofvehicleshas recentlygainedhuge popularityinmarketplace just because of is attractive shape and modern features. Weaknesses (W):The FCA was founded in year 2006, so that it not has an appropriate experience for working in the internationalautomobile industry,becauseitsmany competitors have experience of more than 100 years in this industry. In this situation, due tolackofexperience,the company is able to gain huge competitiveadvantagein market place. Opportunities(O):Inthis dynamicworld,strong marketing is very necessary to a business, in which FAC has an opportunity to attract maximum customers towards its brand by employing digital marketingstrategyinown workplace (Neneh, 2016). On the other side, most people are like to buy such vehicles SO Strategies:The company have to adopt and implement theproductdifferentiation strategyformakingsome moreexclusiverangeof productsandservices. Productdifferentiation strategywillenableto companyforofferingvery quality vehicles to customers in market place, and then the WO Strategies:Currently the company have to depend on modern and latest marketing strategy,named;digital marketing strategy. Basically, currentlymostpeoplein marketareusingvarious digital services, in which this isthebestopportunityto companyforrunningits marketingcampaigns
for daily use, which are able to provides proper safety, in which company has another opportunitytogenerate excellentprofitmarginsin marketplacebydesigning and developing vehicles with advance safety. company no need put its huge efforts for gaining excellent competitiveadvantagein market place. digitallyunderthedigital marketingstrategyfor positivelyinfluencingmany ofpeopleinmarketplace. When people seen FCA’s ads iondigitaltools,thenthey can make their plan to buy vehicles from this company. Threats(T):Daytoday manynewentrantsare enteringininternational automobile industry, in which this is the biggest threat to company. On the other side, presentcoronavirus pandemicalsohasreduced sales ratio of FCA in market, so this is another key threat to company.However,each automobilecompanyhas badlyaffectedbythis pandemic, because there are no people in markets to buy productsandservicesfrom companies, because currently peoplebelievesinbuying onlyessentialgoodsand services, and vehicles are not very essential to them. ST Strategies:On the basis of existing threats, the company havetoadoptthefocus strategyforsystematically focusing on different market situations. After focusing and analysingvariousmarket situations, the company can simply make its brand very effective. WT Strategies:According to weaknessandthreats,FCA have to adopt cost leadership strategy for providing various vehicles to customers on very favourable prices (Rittenburg andet.al.,2016).This strategyhasenabledto excellentcompetitive advantage as well.
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Stakeholder Analysis The management at Fiat Chrysler have to consider these steps to conduct stakeholder analysis; Step 1: Determination of stakeholders Currently customers, employees, government, suppliers etc. are major stakeholders of FCA, in which the company have to prioritize these all stakeholders on the basis of their power and interest. Step 2: Prioritize stakeholders Fiat Chrysler have to use power & interest matrix for analysing real power & interest key stakeholders. Generally, power and interest matrix divide all stakeholders in four different categories; High power and high interest:Government always has higher power and higher interest in business, because it contributes in all over growth of the GDP. High power and low interest:Customers have high power and low interest, because they manyotherautomobilecompaniesalsoinfluencingtocustomersforbuyingtheir vehicles. Low power and high interest:Employees have low power and high interest, because they have linked with company just because of earning some money. Low power and low interest:Currently suppliers have low power and low interest in FCA, because there are various automobile companies available in market which can buy raw-materials from them. Step 3: Communicate with stakeholders Top-level managementof FCA has always required establish an excellent communication with its various stakeholders for maintaining great relationship with them (Sinha, 2018). With proper communication, the company can properly retain it’s all stakeholders effectively. This is the main reason that a strong communication is very necessary with different stakeholders.
SAF (Suitability, Feasibility and Acceptability) Matrix SAF is very innovative matrix to different businesses and companies which basically evaluates various strategic options to pick the most appropriate one. SAF will help to Fiat Chrysler for judging and scoring all strategies in proper manner. SuitabilityFeasibilityAcceptability According to current market reputationofcompany,the FCA cab simply adopt and implement those all strategies initsbusinessenvironment which has been mentioned in theTOWSanalysis,like; focusstrategy,cost leadership, digital marketing andproductdifferentiation, etc. In all business strategies, the company have to be focused onhighlyusingproduct differentiationanddigital marketingstrategy,because thesenotconsumeslotsof time and resources (Strategy Evaluation SFA -analysis,2019). Thecompanyhavetobe readyforacceptingthe outcomeswhichitwillbe gainedfromtheprocessof strategyimplementation process,becausesometimes outcomescanputnegative impact also on the business. CONCLUSION This report has been summarized significance of corporate strategy in organization's success. Porter's five forces i.e. bargaining of suppliers, bargaining power of buyers, threats of substitute, threats of new entrants, rivalry among existing competitors implemented for the Fiat Chrysler that has been concluded in this report. It can be summarized value chain analysis for the company in order to analyse its internal environment, strength and weaknesses through which company has achieved competitive opportunities in this report.
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