Applied Corporate Strategy: Analysis of Fiat Chrysler Auto Mobiles

This report evaluates the business environment, opportunities, threats, strengths, weaknesses, and strategy evaluation of Fiat Chrysler Auto Mobiles.

Applied corporate strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. External analysis......................................................................................................................3
2. Internal Analysis......................................................................................................................6
3. Strategy Evaluation..................................................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
The applied corporate strategy used to takings a portfolio strategy for looking the
different business and find the most value creating strategy (Feldman, 2020). To develop a
corporative approach the organization have to look into various business which own and fit
jointly and how they affect each other works. Fiat Chrysler auto mobiles is a multinational
organization uses to produce auto mobiles and FCA is eighth largest producer of automobile in
the globe. Its headquarter is in Amsterdam and London. FCA is established in 2014 in italy. This
report will evaluate the business environment of Fiat Chrysler auto mobiles and its opportunities
and threats than it will evaluate the unique resource and capabilities with strength and weakness.
It will further evaluate the strategy evaluation in the Fiat Chrysler auto mobiles (Cardoni,
Kiseleva and Lombardi, 2020).
MAIN BODY
1. External analysis
Political threats: As political factors are generally created threats for Fiat Chrysler auto
mobiles because political environment is covered with government so it leads to threats like
occures of barriers in the world-wide trade the FCA face problem in trading internationally
because different government have different set of rules and regulations so it affects the product
and sell of that product. The government also uses to change its regulations it also creates threat
because FCA also have to change its business accordingly to the regulation. The government
have power to set the taxes on products supplied by any organization so FCA products sell is

affects by the tax rates set by the government. Fiat Chrysler auto mobiles is a international firm
so the another threat for the company is different political environment have different level of
risk to do business in their nation accordingly.
Economic threats: the economy play a great role to expand the FCA because it has some threats
who are barrier in the way of expansion for the company. The economy uses to set the interest
which is ultimately affected the cost of capital. If the economy is suffering from inflation than
the high price goods as products of Fiat Chrysler auto mobiles are affected and lead to low sell of
expensive and luxury products because in the inflation condition people will not have money to
spend on automobile, so they will prefer and alternative of that. The low gross domestic rate will
lead the people to do less expenditure and there is less tax contribution to economy as people are
doing fewer expenses (Vigna And et. al., 2018).
Technological opportunities: the technology is most important factors that create opportunities
for FCA as the company is using fresh technology and developing more digitally it creates
different opportunities for Fiat Chrysler auto mobiles. With the help of techniques the production
the FCA is increasing rapidly because traditional method of production produces less amount
than fresh technology. The Fiat Chrysler auto mobiles can use information and communication
technology for better learning and understanding between all the employees to coordinate better
in the organization. The technology will also help to reach its customer faster as FCA can use
online and digital marketing to reach its customer and serve them better than its competitors in
the market the technology provide a strength to Fiat Chrysler auto mobiles because in today's
generation in automobile all prefer to be had the latest technology in their automobile so that
they can stand out in the market (Ajmera, 2017). The technology development lead to scientific
advancement. If the Fiat Chrysler auto mobiles have developed its technology than there is less
chance to introduce a new competitor because the fresh rival in the market have to build the
technology by next level and any starting business not have this much amount to invest for
technology.
Social opportunity: The society is offering the different opportunities to Fiat Chrysler auto
mobiles because with population growth the people are going to purchase more product of FCA

as the company only need to inspect the social environment because if the company not know the
society than it will not attract the customers towards the product and if the FCA will get the
preference of customers in the market than they will concentrate on the commodities which
people are willing to buy from the market and by doing this the FCA will cover a wider area in
the market. The FCA can more environment friendly advertisement to get the society more
effectively because people will like the organization more if they are production technique is
eco-friendly, and they are aware the society nicely.
Porter's five forces
The forces affecting FIAT in the automobile industry are as follows:
Competitive Rivalry
Competitive rivalry in automobile sector can be termed high as there are players who are
investing in product development and positioning on a sound financial basis. The investment in
this sector is done for a long term and long term commitments in financial obligations makes it
difficult to exit the sector. The establishment of manufacturing unit also takes up high costs. The
pricing has to be differing slightly to make it easy for the customers to buy. Fiat faces
competition from Ford, GM etc.
Threat of new entrants
As this sector takes up investment in millions of dollars it is not easy for a new entrant to do the
same. Talking of Fiat, it has developed cost advantage over a time period and also patented its
use of technology which marks the threat of new entrants as low (Almeida and Santos, 2020).
Bargaining power of suppliers
The automobile sector has a number of suppliers who are providing standard products in form of
raw materials and not differentiated thus it makes it difficult to bargain with the company for a
higher price. As already companies are in tie up with suppliers new entrant cannot join easily as
a supplier thus making this factor threat as low.
Bargaining power of buyers

The bargaining power of buyers is high as number of buyers are compared to number of firms in
the industry. The buyers can switch to another seller as they do research before buying vehicle
and cost of switching to another seller is low.
Threat of Substitutes
As other substitutes can not offer the same level of comfort and traveling speed, the threat stands
low. Other substitutes are public transport like buses, metro etc. which customers can seldom
take but all prefer their own vehicle (Almeida and Santos, 2020).
2. Internal Analysis
The strengths of Fiat are:
Sensible mergers: Fiat has done joint ventures with various companies of countries which have
proved successful. Its merger with Chrysler has proved a masterstroke for its business.
Operational Excellence: Fiat makes around 2 million cars on an annual basis and through its tie-
up with Chrysler has been able to take support of brands like Ferrari (Vlados, 2019).
Association with Regional brands: Fiat has alliances with brands who are regional that is who
are working out of its home markets. This has increased revenue generation.
The weaknesses of Fiat are:
Infrequent launches: The company has launched very less number of models compared to the
competitors. This leaves customers with a very less choice.
Over-reliance on few brands: The company has mostly reliance on two of its brands Punto and
Panda. Except these it has not done much product innovation in other brands.
After sales service: The number of service outlets are very far and few which does not suit
customer convenience and they have to travel far to get servicing done.
Value Chain Model
Value chain is a set of act that a firm operates to deliver a valuable product in the market for the
specific industries. The aim of this model is to increase the efficiency of the production and
increase their value of the product in least cost. While analysing the value chain model the “Fiat
Chrysler” can get some benefits as they can plan the products , research and development by
creating cross-platform teams and decrease the cost of production by optimizing the value chain
(Zamora, 2016). In this model the activity of the company are classify into two categories-
primary and support. The primary activity is a process which add value and create a competitive

environment and satisfy the external demands whereas the support activity focuses in internal
requirements. The “Fiat Chrysler” using the five primary activities-
Inbound Logistic- which include the distribution of the goods, material handling, warehouses
and the control of the stock.
Operations- by adding value to the products the final product manufactured from the raw
material and following the sequence of activities like manufacturing, labelling, packaging etc.
Outbound Logistic- includes the finished products which are stored in the warehouses and
distribute to the wholesalers, retailers and customers.
Marketing and Sales- for awareness of the product the company can promote , advertise their
product in market so that the customers can came to know about a new product and create an
demand.
Service- for maintaining the value of product the firm provide the services after sale of products
like maintenance, warranty etc.
And “Fiat Chrysler” use the support activity as-
Firm infrastructure- includes the planning , quality control, legal etc, issues (Nagy and et.al.,
2018).
HRM- include the recruitment, training and development of employees, promotion of
employees.
Technological development- for adding value towards products the firm must adopt new
technologies.
Procurement- within the budget it supply all the resources.
while discussing all five primary and support activities the “Fiat Chrysler” can adopt the
marketing-sales, firm infrastructure and technicology development activity as an strength by
promoting, selling, proper planning of strategies, new adoption of technologies so that their the
customers are more aware about their auto-mobile products and this can create an demand by
which a company can build their brand name (Kawharu, 2019 Lopes and et.al., 2018). Moreover,
they are having an weakness too by inbound-outbound logistic, procurement, service adoption.
As the company cannot follow the proper criteria of the inventory store, resources are out of
budget and not able to provide proper services to all the customers.
VRIO Model-

VRIO is a framework which involves for terms i.e., Value, Rare, Inimitable and organized to
analysis the resources include financial and human resources, material resources, information
and knowledge resources. The resources are said to be valuable, if they allow to optimize the
opportunities and neglect the threats (Lopes and et.al., 2018). If the firm does not allow
neglecting or minimizing the threats and optimum utilization of resources, then the firm cannot
achieve the competitive position. If the firm have resources that are not rare, then the firm is not
in the position to take advantage from the competitors. If the firm maintains possession in
relation with valuable resources that are rare, then the firm is in competitive advantage from the
firms who do not posses valuable resources.
The core competence of the internal environment by analysing of VRIO model the human
resource compete with the competitors by effectively performing their work and make the
resources valuable for the company so that they can increase their market share and compete
with other competitors. The humans are very important for every organisation who perform all
the activities of the “Fiat Chrysler”. The employees who are working in this firm having an
efficiency to work effectively and complete their target (da Costa,Geraldes and Geraldes, 2019).
The knowledge resources as an non- material resource is very important for the company to
compete and adopt so that the firm can gather all the information regarding the new modification
and new technologies. And take changes accordingly for the growth of their firm. As the Fiat
Chrysler is an auto-mobile company and its important for them to gather all the knowledge
regarding the market and new technologies so that they can make decision as changes occurred.
3. Strategy Evaluation
Sustainability - This is the most important element, as with the help of sustainability it is known
that whether the strategy formulated by the company of merging its business with PSA group
will provide it the expected result or not. However, with the proper research and development
and efficient planning minimizing the threats and overcoming the weakness it can be analysed
that the strategy is sustainable (Kapoor and Kaur, 2017).
Opportunities Threats
Strengths One of the key strengths of the
company is that it uses and
adopts the new and innovative
Fiat Chrysler has another key
strength that it have the team
of brilliant managers who help

technology and train its
employees about the
technology. In order to get the
better and efficient results
which gives it advantages of
entering into new market with
the help of PSA group as this
its potential opportunity and
will provide great benefits if
successful (Ravanavar and
Charantimath, 2012). With the
help of better technology it can
provide better customer
satisfaction and which may
also help in creating the
goodwill of the company and
will provide it long-term
benefit.
in formulating the great
strategies which benefits the
company. But if due to the
changes in company related to
merger there will be
restructuring in company if
this strategy fails it will be
potential threat of not
implementing the strategy
successfully. If in any situation
the planning is affected there
are high risks affiliated with
this will bring great losses to
the company as doing merger
also is an expensive process.
Weakness As it is analysed that the
supply chain of the company is
not that great and it should
work really hard on making its
supply chain efficient. By
improving and working on its
supply chain, it can create the
opportunity for the company as
through this it will be able to
provide the services to its
customers fast. By giving fast
services and making its
customers satisfied, it would
As it is observed that Fiat
Chrysler, is just focusing over
its two brands in Europe,
invests all of its finance over it.
This weakness of company of
just focusing on two brands
and not thinking above that can
be become a serious threat in
near future. For the long term
goals, company has two focus
on its all business aspects and
spend its finance equitably by
the help of complete research

not only create the opportunity
but will also make its business
sustainable.
and development. If the steps
on this issue are not taken
now, there may be situation
where rivals get ahead of the
company and it faces losses
due to this.
Stakeholder Analysis the tools is the first crucial step towards the stakeholders' management, in
which company use to win the support from other people. Fiat Chrysler have various
stakeholders such as owner, executives employees who are the internal stakeholders and have
others external stakeholders such as suppliers, government, potential customers, public and
communities and the strategy impact them accordingly (Raum, 2018). With the help of Interest
power grid, it can be analysed that which are major stakeholders that are influenced by the Fiat
Chrysler's work. Some stakeholders are very much interested in knowing about what business
doing and some stakeholders don't care.
The stakeholders are categorized into four types:
High Power, Highly Interest – Fiat Chrysler manage this group of stakeholders very closely,
engage with them completely on the regular internal, and make good amount of efforts to satisfy
Illustration 1: Interest Power Grid
Source: Stakeholder Analysis, 2020

this group. This group of stakeholders include the Owner, Executives, Employees, Alliance
Partners etc.
High Power, Less Interest – Company makes enough efforts to make this group of stakeholders
(government) satisfied but not so much like previous group because there are chances that these
people get bored, they are kept satisfied about the company's decision.
Low power, High Interest-This group of stakeholders (lenders, suppliers) are just provided with
the relevant information about the company, company interact to them in regular intervals just to
ensure that issue arises, and these stakeholders are generally helpful and helps Fiat with the detail
related to project (Sapapthai and et.al., 2020).
Low Power, Less Interest – Fiat Chrysler, regularly monitors this group of stakeholders (trade
associations, public, communities), but do not communicate much with them share the annual
information to these stakeholders just make them informed.
On the basis of above conducted stakeholder analysis, SAFe framework is used to address the
evaluates the strategy implemented-
Acceptability – The strategy of doing the 50% merger is done, in order to create the value and
increase the returns of the shareholders, by doing merger with the PSA group which is the
French company it will be diversified and will be able to acquire new talents and skills in this
industry and increase financial capabilities of the company. By measuring the return, risk it can
be concluded that it is acceptable for all the stakeholders' group but influence the High interest
and high power group and Low power and High Interest group.
Feasibility – Through the feasibility aspect, it can be analysed that the strategy of Fiat Chrysler,
of merging its company with PSA Group will make or break its business. By doing the complete
evaluation, the basic principle is that it will be brought skills and capabilities of different talents
in the company and will also provide the financial support that will help in lowering its debt and
increase the profits of overall companies and its crucial stakeholders.
CONCLUSION
The following report provides the detailed understanding of strategic concepts and
analysis of Fiat Chrysler. The report analysis the business environment of the company and
recognize the key opportunities and threats that impacts the company and can provide the benefit
to the company by making it stronger in terms of brand value and the potential threats that can be

avoided by taking effective measures. The report also examines the industry attractiveness by
using the Porter's Five forces. Further, this report applies the VRIO and value chain frameworks
to analyse the internal factors that influence the company. Last but not the least, the company
using constructs the Tows matrix and stakeholders' analysis and evaluates the strategy with the
SAFe.
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