Strategic Analysis Report on Fiat Chrysler

Strategic Analysis Report

Table of Contents
INTRODUCTION...........................................................................................................................3
External analysis..............................................................................................................................3
External analysis of Fiat with Pestle and Porter 5 forces............................................................3
PESTLE...........................................................................................................................................3
Porter’s 5 Forces..............................................................................................................................5
Q2: INTERNAL ANALYSIS:.........................................................................................................7
STRENGTH:....................................................................................................................................8
WEAKNESSES...............................................................................................................................8
FINANCIAL STATEMENT ANALYSIS OF FIAT CHRYSLER................................................9
VALUE CHAIN OF FIAT CHRYSLER :....................................................................................12
6 VRIO...........................................................................................................................................13
Question 3......................................................................................................................................14
Suitability, Acceptability and Feasibility: -..............................................................................14
TOWS MATRIX: -...................................................................................................................15
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18
Fiat Chrysler Automobiles Porter Five Forces Analysis 2019. [ONLINE] Available through:
https://notesmatic.com/2019/11/a-porters-five-forces-analysis-of-fiat-chrysler-automobiles/.....18

INTRODUCTION
This report will center the importance of a corporate strategy on the Fiat Chrysler. The
report will analyze the company using models like PESTLE, 5 Forces Analysis, Value Chain,
VRIO, and SAFe.
Fiat Chrysler Automobiles (FCA) is an automotive production industry founded in 2014. It is
incorporated in the Netherlands and with financial headquarters in the United Kingdom. Fiat
Chrysler is involved in the business of designing, producing, distributing, and selling automobile
vehicles. (Matricano and et.al., 2019.) The company also sells passenger car engines,
transmission systems, and automotive components. In June 2018, Michael Manley became the
CEO of Fiat Chrysler. The company operates worldwide with various automotive brands such as
Maserati, Dodge, Alfa Romeo, Ram, Jeep, and many more. FCA is always known for its
innovation, as the company embraces 5,000 patents and more than 2,000 product ideas. (Fiat
Chrysler Automobiles Introduction. 2020.) In 2019, the company funded €4.2 billion in the
research and development sector, which is about 3.9 % of net revenues from industrial
operations.
External analysis
External analysis of Fiat with Pestle and Porter 5 forces
PESTLE
Political
In the Automobile industry, various political environments and risks affect the revenue of
the business. One of the biggest political issues that impact sales are the Brexit issue. (Cillo and
Pradella, 2019.) The sale of many vehicles has decreased due to the effect of Brexit. The time
when Brexit has been implemented since then suffers extreme losses. This will also affect trade
between other countries. employees. A law such as a contract law which are enforces by
countries prohibit from doing sales in that country. The Indian government also requested to go

for local products, which may decrease the sale. Looking at the situation political factors are a
threat for the automobile industry.
Economical
The automobile market is strongly influencing the economy. The industry employs
millions of people directly and indirectly. As compared with the sale of 2019 in the second
quarter of Fiat the sale in 2020 has fallen with a high percentage. The total shipment has also
marked a decline of 63%. It is predicted that the sale of the automobile will rise in 2021. The
first two quarters of 2020 were not good for the industry, but the future is showing opportunities
for growth and profit. Due to the increase in demand for electric vehicles, the industry is ready to
produce more which will help boost the economy. Fiat is also ready with its Jeep which will be
the bundle of technology.
Social
A self-driving car or say autonomous cars are the new charm of the industry. It will
create a positive impact on society. It will be beneficial for the traveler as it will provide safety
and privacy. It is estimated that by 2040 there will be 1 billion autonomous vehicles on the road.
Fiat Chrysler and Waymo also agreed to develop the self-driving commercial car for the people.
The self-driving will be helpful for old-age people who are not able to drive carefully. The social
impact will bring more opportunities for the industry.
Technological
Innovation and technology have always brought possibilities for the automobile industry.
The demand of customers motivates the industry to deliver new technology for people. The self -

driving cars to showcase the use of technology in vehicles. Fiat 500 is a combination of
technology and a new generation car. (Matricano and et.al., 2019.) It is the first full-electric car
which is design in Italian style and with unique features of technology and tradition. The
connection between electricity and transport is an innovation in the world of technology. Thus,
the technological impact is an opportunity for the automobile industry.
Legal
A legal issue like Brexit and guidelines of the UK government have affected the
production and sales of the automobile. The cost of export duty impacts the price of the vehicle
which increases its price and sales chances are lowered down. In the UK, 80% of the car are
exported, out of which 50% were brought by the European Union. But after Brexit, the sale of
cars decreases. In 2019, the passenger car of Uk sales decreased by 2.4%. The legal factors most
of the time are a threat to the industry.
Environmental
In the last few years, the automobile industry has taken care of environmental factors
during the production of vehicles. Many automobile industries have improved the production
process, so the harm to the environment is very less. The use of energy produces have gone
down by 19%, 35% less water is used and 91% of water is wasted. The use of harmful gases has
also decreased by 31%. Fiat also decreases the use of renewable resources in production.
(Bertoldi and et.al., 2018.) To promote the environment Fiat 100 employees have participated in
an event of World Environment Day. So environment are opportunities for industry as new
innovation can come from this.
Porter’s 5 Forces
The threat of new entry
The production of light and electric vehicles has grown in the automobile industry. In
2010, the production in the UK of light and commercial vehicles was 1.37 million and in 2020 it

is approximately 2.09 million, which is huge growth. Most of the vehicle companies are focusing
on light vehicles. (Steidle, 2016.) The new entry like Toyota, MINI, Vauxhall, and Honda are
producing in large number. The import of light vehicles has also raised. The entry of such cars is
the thread for Fiat light vehicles like 500X, Fiat Punto. The risk of new entry is very high.
Buyer power
In the situation of a pandemic like Covid has impacted the buyers' power. The
unemployment rate has raised in the UK, due to which spending on customers has also
decreased. Customers are focusing more on essential items than luxury, as automobiles are not
essential items, it affects the sales. Fiat Chrysler sales also decreed in 2020 as compared to 2019.
The UK Fiat branches have also seen a 5% loss of sales in 2020. The buyer power is moderate
but chances are to be high in the future.
Threat of substitution
Customers may switch to other modes of transportation like buses, trains, or subways. In
the world of social distancing due to pandemic Covid, the changes are very low to use public
transport. For safety and keeping distance from other people, customers will prefer to buy
personal cars for transportation. Fiat autonomous vehicles and electric cars are most useful in
such a situation. In the future, the changes in buying vehicles will be increase and the industry
will grow. The autonomous car will also be helpful for the student and aged people, rather than
using public transport. Overall, the threat of substitution is low, as the situation of the
pandemic has changed the reason for customers.
The Power of Suppliers
The bargaining power of suppliers may change the cost of vehicles. The material for cars
and vehicles like Manganese, Carbon, Lithium have shown growth in the past few years.
Recently, ENGIE and Fiat have come together in a contract to provide innovative electric
mobility solutions for the new vehicles of Fiat which are fully electronic.( Rawlinson and Wells ,