Analysis of Fiat Chrysler's Corporate Strategy and Evaluation Report

This report provides a comprehensive analysis of Fiat Chrysler's corporate strategy, examining both external and internal factors influencing its operations. The external analysis delves into environmental pressures, market boycotts, and technological advancements like electric and self-driving vehicles, along with legal regulations and a Porter's Five Forces assessment. The internal analysis evaluates Fiat Chrysler's resources, including retail outlets, human capital, and financial strength, as well as its core competencies through value chain and VRIO analyses. The report highlights strengths such as employee expertise and financial stability, while also pointing out weaknesses in inbound logistics and technological development. The overall evaluation assesses the company's competitive advantages and strategic positioning in the automotive industry.

APPLIED CORPORATE
STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
External analysis..........................................................................................................................3
Internal analysis...........................................................................................................................6
Strategy evaluation......................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Corporate strategy is basically the defined and well-structured long-term vision which
organizations set in order to achieve their business objectives and to create the corporate value
for customers. The main purpose of this report is to carry out the well-through analysis of
strategy of Fiat Chrysler and evaluate its implementation.
Fiat Chrysler is basically multinational automobile organization being established in 2014
by John Elkann and headquartered in London, U.K. The corporate headquarter of company is in
Amsterdam, Netherlands. This company actually have two subsidiaries namely FCA Italy which
has it’s headquarter in Turin and FCA US which has headquarter in Mihigan. The holding
organization is listed in New York Stock exchange as well as Borsa Italiana.
This report gives a brief overview of external analysis, internal analysis and strategy
evaluation.
MAIN BODY
External analysis
External analysis is basically the process of identifying external or outside factors which
have a direct bearing upon the operations of an organization. There are generally six issues
which Fiat Chrysler and Peugeot is currently facing or might face in the near future
Environmental factors
The most important issue which company might face is the environmental pressure from
the government and people to reduce carbon emission. As a large number of carbon is emitted
from the vehicles thus this is the great issue which company might face in the near future. This
environmental pressure is one of the biggest threat for company as decreasing the carbon
emission will eventually increase their overall price and simultaneously will decrease the
performance (Feldman, 2020).

Boycott of the Chinese market
Fiat Chrysler and Peugeot have a great market share in Chinese markets and most of their
parts and equipments are generally exported from china. But due to the recent pandemic
COVID-19, companies are being forced to quit Chinese products and export from them and this
will be a great threat for company. As company is heavily depend on the Chinese market and
have great share their thus boycotting china might pose a big threat for company.
Electric vehicles
One of the greatest and important issue which Fiat Chrysler and Peugeot is currently
facing is reducing the carbon emission. In the transportation of various goods and services, a
large amount of carbon is emitted from vehicles thus reducing its release is a great issue.
Company can convert this issue into an opportunity. Fiat Chrysler and Peugeot has the
opportunity to focus more on the electric vehicles which mainly produces 50% less CO2.
Company can invest on producing these electric vehicles which will eventually increase their
market position (Rugman and Verbeke, 2017).
Self driving cars
Most of the large organizations mainly depend on the heavy vehicles and other
convenience for transporting its goods and services. During the transportations, Fiat Chrysler and
Peugeot mainly face the biggest issue of traffic delays, accidents, traffic collisions etc. This issue
is faced by company from past few years and thus has affected their overall operations. The
golden opportunity which the company has is investing the recent technology to build self-
driving cars and trucks. These driverless cars will basically solve all the problems and will help
to navigate safely through the roads. Company can heavily invest in R&D to develop these cars
which will have radars, ultrasounds and cameras for safety.
Weight reduction
When coming to the lightweight materials, it is highly believed that the low-density
materials like aluminum, magnesium etc when incorporated into vehicles eventually reduces the

release of fossil fuels into environment. This is the another issue faced by company for reducing
the weight of its vehicles as this reduction generally increases the cost as well as human efforts.
This is the biggest opportunity available to company where it can reduce the weight of its
vehicles by introducing the new steel grades having high strength which will eventually reduce
the overall mass as well as will be inexpensive (Köhler and Zerfass, 2019).
Legal regulations
The legal regulations of the country in which organizations operate highly matters as
these controls the operations of organizations. Therefore, this is the another issue which is being
faced by Fiat Chrysler where it has to follow the legal regulations of all countries of its
operations. This is one of the major threat which might hinder operations of company as the legal
regulations of country changes constantly and it will be difficult for company to abide by all the
rules.
Porter five forces
This is basically the framework which helps organizations in analyzing the competitive
environment and evaluating its market position.
Threat of new entrant
This basically addresses the barriers for new entrants to enter the market or industry. The
threat of new entrant is generally low for Fiat Chrysler as for entering the automobile industry,
high amount of capital is required. Due to high investment and overhead expenses, barriers for
new entrants are high and thus this makes this threat low or company (Puranam and Vanneste,
2016).
Power of suppliers
This corresponds to the influence of suppliers over the prices of products and services.
There are generally large numbers of suppliers in automobile sector which makes their influence
over the prices much low. Thus, this threat is low for Fiat Chrysler as suppliers do not have
control over prices and company can switch to other suppliers anytime (Viscelli, Hermanson and
Beasley, 2017).

Power of customers
There are generally large numbers of customers in the automobile sector who are highly
oriented towards leading luxury life. Besides this, due to the availability of other competitors like
BMW, Toyota, which offer similar types of the services in their vehicles, switching cost of
customers is generally high. This makes the threat high for Fiat Chrysler.
Substitute threat
This is the threat which corresponds to products having similar characteristics and is dupe
of that. Although, there are various services and products which are highly differentiated of Fiat
Chrysler but still there are few products like bicycles, public transports whose substitute products
are available. Thus this makes the threat moderate for Fiat Chrysler (Weissenberger-Eibl,
Almeida and Seus, 2019).
Competitive rivalry
Fiat Chrysler has strong competitors which have a great market position and have good
brand image like BMW, Toyota etc. Thus, there is intense and fierce competition in the
automobile sector and thus there is high amount of rivalry for Fiat Chrysler.
Internal analysis
Resources
The major resources of company are
Physical
Retail outlets
The retail outlet forms one of the major physical resources of the company. Although the
company has a great brand image but still its retail outlets are not present in various countries. In
short, these retail outlets are not distributes evenly across the different countries. This forms its
one of the major weakness. The retail outlets of Fiat Chrysler are not present in most of the
major countries and this has affected the overall market position and the profitability of

company. For example- its retail outlets are not present in Malta which forms its biggest
weakness. Therefore, due to its limited presence this resource does not provide much competitive
advantage to the company (Millstein, Odoner and Sharma, 2018).
Human resources
Human resources forms one of the major part of organizations and thus includes
employees and the overall staff of company.
People and teams
Fiat Chrysler has more than 1550000 employees who are spread across the various
locations. Employees and the management of company form its strength and thus are considered
as the unique resources. Fiat Chrysler has highly trained as well as skilled and experienced
employees who are engaged in providing the great customer services as well as strive willingly
to provide competitive advantage to the company. Their uniqueness lies in the skills and
capabilities of the employees where they have a great knowledge base about the products and
services of company along with the tactics to persuade customers. Therefore, employees forms
the major strength of the company which helps them to gain a great market share as well as
enables them to develop a goodwill in market (Oertwig and et.al.,2017).
Financial
The financial resources of Fiat Chrysler are highly unique and thus help them to provide
competitive advantage. Fiat Chrysler has a great brand image in the market and thus brand
awareness is high among customers due to which the profitability and revenue ratio of company
is highly stable. Talking of the financial resources, for example company has its accounts on
major established banks and along with this, they have a great number of publicly traded stocks
which eventually makes this as the biggest strength f company. These financial resources
basically help the company to make relevant and sound decisions and along with this, due to
sound financial position most of their assets are of high value. Primarily their assets form the
unique resources and major strength which helps them to gain the competitive advantage.

Competencies
Competencies are basically the ability of the organizations which helps them gain the
great market position as well as enables them to gain the competitive advantage.
Value chain analysis
This is primarily the framework and tool which helps organizations to analyzed their
internal activities which helps them to gain competitive advantage.
Primary activities
Inbound logistics
These mainly include the various functions such as receiving, warehousing as well as
managing the inventory. The inbound logistics of the company is not highly defined and well-
structured and thus this form sits one of the major weakness. Fiat Chrysler mainly depends on
the third part for their raw material and does not process on their own. This means that company
does not create their own raw material and mainly obtain it from the third party. Most of its parts
like leather seats, tire, steering wheels etc are obtained from the third party. Therefore, this forms
their major weakness as depending in the other party generally poses various problems. For
example- sometimes due to delay in delivering the parts or receiving bad quality raw materials
eventually affects their overall production prices and thus their inbound logistics is not well-
structured (Jiao and et.al.,2019).
Outbound logistics
The outbound logistics forms one of the major strength of the company and thus helps
Fiat Chrysler to gain competitive advantage. This activity is mainly linked with distributing the
final product to end users. Fiat Chrysler has around 170 distributors which deliver the product at
different locations and countries. The supply chain of company is highly imperative and its
distribution channels are divided into the three categories mainly in North America, vehicles
produced in overseas and lastly produced in Japan. The finished product that is car is then
directly sent to Fiat Chrysler dealers. Besides this, Fiat Chrysler contracts the large group of

outbound providers and uses 10 shipping lines as well as 45 partners of truck to transport the
products to end users (Pyles, 2016).
Technological development
This is one of the major support activity which helps in accomplishing the tasks of
primary activities. This mainly corresponds to various aspects like designing, developing
techniques, automating process etc. This is mainly related with bringing differentiation and
innovation in the products and services. The technological development activity of the company
is not highly developed and thus it forms one of its major weakness. This activity generally does
not confer much competitive advantage to the company. Although, some of the products of
company are highly differentiated but still there are various services and products which are not
unique and thus requires a large amount of innovation. Therefore, the low investment of
company in R&D forms its biggest weakness and prevents it from gaining competitive
advantage.
VRIO
This is basically the tool as well as framework which help the organizations in analyzing
their internal resources as well as capabilities which helps them to provide competitive
advantage.
Resources Valuable Rare Inimitable Organized Competitive
advantage
Retail outlets No No No Yes Temporary
competitive
advantage
Employees Yes Yes No Yes Sustainable
competitive
advantage
Financial
resources
Yes No Yes Yes Sustainable
competitive
advantage
Inbound
logistics
No No No No Temporary
competitive

advantage
Outbound
logistics
Yes No Yes Yes Sustainable
competitive
advantage
Technological
developments
No No Yes No Temporary
competitive
advantage
Strategy evaluation
SAF test
Suitability
The most important and the recent strategy which Fiat Chrysler is working on in order to
gain the competitive advantage is merger with Peugot. This merger strategy will be highly
suitable for the company due to most primary reasons. Firstly, Fiat Chrysler has a great brand
image and along with this Peugeot has a great share of market across the various countries. If
both companies will merge then this will be highly beneficial for Fiat Chrysler as it has already
established name thus when it will take the products in new markets then there will be low
amount of risk in market testing. The merger of both organizations will help the company to
enlarge its customer base as well as will help to enter the new product line. Another reason for its
great suitability is that this merger will eventually increase the market value of Fiat Chrysler.
One of the major strength of company which is its unique financial resources will help to
increase its market share. This merger will be a great opportunity for the company as it is
expected that this will boost up the share of Fiat Chrysler to around 9%. Along with this, merger
with Peugeot will eventually increase the financial resources of Fiat Chrysler and thus this will
help them to enter the new international markets (Rugman and Verbeke, 2017).

Tows matrix
Strength Weakness
Opportunities Merger of Fiat
Chrysler & Peugeot
Threats
Acceptable
The recent strategy of Fiat Chrysler of merger with Peugeot is highly suitable. This
strategy will include a number of stakeholders which will be impacted from this merger.
Stakeholders are basically the individuals who have a direct interest in the operations of
company. Power/interest matrix is predominately the framework as well as technique which
helps to categorize the stakeholders according to their power and influence over the certain
project or aspect. There are generally large numbers of stakeholders which will be highly
influenced by this strategy. These stakeholders are competitors, government, customers, board of
directors, suppliers, local community, employees, and investors. Although all the stakeholders
will be directly or indirectly impacted by this strategy but the two major stakeholders which will
be highly affected are customers and employees. Firstly, the due to the merger of Fiat Chrysler
with Peugeot will eventually bring a wide variety of choices for customers to choose from. The
brand loyal customers of both the organizations will not face difficulty as which brand to choose
and for what brand to go with (Weissenberger-Eibl, Almeida and Seus, 2019). Along with this,
this merger will also bring a huge amount of differentiation in the products and services which
will eventually help to fulfill the customer’s needs and wants. The second stakeholders which are
employees will be highly benefitted from this merger. The employees of Fiat Chrysler and
Peugeot will come across a wide range of opportunities which will eventually help them to
secure their dreams. For example- merger will increase the job responsibilities of employees and
their pay structures and will also give them the opportunity to step out of the monotonous work.
Thus, the extra benefits as well as enhancement in the pay structure will eventually increase the
productivity and motivation level of the employees. Therefore, this shows that this strategy will
be highly acceptable.

Power/interest matrix
High power/low interest High power/high interests
Customers Investors and government
Low power/low interests Low power/high interests
Suppliers Employees and local community
Feasibility
Feasibility basically shows that how much feasible or achievable the strategy is and thus
shows that whether it can be implemented or not. The most important two elements which needs
to be asses for recognizing the feasibility of merger as strategy are financial resources and the
skills. The basic and fundamental financial resources which will be required for implementing
this strategy are investments, capital and the owners equity. Fiat Chrysler will seek the support of
banks and other financial institutions for obtaining the funds and loans for its strategy. Apart
from this, the major skills which are required for making this strategy successful are technical
and administrative skills. The two major skills are planning and monitoring skills. Employees
and management should have the planning skills in order to know that how to execute the
strategy and what will be required for its implementation. Besides this, monitoring is also
important where management should have the capability to monitor the entire process of merger
and whether it is effective or not. Along with this, the technical skills will also be required as
updating the entire software and infrastructure is extremely important for making this strategy
successful. Along with this, leadership skills will also be required in order to manage the entire
process and to motivate the employees to adapt this change (Köhler and Zerfass, 2019).