Strategic Analysis Report: Fiat Chrysler's Industry and Competencies

This strategic analysis report examines Fiat Chrysler's position in the automotive industry. It begins with an external analysis using PESTLE and Porter's Five Forces to identify opportunities and threats, assessing the industry's attractiveness. The report then delves into the company's key competencies, employing VRIO and value chain models to understand its competitive advantages. Finally, the firm's strategy is evaluated using the SAFE criteria. The report provides insights into Fiat Chrysler's strengths, weaknesses, and strategic choices, offering a comprehensive overview of its market position and future prospects. The analysis covers various aspects, including political, economic, social, technological, and environmental factors, alongside competitive dynamics and internal capabilities. The student's work is contributed to Desklib.

Strategic Analysis Report
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
1) External analysis to identified set opportunities and threat and assessment of industry
attractiveness................................................................................................................................3
2) Analysis of key competence of organisation that helped in retained differentiate positioning
in the market................................................................................................................................6
3) Evaluate the given strategy using SAFE criteria....................................................................9
REFERENCES..............................................................................................................................14
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INTRODUCTION
Strategic management is an ongoing process in which manager continuously planned,
monitor and control action with an motivate to attain higher end goals or competitive advantages
in external environment. There are numerous changes in external environment that adversely
impact on growth and profitability of business so manager needs to effectively adapt to them for
benefit of firm. Fiat Chrylser is public automobile company that was initially founded on 12
October, 2014, 6 year ago having operation across worldwide with employees ranging 1,98,545
that are ready to work for expansion of firm. This report is about Fiat Chrylser that contained
information related to external analysis in order to identified set opportunities and threat of
business. It has also included information related to strength, weakness or core competences of
company that helped in gaining competitive advantages in automobile industry. At last strategy
of firm is evaluated using SAFE criteria.
1) External analysis to identified set opportunities and threat and assessment of industry
attractiveness
Pestle Analysis: It is one of the effective strategy management tools that help in identifying
several external factors that act as threat and opportunities for business. Like policies of
government, economic condition of country, change in taste and preferences of people,
technological development and environment factor. Therefore, several factors that acts as
opportunity and threat for Fiat Chrylser can be illustrated as follows:
Political factor: It can be stated that political factors has contributed in effective development of
market of Fiat Chrylser in context of technology, human advancement and establishing of
institute of modern technology. Moreover, in 1990 government has made five year strategy for
development of submicron modern technologies that helps in development of research
laboratories and growth of business operation (Balashova and et.al., 2018). Therefore, political
factors act as an opportunity for company to develop its market share and earn maximum
profitability. Brexit is one such policies that act as threat on business as most of the trade of
country is with European Union.
Economic condition: There are several changes in economies like unemployment rate,
disposable income of customers, interest rate etc that directly and indirectly impact on business
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functions. Globally there is high rice coming on the situation of recession due to impact of Brexit
and covid-19 that resulted in threat on sales volume and profitability of Fiat Chrylser in near
future (Weinrich, 2017). As less number of people are interested to have more expensive, luxury
products in order to satisfy their needs due to loss disposable income and less employment
opportunities across UK. So, company in 2019 has announced to merge with groupe PSA on 50-
50 stock basis thus both agreed to the term of binding $50 billion merger.
Social factor: Taste and preferences of individual’s changes continuously so company in order
to meet expectancy or needs of customers has to find new or innovative ways thereby they are
motivated to be part of organisation. Popularity of driving cars has increased among several
individuals or younger generation thus they want more innovative, better technologies car in
order to move from one place to another. Thereby social factors has contributed in providing
opportunities to Fiat Chrylser to find more better and qualitative way to satisfied growing
demand of customers for growth of organisation. Due to decrease in disposable income of people
there are less likely to make purchase of car that resulted in somewhat reduction in sales of
company.
Technology factor: There are numerous developments in technology that has forced company to
make use of them while delivering services to customers in order to retained them for longer
time frame. So, Fiat Chrylser has opportunities to grow its business operation by making use of
new technologies like artificial intelligence, digital marketing to provide excellent services to
wide range of customers. Company by enhancing its market share in online platform can easily
attract millions of people and earn more profitability (El Namaki, 2016). While key issue is that
company have limited financial resources to adapt with changing technologies.
Environmental factor: Due to increasing wastage of resources, limited amount of material and
threat to environment and life of future individuals. Government and customer started forcing
companies to take steps towards sustainable management of resources so that they can be
available for existing as well as future generation that has increased cost of company. While Fiat
Chrylser has also opportunities to launch electric car in order to add more and more customers in
the organisation.
Porter value chain: It is another model that helps in identifies factors that shape industry by
studying several elements such as existing competition level, threat of substitute products, and
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threat of new entrance, power of consumers and power of suppliers (A Porter’s five forces
analysis of Fiat Chrysler Automobiles, 2019). Therefore, porter value chain will be used in order
to study the way Fiat Chrylser has retained its competitive positioning in automobile sector of
United Kingdom and across worldwide. Such as:
Existing competition (HIGH): There are number of firms operating its business operation in
automobile industry of United Kingdom such as Bentley. Jaguar and also there has been
continuous rise in business industry domains specifically. The existing competition is rising
specifically in terms of machinery technology and varied other aspects, with varieties of products
and services so that customers have alternative options to select best suitable as per their needs.
Company by forming partnership with Peugeot another well known brand is able to identifying
unique; differentiate method to make customers happy and satisfied. Therefore it can be stated
that despite of intensive competition rivalry in automobile industry Fiat Chrylser is able to grow
and survive due to its services and customers satisfaction.
Power of consumers (LOW): Customers are most important individuals for each and every firm
as they help in generating sales and profitability by making purchase of specific products and
services of organisation. At the same time due to increasing competition level they have
alternative options to select among for fulfilment of their respective requirements (Hsieh, Ma,
and Novoselov,2019). Fiat Chrylser has focused on enhancing its brand image, providing better,
qualitative services so that they are motivated to become loyal customers of organisation.
Therefore, company by improving its after sales services, marketing strategies tried to retain its
positioning.
Power of suppliers (LOW): It can be illustrated that bargaining power of supplier in automobile
industry is generally low as there are large number of individuals that like to provide raw
material at minimum rates. Thereby, due to maximum number of suppliers, brand image and
effective supply management principle used by Fiat Chrylser has helped in getting material at
low price in minimum time frame. Company buy around 75% of material from different
suppliers across worldwide by building strong relationship with them so that they are motivated
to provide material in best time possible for satisfaction of customer’s requirements (Lv, 2019).
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Threat of substitute product (MEDIUM) : There are two major sources form which threat of
substitute products came such as competitive services and brand. Like people have options to
travel through train, flights etc in order to move from one place to another. At the same time
there are several competitive organisations that try to imitate products and services of Fiat
Chrylser in order to enhance their market share. Company has invested large amount of capital in
research and development in order to improve its existing car models so that it can get
differentiate positioning. For example: In 2017, Fiat Chrylser has invested only €2.9 billion
while it invested € 3 billion in 2018 therefore it continuously differentiates to build strong value
in minds and hearts of customers.
Threat of new entrance (HIGH) : There are many big firms in automobile industry with huge
market share, product portfolio such as Ford, BMW, Toyota, Hyundai etc so there are high
barrier for new entrance to cover large market share in automobile industry. Fiat Chrylser
through maintain strong relationship with customers, strengthen its brand image has create
barriers or lower threat of new entrance in automobile industry for sustainability of enterprise for
longer time frame (Liu and et.al., 2020).
The auto mobile industry attractiveness has high variable growth competencies on which there
are larger growth synergy energised, which brings on higher specific functional aspects to which
companies have to raise new synergy of work efficacy productively. Globally also there is quick
rise coming on within new entrants in auto mobile industry, on which keen specific functional
productivity can be risen.
2) Analysis of key competence of organisation that helped in retained differentiate
positioning in the market
There are key internal strength, capabilities that helps company in making optimum
utilisation of opportunities by providing best services to end users so that it is influence to select
specific firm rather than other competitors in market. Therefore VRIO and Value chain model
will be used in order to understand key competence of Fiat Chrylser that contribute in expansion
of firm in both domestic and international market. Like:
Value chain model: It can be describe as several internal system of company that contribute in
manufacture, delivery of products or services to end customers with an objective to earn higher
profitability (Pramanik, Maiti and Maiti, 2018). It is further classified into primary and
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supportive activities therefore the way Fiat Chrylser has make use of its system or internal
strength to gain competitive advantages is explained below:
Primary activities
Inbound logistics: Fiat Chrylser in order to get several raw material or inventory from
suppliers has maintained good relationship with numerous individuals so that they can timely
delivered the material and services are given to users. Company has wide space in its stores as
warehouse where material can be easily stored for further conversion so that end goals can be
achieved.
Operation: There are numerous operation starting from procurement, conversion to delivering
of products are performed by Fiat Chrylser in order to make customers satisfied and happy.
Systematic procedure and policies of organisation has helped in delivering services as per
expectancy of customers (Ike, 2017).
Outbound logistic: Company has strong distribution network, channel and stores across global
from where varieties of services are delivered to large range of customers. Fiat Chrylser has
strength it supply chain so that customers can get vehicle or car in good condition without any
damage.
Marketing and sales: It is another function of organisation that helps in attracting maximum
individuals, creating strong brand image or value in market by finding different way customers
needs can be fulfilled. Marketing department of Fiat Chrylser has skilled, knowledge and
qualified employees that clearly know the way to pursue individuals to select its products rather
than other competitors. It has make use of marketing mix, digital technologies and several
promotions method to induce customers and increase sales volume of firm. Fiat Chrylser sales
department has also estimated future sales and find different alternative the way they can be meet
so that company can gain competitive advantages.
Services: It is also primary activity that helped Fiat Chrylser in expansion of its business
operation as manager by ensuring that each individual is provided better services is able to
promote growth of firm (Stašák and Schmidt, 2019). Like 24 hour services, after sales services
and continuous feedback from customers are collected so that necessary steps can be taken to
resolve their problems and make them satisfied.
Secondary activities
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Human resource management: It is department of Fiat Chrylser that has effectively recruited
and retained highly talented and experienced employees that are ready to give their best for
achievement of organisational goals. HR has ensured healthy working environment, resolve
grievance of employees and provide the training so that they can easily complete their respective
task in limited time frame. Therefore, HR manager of Fiat Chrylser by using different
motivational techniques or strategies is able to manage diverse individuals to increase their
overall performance.
Research and development: Fiat Chrylser has invested capital in R&D department so that it can
find new or innovative, creative method to fulfil customer’s expectancy. Company by
indentifying or making uses of more and more differentiate and innovative method is able to
delivered services that are beyond expectancy of customers.
different types of organisational structure
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Firm Infrastructure
Human resource management
Technology development
Procurement
Inbound Operations Outbound logistics Marketing & Sale
logistics

VRIO model: It is model that is also used to understand elements that lead Fiat Chrylser in
gaining core competency in Automobile industry. Valuable, rare, imitable and organised are
four key elements that helps in analysing the way Fiat Chrylser has gain differentiate positioning
such as:
Resources Valuable Imitable Rare Organised
Technology Yes No Yes Yes
Organisational
culture
Yes Yes No Yes
Human resource Yes Yes No Yes
Brand image Yes No Yes Yes
Product portfolio Yes No Yes Yes
From the above Table, there are few points which can be clearly understand that Fiat
Chrylser has maximised its market share by strengthen its resources and core capabilities which
can be stated below as:
Valuable: It can be stated that all the resources of Fiat Chrylser are valuable like technology,
organisation culture, employees, brand image and product portfolio that help in fulfilling
customers needs in best possible manner. Fiat Chrylser has culture where employees can easily
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communicate with each others that help in coordinating diverse individuals to work as team for
common goals (Chen and Wang, 2017). Experienced and qualified employees of company are
able to delivered best services to customers thereby contributed in maintain strong brand image
of enterprise. Fiat Chrylser also has innovative cars and wide portfolio so that customers can
select best among them for fulfilment of their requirements.
Inimitable: Only organisational culture and somewhat employees can imitate or such type of
culture and hard working individuals may be have with other firm operating in automobile
industry. While brand image, product portfolio and technology can be imitated or copied due to
use of patent and copyright by company.
Rare: Fiat Chrylser has rare car that have unique design, attractive features and facilities that
help in providing more ease and comfort to customers. Company has make use of innovative
technology in order to minimise cost and make optimum utilisation of resources that contributed
in offering products as per customers’ needs.
Organised: Yes, the above table stated that manager has effective organised its human resource,
reputation, products, organisation culture and technologies that helped in reducing wastage of
resources and providing maximum value of end customers (Bentley-Goode, Omer and Twedt,
2019). Therefore, Fiat Chrylser through effective organising its resources is able to optimise its
profitability.
VALUE CHAIN
The value chain can be analysed as step by step business model for transforming
prduct and services from ideas into reality,for enhanced business efficiency and forming
business delivery the most valuable goal productively.
FINANCIAL STATEMENT OF FIAT CHRYLSER’
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Figure 1: Financial statement
(Source: Fiat Chrysler Automobiles Financial Statements 2013-2020)
Physical resource: The brand has high valuable competitive physical structure aspects on store
availabilities, higher presence at auto mobile industry scenarios on which larger scale efficacy
has been competitively targetted.
Financial resource: Capital structure is strong which shows that financial resources have high
potency to bring on quality functional availabilities and profound growth within work growth
domains strategically.
Intangible resources: Goodwill among consumers is the best intangible resource where
companies are strategically heading.
3) Evaluate the given strategy using SAFE criteria
Suitability
SWOT model of Fiat Chrylser
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Strength
1. Broad product range
2. Strong brand image
3. Talented employees
4. Global distributional channel and
network
5. World class manufacturing facilities
6. Strong financial health
7. There is varied capital structure
which can be put on investments
further.
Weakness
1. Decreased in profit margin due to fleet
sales
2. Product recall
3. Absence of captive financing
4. LESS TRAINED EMPLOYEES and
lack of evolving synergy within new
domains
Threat
11 Impact of Covid-1911 Brexit11 Increasing competition level11 Government policies11 Changes in external environment
Opportunities
1. Opportunity to grow its operation in
new market or international market.
2. Shift of customers taste to electric
vehicles
3. Digital technology
4. New entrance business opportunities for
wider scale expansion into untapped
arenas commercially
5. Opportunity for focusing on
strengthened new functional scope
measures by regenerating keen
strengths.
TWOS MATRIX
EXTERNAL
OPPORTUNITIES
EXTERNAL THREATS
INTERNAL STRENGTHS SO ST
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