Strategic Analysis Report: Fiat Chrysler Automobiles (BUS301)

This report presents a comprehensive strategic analysis of Fiat Chrysler Automobiles (FCA). It begins with an external analysis, employing PESTLE and Porter's Five Forces frameworks to assess the political, economic, social, technological, legal, and environmental factors influencing the automotive industry, as well as the competitive dynamics within it. The report then delves into an internal analysis, identifying FCA's strengths and weaknesses, supported by financial statement analysis. Further analysis includes value chain and VRIO analysis. The analysis then extends to the application of the TOWS matrix to formulate strategic recommendations based on the company's internal and external environments. The report concludes with an evaluation of the suitability, acceptability, and feasibility of the proposed strategies.

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 ,

2016. ) The power of technology store in cars is also part of suppliers. The use of GPS, self-
driving car technology, have made the suppliers very important. The growth of GPS in vehicles
has grown at a very rapid rate. It is expected to grow by 12.9% by 2030 in the industry. So the
power of suppliers in the market is moderate.
Competitive Rivalry
The automobile industry is a world of competition, Ford, Toyota, Honda, Nissan,
Volkswagen are some competitors in the automobile industry. Ford will also launch hybrid and
electric vehicles in 2020, with advanced technology included in it. Escape Titanium Hybrid and
Fusion Hybrid are going to launch in 2020, which will create a competitive market in the
automobile world. Fiat jeep will be giving equal competition to Ford cars. Fiat jeep also includes
new technology which will be a combination of technology and heritage. Tesla is also ready to
introduce a new electric car to its customers in 2020.( Liu and Meng, 2017.) So the competition
Rivalry is going to be a tough fight among all the automobiles company. Therefore, the risk is
very high for all automobile companies.
Market attractiveness
Analyzing the above information, there are many opportunities for the growth of Fiat
Chrysler, the risk factors are overall low for the company. With the growth in technology,
vehicles are becoming more innovative and customers are getting attracted toward it. Fiat is
always known for its innovation which increases the demand of customers and it leads to profit
for the company. Overall the market attractiveness is moderate.
Q2: INTERNAL ANALYSIS:
Fiat is one of the leading company across the world. They have many strengths and new
products to rule the market. These strength help to maintain the market share. (Thigpen,
Kappenman,. and Keil,, 2017)

STRENGTH:
Worldwide sales and distribution channel: Fiat is London based company and it has
worldwide sales and distribution network across 140countries. Its operation business divided into
four segments through which he deliver the products worldwide directly. In 2017 fca sold 4.4
million vehicles through this channel globally. In Asia they have collaborated with Tata Motors.
Strong brand portfolio: From past many years fiat is mainly focuses and invested to create
large brand portfolio. A big portfolio is very useful when he wants to lunch new products. In
Fiat’s portfolio Abarth, Dodge, Romeo, Jeep brands are included. They provide the vehicles
from affordable to luxury as per customer’s preferences.
Product innovation: Fiat highly focused on to provide innovative and different products to its
consumers. And it has very good track record to provide new creative product to the market.
They highly focused on their research and development. They have 87 R&D centres in specific
areas and they are focusing on two factors first low consumption of fuel and second
improvisation of fuel.
High customer satisfaction: The Company has very good reputation in the world and also have
loyal customers. They have separate customer relationship management department dedicated to
customers only to fulfil all the requirement and queries.
Quality management: To provide the new and innovative vehicles to the customer they also
focus on the quality of the product.
Good brand image and market share price: FCA is measured by as a trustworthy brand in the
market and due to loyal customers they have large sales and distribution network which create
huge sales. FCA has maintained the market share in specific passenger cars segment at 6.7% in
UK and in USA It has market share at 11.7%.
Capital expenditure return: It has very successful execution strategy for its new products, this
strategy generates good returns on the capital expenditure to create new investment.
WEAKNESSES
Weakness are helping the company to improve the current situations and adopt the new strategy
to achieve the long and short term goals.

High investment on R&D : as these are their strength but also its weakness because they invest
more than average amount to these department through which they are not able to provide
innovative products to its customers. Some times forecasting the demand is also not good
because it leads to miss the opportunities.
Lake of financial planning- financial planning is very essential part of the organization and
financial planning of FCA reflect that they can use more cash professionally through their
current assets ratio and their liquid ratio.
Various mergers: to avoid bankruptcy FCA merge with many companies and which affecting
the brand image drastically.
Provide range of product: FCA has large number of products in all segment which highly
affected the cost of the company to maintain these range which lead to the financial crises.
High attrition rate – Comparing with other organizations in the industry Fiat Chrysler
Automobile has a higher attrition rate and spending too much of amount for training and
development of its employees other than their competitors.
FINANCIAL STATEMENT ANALYSIS OF FIAT CHRYSLER
Fiat Chrysler Automobiles (FCA) mainly operate their business in automobile sector and provide
commercial vehicles and automotive parts . They have their operations in many countries like
US, Canada, Mexico, brazil, Argentina etc . Fiat Chrysler covers huge market, sales overview is
represented by following table :
THE TABLE SHOWS THE DATA OF SALES OF US :

From the above table we can analysis that sales of vehicles and market share in US in the year
2018 sales of automotive has increased from 2059 to 2235 and market share has also increased
from 11.7% to 12.6% and in the year 2019 it has decreased from 2235 to 2204 but market share
isw same as 2018 even when sales has decreased.
THE FOLLOWING TABLE SHOWS PERFORMANCE OF US AS COMPARED TO ITS
COMPETITORS :
FCA covered only 11.7% in 2017 which is less than its competetors like GM,TOYOTA and
these companies has covered more 1-7% market share as compared to FCA and FCA is ahead of
HYUNDAI KIA, HONDA approximately 2-6%, in the year 2018 the FCA has covered only
12.6% of market share which is almost 1-4% less than GM, TOYOTA and Has more market
share than NISSAN, HYUNDAI KIA and FCA has same performance in 2019 as 2018
THE TABLE SHOWS THE SALES AND MARKET SHARE OF BRAZIL :

sales of brazilhas consistently increased from 380-434-497 from the year 2017-2019 and market
share also positively increased 17.5% - 18.7% which shows that FCA is growing in brazil
country
THE FOLLOWING TABLE REPRESENT THE GROWTH OF FCA AS COMPARED
TO ITS COMPETITORS :
FCA is on top of the brazil automobile market it growth is comparatively more than GM, FORD,
and VOLKSWAGAN
THE COMPARITIVE ANALYSIS OF BRAZIL AND US :

The analysis shows that FCA is still facing strong competition in US from many companies and
trying to reach on top of the market while in brazil the FCA has already reach the level of top
and ruling the automobile market and earning huge profit through increasing sales.
VALUE CHAIN OF FIAT CHRYSLER :
PRIMARY ACTIVITIES OF FCA :
a) INBOUND LOGISTIC : FCA purchases various components like mechanical,
electrical ,plastic, steel components ,tiers from various suppliers which cause 70-80% of total
cost, and 10-15% of these purchase relate to the raw material including rubber, steel, aluminium,
copper and lead and the company sources the some of the parts and components for vehicles
from teksid,Tupy S.A and Magnetic merely these supplier
b) OPERATION : the company locally produce and distribute jeep cherokee,jeep renegade, jeep
compass, jeep grand commander etc it also has joint operation with Tata motors ltd. For
producing certain vehicles in India , the company also has joint operation with reliance to
increase market presence. It has also explored opportunities to develop partnership with suppliers
to improve technology, platforms and to enhance skills
c)OUTBOUND LOGISTIC : the company operates in numerous market and exposed to
currency risk is mainly due to difference in geographic location of manufacturing and
commercial activities and results in cash flow from different currencies’.
d)MARKETING AND SALES : the FCA company has recently refocused on its marketing
plans in china with launched product combine with product quality improvements. It also has
marketing strategy of collecting customers information for product development.