At this crucial time in Fiat’s history, they are forced to either collaborate effectively or die out. Just recently the Italian car company Fiat purchased a large portion of Chrysler through an international deal to save the company from bankruptcy. The two automakers, both struggling regionally, will come together to create a global competitor. The expanded production facilities means that they will be able to produce cars anywhere in the world, reducing shipping costs. For this vision to successfully occur, the two companies need to effectively transfer knowledge and integrate product lines. On the engineering side, the old Chrysler cars and Fiat cars need to be outfitted with the best of the two technologies. On the operations side, new efficient means of production needs to be planned out to fully utilize all the new resources to mitigate costs.
Fiat also has a few difficult decisions to make at their home in Italy. Do they continue to produce cars in Italy, a place where they are losing money, or move production else where and risk the backlash of Italian employees. Their current plan is to expand production in exchange for a new pay structure that would allow Fiat more flexibility in compensation.
2 replies on “Fiat and Chrysler. Collaborate or lose.”
Can this form of collaboration be successful? Here we have two fallen giants, each with its own problems. Chrysler cars suffered from design, fuel efficiency, and reliability problems, while Fiat has suffered from the same and possibly others for decades. Can two companies with existing problems collaborate to create products and services that are better than what they had before collaboration? It is hard to predict the outcome. But I think that when collaboration, and especially strategic partnerships are based on each company or team bringing certain strengths to the new project, it can be successful. In this case, it seems that Fiat and Chrysler are both bringing weaknesses to the table. Having said that, I like the look of the new car, although it is far from the Mini!
I wonder how Fiat will be able to capitalize on Chrysler’s technology. Fiat is known in Europe for its small, cheap and reliable car, perfect for crowded cities. Chrysler has mostly produced SUVs. Their success will heavily depend on the synergies they can find between two different products that target different markets.
Yet, on the organizational side, it gives some leeway to Marchionne to press for less rigid work practice by stressing the fact that he can now offshore production. In a country crippled by populist interventionism by politicans, I don’t know how far he can get with that. At least, he now has a backup plan.