Case Study 4 Chrysler

At least we finish Early for our presentation.

What is Chrysler's corporate focus?
Vision: To provide cars and trucks that people will want to buy, will enjoy driving
and will want to buy again.
Mission: Return to Profitability
Strategic Framework:
Enhance our Core
Extend our Business
Expand the Market
Business Fundamentals - Five Pillars:
Customer First
Go Global
Be Green
Quality . . . period
Powered by Great People

Core Values: We must achieve sustainable performance by exceeding the

evolving customer requirements and expectations better than the competition
and in a culture built on leadership, accountability, passion, integrality and
discipline, and in an environment of mutual respect.

Chrysler Group Mission, Vision and Principles:

The founding philosophy of Chrysler was "design with purpose." After the Chrysler
corporation went into bankruptcy in 2008, a new company emerged with a realignment of its
mission, vision, and principles to return the company to profitability. In the redefinition, the
new vision, mission and principles reinvigorated the purpose of Chrysler's "design with
purpose." This new Chrysler Group mission, referred to as its "vision" is...

"Our vision is to build cars and trucks people want to buy, will enjoy driving and will want to
buy again."

The new Chrysler Group further defines its "purpose"...

"To create the type of exciting, efficient, reliable, safe vehicles you expect and deserve."

In an open letter to stakeholders in 2009, the CEO at that time, Bob Nardelli defined
threebasic principles for the new Chrysler Group...

Enhance our core: invest in product enhancements; strengthen our customer focus;
improve our relationship with our dealers; and recommit the entire organization to a new
level of quality.

Extend our business: develop or establish partnerships to provide new products; build
off of existing products to extend into new segments; explore new and adjacent market
opportunities; and accelerate new technologies and innovation.

Expand our market: pursue global alliances to fill gaps in our product portfolio and open
new geographic opportunities; increase global sales by building from our existing dealer
network; and invest closer to our global customers by enhancing regional business
operations and global engineering centers.
It is unclear if these principles are still the guidelines for Chrysler leaders after Sergio
Marchionne was named CEO in September, 2011.

Swot
Strength

Weakness

1. The strategic alliance enhances

the product proliferation both
Chrysler and Fiat which means
increase its market share and
producing wide range of product to
target different market segments.

1. Implication of strategic alliance

between Chrysler and Fiat will bring
different approach in term of culture and
management to run the new company
because Fiat is an Italian company. Just
like the previous merger with DaimlerBenz.

2. Strategic alliances with Fiat give

Chrysler the resources, technology
and distribution networks.
3. Strong R& D capabilities with Fiat
such as developing better products
that allowing it to run the businesses
and differentiate its offering in a
highly competitive market.

2. Chrysler needs to pay off the large

financial debt (federal loan) to the
government for restructuring plan.
3. The bankruptcy status that ruined the
image and reputation of Chrysler which
changing customers perception, trust and
the confident level.

4.After the alliance with Fiat, it

become the sixth largest cars
manufacturers in the world
Opportunities

Threat

1. Technologies innovation in hybrid

electric cars that inspired from other
competitors that have already
produced it.

1. Global financial crisis- if the economy is

down, consumers will reduce buying; this
will make Chrysler cars drop its sales.

2. Increasing in new Demand in

smaller cars and cost fuel efficiently.
3. Exploring new market
geographically to expand its products
globally.

2. Global oil fuel crisis Fuel price keeps

increasing due to limited supply of
resources.
3. Competition from major player in the
market such as Honda , Toyota and Ford
4. The difficulty of gaining trust and
confidence from customers due to the
Chryslers bankruptcy status before
alliance with Fiat

5.Potential to stay in bankruptcy status

Strategy 1: Horizontal Growth Strategy

After the strategic alliance between Chrysler and Fiat is completed, based on the
case study, the new company would like to enter the United States market but they
had to competing with German and Japanese car maker where both of them had
long term successful gaining in the U.S market. This strategy help Chrysler to

achieve growth by expanding it operation into other geographical locations

and by increasing the range of product and services offer to current market.
By using this strategy, Chrysler should choose a closed strong alliance that
act as the Chrysler supplier or distributor for mutual advantages.
Instead of entering the U.S market, Chrysler needs to apply the strategy alliance
with other region or outside United States for example exploring to China market.
They need exploring the new market to expand it products globally.
The benefit for strategic alliances, it can gain target market in China because the
potential alliance of Chrysler know the current trend of the china market. The
partner alliances will help Chrysler to distribute and manufacturing the cars in
China. Chrysler and it potential strategic alliance company in China uses this
strategy as a way to achieving market growth and increase the market share of
Chrysler in China. It also allows them focus on Chrysler key strength for example
cars technology, cars designing, and distribution channel and manufacturing it with
the help of it potential strategy alliances to distribute and manufacturing the cars in
China market.
The strategy allow both of them exploring and focusing in market opportunities
rather than Chrysler entering the China market without any partnership alliance and
not knowing the market trend and culture and policy makers in the particular
region rather than simply compete with other competitors such as Honda, Ford and
Toyota. This strategy is linked with it basic principles and mission of new Chrysler
group which is to extend the business which is to develop or establish partnership to
provide new products, extend into new segment, exploring new market opportunity..

It can gain high profitability if the new alliances capture the market of China. This
will exist the Chrysler from bankruptcy.

Strategies 2: Global Standardization strategy(pp438)

When the company embarks on a global standardization strategy, it located
its manufacturing and other value chain activities at the global location that
will allow them to increase efficiency, quality and innovation. By doing this
strategic, it has to solve the problem of coordination and integrating its
global values chain activities. It to find the lower the bureaucratic cost
associated with resource transfer between corporate headquarter and its
overseas divisions and provide the centralized control that global standardize
strategy requires.
In these strategies, the Chrysler headquarters is manage and coordinate the
activities of the Chrysler home operation and oversea operation. It means
Chrysler headquarters group decide where to locate the different function at
the optimal global location for performing that activity. For example,
Chryslers had the product group one that doing global R &D in Italy of the
technology of engine, product group 2 is for designing the cars is located in
United States. The product group structure allow Chryslers to decide how
best pursue a global standardization strategy for example the manufacturing
process, product design and which country to increasing efficiency.
Therefore, for the manufacturing process it is wiser to move to China to
manufacturing the cars because for the resources using cheap labor and
place the R & D and product design innovation design because they had skill,
capabilities and expert people to design better cars.

Strategy 3: Organization strategy - Strategy control system (pp288)

Chrysler must choose the organization strategies and structure that
they hope will allow Chrysler to use it resources most effectively to pursue it
business model and create value and profit and achieve their goal to exit
from bankruptcy.
Therefore, they need to create a strategic control system tools that
allow them to monitor and evaluate whether their strategy and structural are
working as intended, how Chrysler count be improved and how they should
be changed if they are not working.
Strategic control is not just about monitoring how the well an
organization and it member are performing currently or about how well
Chryslers is using its existing resources. It is helping the strategic
management to obtain efficiency, quality, innovation and responsiveness to
customers.

Control and efficiency to determine how efficiency is Chrysler are in using the
organization resources to measure how many units of are being used to
produce a unit of output. They must also be able to measure the number of
units of output of the cars.
Control and quality use the strategic control is helping Chrysler to determine
the quality of Chrysler cars and service because it gives feedback quality.
Control and innovation use the strategic control to help to raise the level of
innovation for Chrysler to create an innovation cars for example produce a
affordable, cost fuel efficiency and smaller cars.

Control and responsiveness to customer- it help make Chrysler more

responsive to customers if the develop a control system.
Strategy control system are the formal target setting, measurement and
feedback system that Chrysler to evaluate the whether the company is
achieving
superior
efficiency,
quality,
innovation
and
customer
responsiveness.
The strategies is should be flexible enough to allow the Chrysler to respond
as necessary to unexpected event by giving enough accurate information
and a clear picture how the Chrysler performance, by using the information
,for future decision making.

Best Strategy (Rujuk Guidelines nya).

Choose Strategy one- Strategic alliance horizontal

Should be link to Mission and vision statement of the company

Explain the Pro site not Cons Site
The best strategy is linked or cope with it current strategy framework which
is to extend the business by develop a new products and building existing
product to extend into new segment and new market for cars that is cost
efficiency , affordable and smaller.
This step can make the company to recover from the bankruptcy and gain
level of trust and confidence level of among the potential customers and
existing customers.
Implementation ( Munirah)

Short run term ( Munirah)

Strategic alliance with other region

1. If the short terms are success they can apply 2 strategies to increase
profitability.
nd

2. Enter in market in china 1 . particular choose Guangzhong for

manufacturing because it is industries region .
st

3. Select one trust strategic alliance that manages the market in China. Cars
manufacturing or car owner.
4. Arrange an agreement to sign the Memorandum of Understanding. What
are the benefit for both part

Long term
Global standardized strategy

1. Need to present to the top management for decision making

2. Financial department need to analysis the cost to producing the cars
3. Designing and production operation need to design the innovation cars.
4. Quality control, enhance the warranty strategy on cars. To make the and
services.

5. Testing the cars for technology, safety measurement, and test drive.
6. Market research- getting information from the customers.

Implementation Guide
HR, Finance, Marketing, Research, production and design