Recover from Injury - Chrysler and Fiat - Essay Example

?Recover from Injury In 2008 the Big Three American car companies were in trouble. The global economic crisis dragged them down including Chrysler’s downfall. They faced financial issues because the USA economy was weakening. Furthermore, there were regulations and laws adjustments in order to recover the financial situation of the nation. These changes negatively impacted Chrysler. After a year Chrysler has been trying to resolve its issues, thus Chrysler merged with Daimler. This alliance was unsuccessful and eventually the company broke the contract. Based on my analysis Daimler felt that Chrysler needed them, so Daimler treated Chrysler like a child. “The marriage was based on ego the egos of the two men at the top of the companies at the time who got rich on the deal not compatibility” (Krebs, 2013). Cultural differences made things even worse. This fact limited communication between Daimler and Chrysler. However, when two car companies merge they should have strong relationship and similar cultures. Both sides should understand each country’s traditions before they implement new concepts to their new styles of their cars. A year later, Chrysler decided to move on with Fiat Italian automakers. This time the company should build a solid rock foundation before they further unite. In my perspective if they don’t want to repeat the same costly failures, Chrysler should reflect about there past mistakes that negatively impact their business. They should engage in deep understanding and embrace equalities. Therefore, in order accomplish their goals the company should start to apply business strategies in effective ways to promote a better level. It is important not to forget the cultural differences that created concerns. After the analysis above about the issues at Chrysler, I came out with effective business strategies that may resolve Chrysler’s problems. It will help Chrysler to stand strong for the short-term survival and long-term probability against Chrysler’s crisis. The company needs to work together with Fiat to support their financial system and expand their business to Europe, but this plan requires a business strategy in order to accomplish that goal. Those business strategies that Chrysler’s CEO should execute are to improve Chrysler & Fiat relationships through better communication, apply the Hofstede’s theory in business, and follow the current regulation. In my opinion before companies go public they need to have strong structures to support their plans. In business communication is one of the most important things. The initial steps that the CEO of Chrysler should take are to understand Fiat’s background. The firms need to promote open-minded for each other. Furthermore, these two companies should share their visions and missions so they will implement a new hierarchy system that is going to satisfy both companies’ needs. “This companies merges can harm communications within the companies, especially if the companies adopt distance working and mobile sales and service teams” (MacKechnie, 2013). Chrysler & Fiat need effort and time to fulfill this goal. Both sides should embrace flexibility and equalities because I believe that these will solve the merging issues that would cause conflicts at the initial stage. After they overcome the internal structure goals they could minimize bigger conflicts in the future. This first step is the simplest business strategy, but it is the most important aspect of business. It is better for them to consider this step rather than decide to quickly go out to find the profit as soon as possible. It is going to raise unexpected circumstances that would negatively impact the alliance between Chrysler & Fiat. Thus, in order to achieve short term and long term benefit this step is the one that needs serious consideration. I believe that they will have better understanding in the future when they need to overcome the company’s problems. In addition, by understanding both sides’ views, they will focus to pursue one objective that they have set. Also the understanding in the companies’ relationship will embrace the mutual relationships between Chrysler and Fiat. This will form a new strong hierarchy system in these companies. The firms must build strong foundation and relationships with good communication. They should start to concern about Hofstede’s theory. “They dealt with four anthropological problem areas that different national societies handle differently: ways of coping with inequality, ways of coping with uncertainty, the relationship of the individual with her or his primary group, and the emotional implications of having been born as a girl or as a boy” (Hofstede & Hofstede, 2013). This is about the cultural dimension in society. It is how the public value something based on their tradition and every country and communities have different satisfaction perspectives from goods. This is something that’s not fully accepted by Italians from Chrysler or Fiat from Americans. They should discuss about this matter before they produce their future products because they are in international business. In this stage cultures plays a primary role, so they need to understand the consumer’s preferences on cars. Based on my analysis from the consumer reviews based on Hofstede’s theory both Italians and Europeans people love cars with high technology gadgets in their interior. They love the dynamic slim body cars that have beautiful outlook. Italians are perfectionists and they are concerned about the smallest aspect from a car, so most Italian cars were produce very stylish from their interior and exterior. On contrast with Americans car consumer preferences they love cars with muscle outlook, or we know it as American muscles, they typically have bigger exterior than European cars and Americans are not really concerned about the cars’ interior gadgets like Italians. Therefore in my opinion, Fiat should design their cars to look more muscular and they can reduce some of gadgets in their cars when they want to sell their products in the USA Chrysler showrooms. This will satisfy the USA consumers that based on the Hofstede’s theory also gain profit because by reducing the gadgets in Fiat can lower the operation costs. Doing so will increase the profit margin. In addition, if Chrysler wants to market their products in Europe Fiat showrooms they need to put more gadgets in the car, and form their exterior slimmer so it will satisfy the European consumers. I believe they should use Hofstede’s theory on fitting their companies’ production to the cultures. Chrysler & Fiat will expand their business bigger because they both can fit in their country, and also when they want to expand their business into other countries. This would raise costs in a short term, but it will positively impact both sides in the future. Finally even though Chrysler is in the middle of a crisis, the CEO of Chrysler should apply the regulation on their business with Fiat. It is better to pay taxes now and spend more on operating cost because of regulation, but the company will not get sued because they abandoned laws in the future. The CEO of Chrysler should exchange the ideas with Fiat about exchange controls, local-contents law, import restriction, price controls, and labor problems. I believe there are big differences between European and American regulations. They need to understand this and apply their business according to the law. Maybe it will be costly in a short term, but I believe that it would be a big benefit in the future. The alliance between Chrysler, and Fiat should bring success to Chrysler out from the company’s crisis if they can understand both side’s vision and mission in order to set one big goal that is to become one of the biggest companies together. Thus, they can together embrace equalities and mutual business relationships to focus on the same goal. Furthermore in expanding their business to both sides of the world they should understand the Hofstede’s theory, so they will sell the right products to the consumers and will produce bigger profit together. Finally, in order to keep there business alive in short term and accomplish long term success they should follow the law and regulations. This measure will prevent in the future potential problems. I believe if the CEO of Chrysler applies these strategies Chrysler’s marriage with Fiat would bring success for both sides and it will drag Chrysler to a better financial level. They would survive in the short term and in the long term as well. References Krebs, M. (2007). Daimler-Chrysler: Why the Marriage Failed. Retrieved September 8, 2013 from http://www.edmunds.com/autoobserver-archive/2007/05/daimler-chrysler-why-the-marriage-failed.html Hofstede, G., Hofstede G.J. (2013). Dimensions of national Cultures. Retrieved September 8, 2013 from http://geerthofstede.com/dimensions-of-national-cultures Mackechnie, C. (2013). The Best Way to Improve Business Communication. Retrieved September 8, 2013 from http://smallbusiness.chron.com/ways-improve-business-communication-3084.html Read More