Fiat Threatens to Quit Italy - Term Paper Example

Fiat’s Dilemma Fiat is facing a dilemma currently compared to any other period in the history of operations in the company, while the company is being faced with a hard economic downtrend in the market, workers in the parent factory lead by the workers’ unions are increasing the pressure on the company to relax its intended sweeping changes that are expected to make far reaching changes in the company. Cutting expenses is the goal of each company. In the current competitive market, Fiat has to make a delicate balance between remaining competitive in the market through cutting costs and making wide sweeping operational changes in virtually all areas of operations in the factory, and giving in to the demands of the workers, which would threaten the performance of the company in the global market.

The company has an option of making far reaching changes to make the parent factory sustainable or move to other markets where the factors of production are more favorable compared to the Italian market. The North American countries are experienced a rapid growth and might be a better opportunity for Fiat to relocate. As Vasarri and Ebhardt (2010) argue policy makers are reluctant to make sweeping policies that would make the operating climate favorable and profitable there is a need for the company to formulate strategic plans that would cushion the company from adverse competitive forces in the market, and in cases where the market dynamics rapidly change.

This would call for a well planned strategic plan. Vasarri and Ebhardt (2010) argue that there are severe outstanding differences between the company and the workers union. The company has the opportunity and the right to control the situation. The company has to remind the workers that they stand to lose in case it shifts operations, Fiat managers have to face the situation and caution employees and other policy makers on the implications that the shifting would have on the country and workforce at large compared to the impacts of the intended changes and the positive aspects to the economy and the employees at large.

This would be in accordance with Lewin’s model of effecting new perspectives in an organization. Vasarri and Ebhardt (2010) argues that sales and new production of models have been halted as a result of this standoff. This has a serious effect on the company’s growth, profitability and market competitiveness. There is a need for strategic leadership to be portrayed in Fiat Company. As a matter of fact, many unions have been satisfied with the changes except one; the Fiom-Cgil, this portrays lack of enough deliberations, communications strategies and strict defined policies regarding employee engagement policies in the firm.

The company has to define the rewards for the employees in consultation with their unions leaders and put forward the engagement policies that have to be followed in the company by all employees with rewards, motivational factors and the objectives of the comply well outlined. These would help in effective communication between the management and the employees, and offer better grip in leadership to all mangers. Conflict management is an issue that affects many firms. Before the company shifts to new areas of operations, there is a need for a detailed conflict resolution mechanism that would not taint the image of the company and that would not affect the shares of the company as Vasarri and Ebhardt (2010) argue.

This would entail inviting all the involved stakeholders in a fact finding mission that would offer proposals that would be fair to each party and that would be expected to offer the line of action to both the company and the employees. Resolutions emanating from a stakeholders forum are in most cases biding and have far reaching effects in ensuring stability of the company in the market. Reference Ebhardt, T., & Vassari, C., (2011, 27 Oct.). Fiat Threatens to Quit Italy: The CEO says the carmaker may move production elsewhere if unions don’t accept changes.

Bloomberg Businessweek. http://www.businessweek.com/magazine/fiat-threatens-to-quit-italy-10272011.html?chan=magazine+channel_news+-+companies+%26amp%3b+industries