Strategic Management of the CEO of Fiat - Coursework Example

Strategic management When Sergio Marchionne was appointed the CEO of Fiat, the company was facing a period ofunsuccessful operations in its automobile business. He therefore first took an initiative to establish what the cause of the failure in the company was by touring the business. The major problem that the CEO identified was an established paradigm which was part of the culture of Fiat and that impaired the decision making of the most managers. The executives were used to referring all the important matters to the CEO because they feared to make decisions on their own and this affected the efficiency of the operation in most departments. As Schein (1997), explains that the culture of an organization influences how the management and other employees work and eventually determining the success of the company. Marchionne therefore found it necessary to make some strategic changes in the company to ensure that things were done differently and save the company from going bankrupt. In that case, Marchionne implemented a reconstructive strategy that involved some rapid changes in Fiat without the entire change in the initial culture of the company (Johnson, 1992). He appointed talented managers who were initial operating in the subordinate levels and could not make any influential decisions. These managers were then put in a team that was tasked to achieve Fiat’s turnaround within a specified period of time. Through this, the CEO ensured that the strategic change that he opted to make in Fiat was properly managed by his collaboration with other employees while at the same time delegating responsibilities to managers. This strategy was in line the styles of managing strategic changes explained by Johnson et al (2009) requiring that collaboration and delegation be part of managing strategic changes. Learning was also incorporated as part of the strategic change in Fiat through the team building that Marchionne developed. The managers who were identified to be talented were put in a team that was required to develop a business plan that would raise the profits of the company by 2007. This team would then be held accountable for any failure despite the fact that they were allowed to make mistakes and learn from them. This enabled the managers to share their ideas and think freely to implement them for the improvement of the business in order to make profits (Johnson et al, 2011). As explained by Senge (1997), team learning enables people to put aside their long held assumptions and identify mental models that can generate great ideas. This was also the case at Fiat when Marchionne gave the team a responsibility of achieving the set objectives of the company. Some management layers were eliminated and committees were replaced at Fiat according to how Marchionne thought was best for the improvement of the company. In regards to this, Marchionne was trying to implement an adaptation strategy that ensured that the various changes in Fiat were done incrementally while accommodating the initial culture of the company. However, to manage this kind of change it was necessary for him to give directions on what was to be done while at the same time allowing the employees to participate in the delivering on those changes (Eisenhardt, 1989). That is why the managers were given the responsibility make decisions of the company on their own as a team and not just leaving all the decisions to the CEO as it was before. Chrysler was also facing bankruptcy when it Fiat acquired 20% stake in it in 2009. It was therefore necessary that some strategic changes be implemented to change the situation in Chrysler and revive the operations of the company to become profitable. The first thing that Marchionne did was to put into action a turnaround strategy in the company that would enable the company utilize the available resources in changing the business. This led to managers and other workers who did match the expectations of Marchionne to be laid off and sharing of engines with Fiat which eventually cut down labor costs and other expenses while at the same time closing down unprofitable plants. This was also part of reconstruction change of strategy that Marchionne used to change the strategies in Chrysler after realizing that unnecessary cost were being incurred which lead the company into debts. However, the management of this strategy was based on the direction from the CEO who made most of the decisions in order to speed up the process of attaining some changes in Chrysler. The Fiat CEO also carried out a forcefield analysis in order to establish how the various brands of Chrysler could be made better in their quality. According to Dunphy and Stace (1993), such an analysis is usually very important in determining the actual forces that are likely to affect strategic changes pursued in an organization. This was in line with what Marchionne did when he ensured that the causes of business failure in both Fait and Chrysler were first analyzed in order to establish the proper strategies to address the problems. As a result of this, Marchionne was also able to come with the solution of merging the various departments Chrysler that initial dealt with specific brands of automobiles so as to make the one large team that could make joint decisions and work on improved measure of the quality of their brands in accordance with the suggestion of Mintzberg (2009). Chrysler was therefore able to upgrades various models of its products within a period of 18 months through the quality improvement and modernization of the entire firm. Considering the various strategic changes that Marchionne pursued in Fiat and Chrysler, it was necessary that the CEO identified some levers that would enable him to properly manage the changes that were being pursued in the company. Peng (2014) explains that levers of strategic management should be considered based on the type of strategic changes that the company wants to pursue as well as the context of such changes. Based on the strategic changes of adaptation and reconstruction that were pursued in Fiat and Chrysler, one of the levers that were used to manage the changes was to challenge the assumptions that the managers took for granted in both companies. When Marchionne was appointed the CEO, most manages were used to the idea of referring all matters to the CEO. Their assumption was that they would get themselves into trouble if they would make decisions on their own. However, Marchionne challenged this when he appointed a team and tasked them with the responsibility to make decisions on their own to deliver on company objectives. Compelling changes in Fiat and Chrysler was also another lever of strategic change that was used by Marchionne in his efforts to improve the situation that was facing the two firms. When Marchionne appointed a team of managers to deliver on the objective of Fiat, most of them did not see the possibility of attaining the target that was set for them. However, the CEO compelled them to work hard and implement their great ideas to improve the company by setting standards for them. Every manager would be held responsible for any problem that would arise from poor decision making (Peng, 2009). This therefore, motivated them to work as a team and share their ideas to deliver the changes that were required to save Fiat from bankruptcy. Peng et al (2009), emphasizes that for successful strategic changes, it is necessary that the managers and other employees in the company feel compelled to deliver the best in terms of pursuing the particular changes and this was the case for Fit and Chrysler. In Chrysler, Marchionne lay off some workers who did not match his expectations and this compelled the remaining workers to ensure that they attained the required expectations to avoid being laid off. Changes were also done on the operational process of the two companies as well as the routines that the managers and other employees were used to. Marchionne changed how things were done in both Fiat and Chrysler to ensure that the strategic changes that were being pursued were well managed and would be attained. In Fiat, the decision making process was changed while all the other employees were allowed to participate in generating ideas that would help improve the operations of the firm just as suggested by Thompson et al (2014). This was also the case in Chrysler where separate departments that dealt with different brands were merged to come up with a better team that would make better decisions. This was a very important step according to Saloner et al (2001) who argue that strategic changes are managed better when there are changes in the normal routines and operational process of the particular firm. The entire change program was very effective in improving both Fiat and Chrysler firms which were almost closing down when Marchionne joined the business. In Fiat, the CEO appointed a team and delegated the responsibilities of achieving objectives within a certain period of time. Although many employees thought the target was unrealistic, but the firm become more profitable within a very short period. In the case of Chrysler, costs were cut down, some unprofitable plants were shut down and the operation was changed. This was very effective because the company registered high profits within a period of two years. References list Dunphy, D., & Stace, D. 1993. “The strategic management of corporate change.” Human relations, vol.46, no.8, pp.905-920. Eisenhardt, K. M. 1989. “Building theories from case study research.” Academy of Management Review, vol.14, no.1, pp.532-550. Johnson, G. 1992. “Managing Strategic Change: Strategy, Culture and Action.” Long range planning, vol.25, no.1, pp.28-36. Johnson, G., Scholes, K. & Whittington, R. 2011. Exploring Strategy 9th Edition. Pearson Edu. Johnson, G., Scholes, K. & Whittington, R. (2009). Fundamentals of strategy. Pearson Edu. Mintzberg, H. 2009. Managing. San Francisco: Berrett-Koehler Publishers. Peng, M. W. 2014. Global strategy. Mason, Ohio: South-Western. Peng, M. 2009. Global strategic management. Thomson, South-Western. Peng, M. W., Sun, S. 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