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FIAT-CHRYSLER MERGER/ACQUISITION STRATEGIC ANALYSIS - Essay Example

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Fiat-Chrysler Merger/Acquisition Strategic Analysis Name: Instructor: Course: Date: Abstract The business environment has become overly complex a factor that has required businesses to review their strategies in order to withstand the shifting market dynamics…
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FIAT-CHRYSLER MERGER/ACQUISITION STRATEGIC ANALYSIS

Download file to see previous pages... Unfortunately, this has not always happened and the result has been struggling companies. For these companies the only solution is a complete overhaul or joining forces with a better placed company. The latter often comprise business acquisitions, or alliances. This study focuses on the former, with a specific look at Fiat’s acquisition of Chrysler. The basic goal is to strategically analyze the suitability of the acquisition on basis of the benefits derived by both companies as determined by the resulting synergies. The study also examines alternative ways through which Fiat would have joined the extensive American market. Table of Content Introduction……………………………………………………………………………………4 Automobile Industry Analysis-PESTEL Political factors………….………………………………………….….………………5 Economic factors……………………………………………………………………....6 Social factors………………………………………………….……….….…………...9 Technological factors…………………………………………………….……………9 Mergers & Acquisitions-Business model framework Four-box business model………………………………………………….………….10 Eclectic paradigm…………………………………………………………………….12 Potter’s competitive advantage diamond…………………………………..................15 Synergies………………………………………………………………………………………17 Market entry strategy………………………………………………………………..………...20 Summary…………………………………………………………………………………..…..22 Bibliography…………………………………………………………………….……………..24 In April 2009, Fiat commenced its efforts to acquire Chrysler an American automobile company faced with the threat of liquidation. At the time, it was largely perceived that Fiat was simply offering a ‘helping hand’. However, in a fiercely competitive industry it was most unlikely that a company would be willing to commit its resources to merely rescue a competitor. It was clear that Fiat had a strategic view of the acquisition. It is the position of this study that mergers and acquisitions are mutually beneficial to both parties. These benefits are not as elaborate and need to be strategically determined to understand whether indeed the alliances are bound to deliver value to shareholders and customers. This study seeks to carry out a thorough review on the Fiat-Chrysler acquisition, by doing this the study hope to look at the arising benefits for both companies and authenticate or fault Fiat’s decision to acquire Chrysler. In the same breath, the study also hopes to determine whether other market entry strategies would have delivered the resulting benefits and synergies. Ultimately, the study hopes to have brought to the fore the basis, importance, and benefits of acquisitions and mergers as well as cultivating in depth understanding of the Fiat-Chrysler acquisition. In April 2009, the U.S. president, Barrack Obama publicized the government’s reorganization plan for Chrysler paving way for an immediate, efficient, and controlled bankruptcy. As per the agreement, Fiat would acquire a 35% stake in Chrysler. Also, Chrysler would restructure to constitute a novel company with superior resources; technologies and a global network which would enable the company compete globally. As part of the alliance, Fiat would avail its technology, platforms, and certain products such as the power-trains ...Download file to see next pagesRead More
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