Business Model Framework of Mergers and Acquisitions - Essay Example

Chrysler acquisition, by doing this the study hopes 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 a 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 the 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 to compete globally. As part of the alliance, Fiat would avail its technology, platforms, and certain products such as the power-trains and its premium cars to Chrysler this would help Chrysler to offer an expanded product line which also comprised electric vehicles (EVs) (Terlep, Rogers & Henning, 2013).

On the other hand, Fiat would benefit from Chrysler’s established market dealership which would be used as an outlet for Fiat’s Italian-made cars. Later, in July 2011 Fiat went on to increase the 35% stake to 53.5% by buying stakes held by the American and the Canadian governments, in January 2012 Fiat increased its shareholding to 58.5% making the company the majority shareholder and handing it a controlling stake in Chrysler (Euronews 2013). At the moment, Fiat is in the process of acquiring the remaining 41.

5% held by UAW Retiree Medical Benefits Trust, the bid is stalled as a result of differing valuations by both parties (Terlep, Rogers & Henning, 2013; Higgins & Welch, 2011). Automobile Industry Analysis-PESTEL PESTEL is a useful tool in scanning the macro environment. It refers to political, economic, social, technological, environmental, and legal factors (Henry, 2008.p.51). PESTEL analysis can be used to help detect trends in the macro-environment that will ultimately find their way into the competitive environment.