Automotive Industry and Fiat

Topics: Fiat, Automotive industry, General Motors Pages: 12 (4325 words) Published: December 18, 2010
1.0 - History of Fiat
2.0 - External Environment
2.1 - PESTLE Analysis
2.2 - Porters 5 Forces
2.3 - Opportunities and Threats
3.0 - Internal Environment
3.1 - Strengths and Weaknesses
3.2 - Value Chain Analysis
4.0 - Current Strategy
4.1 - Current Strategic Implementation
5.0 - Issues of Attention
6.0 - Conclusion
7.0 - References

1.0 - History of Fiat
FIAT was founded in Italy in 1899. FIAT is an acronym for Fabbrica Italiana Automobili Torino. In 1902, the company was appointed a director, namely, Giovanni Agnelli. In 1908, the company branched out overseas to the United States where production increased. Fiat then ventured into other industries such as steel, electricity and public transport. During the First World War, all production was aimed at munitions. During the reign of Mussolini, Fiat had to concentrate on the domestic market. Technological developments were vast for commercial vehicles, aviation and railway sectors. With the arrival of the second world war, the production of cars almost ceased as commercial vehicles had more of an impetus. 1958 marked the beginning of the economic boom in Italy. Domestic production and that from FDI increased as the automobile was the driving force of the Italian economy. From 1965 to 1977 production continued to increase along with exports but there was also a rise in trade union conflicts resulting in 15 million hours of strikes in 1969 collectively. 1978 brought the dawn of robotic assembly equipment. In 1979, the auto sector was established as an independent company called Fiat Auto S.p.A which incorporated Fiat, Lancia, Autobianchi, Abarth and Ferrari. Alfa Romeo was acquired in 1984 and Maserati 1993. Also in this era, other companies were set up. In addition to Fiat Auto, Fiat Ferroviaria, Fiat Avio, Fiat Trattori, Fiat Engineering, Comau, Teksid and Magneti Marelli were established, all under the Fiat brand. In the early 1990’s, Fiat expanded it product range to international markets which resulted in 60% of it’s turnover coming from outside of Italy. Innovation continued in the turn of the millennium with the introduction of Multijet engines which increased fuel economy. More recently, in 2009, Fiat saved GM from collapse in a swift equity acquisition. GM was hit hard with the credit crisis and now chief executive, Sergio Marchionne, has the task of developing a strategy in order to help rehabilitate the damaged company (Betts, 2009). President Obama has faith that the Fiat chief will be able to instil stability back to the depleted firm (Betts, 2009). Fiat also had its eyes set on the acquisition of German giant Opel. It was bidding along with RHJ International and Magna. Eventually, General Motors decided to pull out of the sale of its subsidiary, Opel (Robinson, 2009). If this acquisition had been achieved it would have meant a massive market share in Europe for Fiat and market dominance (Wiesmann, 2009). Due to the size of the Fiat group, this report will only focus on Fiat cars and the car market.

2.0 - External Environment
2.1 – PESTLE Analysis
* Governments and institutions across the world are imposing sanctions on companies in terms of their CO2 emissions. Two treaties; the European Climate Change Programme and the 1997 Kyoto agreement have both been set out in order to reduce emissions and slow global warming (Europa, 2009). This means an increase in spending from companies on reducing their CO2 emissions with no additional return of capital employed. * Because Fiat is a global company, there is a great deal of trade between different countries all over the world. Although the EU and Japan have good trade links, there are still significant tariffs in place that are being worked on being reduced or abolished (European Union, 2008). There is the bonus of free trade for Fiat between the EU 27 bloc where there are no trade tariffs which allows easy movement of goods. * The Corporate Average Fuel...

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