CASE 2/ Fiat Chrysler alliance
1/ Strengths and weaknesses of Fiat GM alliance
Fiat was close to bankruptcy (no sustainable position) ;
GM took 20% and Fiat received a put option ; explain ?
Relations deteriorated (operations phase), GM became less interested : Alliance was not equal ;
The gross of the company has been different (different cycle and country) ;
2/ Strengths and weaknesses of Chrysler Daimler alliance
Merger of equals, however Daimler baught Chrysler for bn$ 36 ; isnt’ it surprising ? the way they had construct the deal is not equal Pb since the beginning due to cultural problems, engineering approaches and operational strategies, Daimler management dit not consider it a merger of equals,
Very little platform sharing occured,
Chrysler market share fell to 11%,
Mercedes sold 80% control to Cerberus, which tried to turn the company around without succes,
3/ Explain the FIAT Chrysler deal; finance, governance, SWOT Which are the key success factors?
How the deal was structured ? Fiat is starting to talk with Chrysler. Be sure that they will be complementary. At each phase of the deal, there are key things that they should not avoid to talk.
Buying a bankrupt company without cash, (but they have to put resources, paltforms, networks, technology, skills) Unions, government are involved,
Marchione CEO of Fiat & Chrysler ; why is it key ? to implement decisions very quickly. Complete management control, Fiat with 20% stake, moving up to 51% based on milestones, Fiat giving its small platforms and engine technology and European and south american networks,
Explain the FIAT-CHRYSLER deal ; synergies
Complementarity to reach 6 Mio vehicles produced geographical complementarity (US for Chrysler, EU and Brazil), idem for product portfolio (A, B for fiat, D, E, pick-up, minivan, SUV for Chrysler), Extensive and purchasing synergies,
Significant improvement in quality and productivity,
Improvement in engineering...
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