Slide 1
CHRYSLER
CASE STUDY ANALYSIS
GROUP 3
COURSE ID MGT 490
SECTION - 2
NAMEIDTANZIRAL ZAHARA ZABIN1030323FARJANA AHMED1020720NUJHAT
MORSHED1030458TAIYBUNNESSA WORTHI1020690
INTRODUCTION
Chryslerone of the largest automobile companies in U.S.
Acquired Dodge Brotherssame timeestablished Plymouth and DeSoto
divisions.
Lee Iacocca was brought in as COOpromoted to CEOcredited for
returning the company to its profitable statecost cutting
measures.
But again in 2008Chrysler was hit hard due to automobile
industry crisis
Billions of dollarsgiven by the U.S government as loansprevent
it from shutting down.
Chryslerfiled for Chapter 11 bankruptcy reorganization on April
30, 2009.
External Environment Scanning
Societal Environment:
World War I widely affected the prevalent business
situation.
Environmental pollution and rising gas prices.
The oil crisis of the 1970s resulted in a high demand for
fuel-efficient cars.
Many companies adopted merging as a strategy to recover their
losses.
Economic depression played an important role to aggravate the
situation.
Task Environment:
American companies facing competition from foreign car
manufacturersHonda, Toyota..
Industry going globalChrysler expanded into Europe and formed
Chrysler Europe by acquiring the UK-based Rootes Group, Simca and
Barreiros.
People went for better quality cars..
Internal Environment
Corporate Structure:
Chrysler LLC started DeSoto and Plymouth divisions.
After they merged with Daimler Benz AG in 1998became a division
of DaimlerChryslerdid not have any representative on the
DaimlerChrysler board of management.
Corporate Culture:
Significantly different cultures of the two companiesAmericans
valued efficiency, empowerment, creativity.Germans followed more of
a bureaucratic culture.
Difference in pay packages..
way of working stylesboth the companies differed
significantly.
Corporate Resources:
Quality-related issues dented the brand image of their cars
Company could not invest enough money in research and
development
Global financial crisis affected Chryslers sales badly
Emphasized on manufacturing passenger cars..like the Dodge
Caravan
Suspended the incentive bonuses, merit increases, and eliminated
retiree life insurance benefits.
They did not have enough resources to stay competitive with the
market
SWOT ANALYSISSTRENGTH
Managed to continue its existence all these yearswent
throughundesirable situations 1970s financial crisisbankruptcy
Existenceproveshas the strength to stay afloatfor their past
performances(Chrysler Six, Firepower later became popular as HEMI
engine, many other innovations)managed to get financial aids
Hascapabilityto face challengesemerge from difficult
situations
2010global corporate advertising campaignto restore its
confidencead showed the strengthit is believedcampaign will deliver
all the objectives
WEAKNESSES
Lack of Innovation and Poor R&Dlateness in launching new
designs and modelsdecline in salesdemandhigh debtcompetitors gained
consumer attentionChrysler went downcould not invest enough money
in R&D department.
Poor Quality and Global PositioningU.S Auto Task Force
commentedChryslers products have historically underperformed in
terms of qualitymoreoverthe low demandsalesdisadvantage to develop
a new global product development processnegative impact on global
positioning
High Leveragelow demandsalesless profitabilityhigh
debtaltogether increases leverage
Ownershipof different entitiesconflictsdifficulties in decision
makinganalysts expressed concernsjointly owned by U.S
GovernmentCanadian GovernmentOntario GovernmentUAWFiat
Poor Business StrategyPoor managemente.g, during 1970sfuel
prices went upconsumers preferred fuel-efficient cars which Toyota
and Honda were concentrating on providingbutChryslers focus
remained on SUVs and trucks.merge with Daimler failed miserably
Low Demand and Lack of Financial Resourceslow demandcausing
declining salesprofitabilityled to instability in the working
capitalnot enough availability of funds for operations in the
company
OPPORTUNITIES
Alliance with Fiatshown strategic and financial benefits to the
stakeholdershelp develop Chryslers possibility planentrance to the
competitive fuel-efficient vehicle platformsdistribution
capabilities in key growth marketssignificant cost-saving
opportunitiessucceed in a global auto industrystatement from
Chryslerhelp create or preserve more than 5000 manufacturing
jobs
Government Supportgiving financial aids to get out of
bankruptcycondition of forming alliance with Fiatalso beneficial
for Chrysler
THREATS
Competitorsstrong competitors in the automobile manufacturing
companiesToyotaHondaetcstill holding significant grounds on the
market
Advance Technologycompetition to get more intensecompetitors
will continue to come up with innovative modelsconcepts
Major Problems
Financial problem
Poor strategy management
Lack of innovation
Alternatives
Strategy 1
Discontinue some Production of models.
Reduce cost, employee benefits, human resource, suppliers and
distributors.
Reduce warranty facility.
Sell non earning assets.
Sell some assets to invest in R&D department and cover
leverage.
Strategy 2
Discontinue the production of some models.
Reduce cost, some employee benefits, human resource, suppliers
and distributors.
Sell non earning assets.
Give factories or machineries for rent.
Recommendation
Strategy 1
Strategy 1 would focus more on product development and
bankruptcy risk, whereas, Strategy 2 concentrates more on
liquidation.
Restructure the company
Set new programs and budgets
Take profitable decisions in low cost
Create production efficiency
Try to reduce the bankruptcy risk and other liability
Hire new employees
Invest in profitable areas
Customer satisfaction
Reduce production cost and warranty cost
Give more facilities in research and development
Implementation
Managers evaluate the process
Resolve the problems
Measuring employees performance
Match with the company standard performance
Need good communication with employees
Evaluate working satisfaction
Evaluating & Controlling
