Synopsis and recommendation
Since the time of the bankruptcy and the government bailout Chrysler group LLC has made a lot of strides in the revitalization of the main brand and product line. This meant a reorganization of its financial operations, which includes reinvesting into the brand name and the operations to the tune of 23 billion dollars. However, this is not the only thing that the company has done. In the year, 2009, the company entered into an agreement with automaker Giant Fiat as its bankruptcy protection. Fiat had been looking at the situation for some time and some analysts’ state that it was actually waiting in the wings to take over in case of such a bankruptcy occurred.
As such, both of the companies have something to bring to the table apparently despite it seeming that Chrysler was being saved by Fiat (Groth, 2011 p.2). In actuality, some analysts and media outlets at the Fiat parent company had predicted the death of the company after it had reached the highest profit peak in its history in 2008. So what do the two companies bring to the table? On the side of Fiat, the company has the technology as well as new technologies which are required to build high efficiency cars. In this perspective it has support and reverence from high performance giants Ferrari and Maserati.
On the side of Chrysler, it is seen as the third largest automaker based within the United States and has a lot of international appeal in the market. This is the catch that the paper aims to analyze as a possibility for the market entry of the automaker partnership into France.
I would suggest that the companies use the appeal of Chrysler as much as possible and various technical attributes of Fiat in order to exploit their presence within France.
Company Background and Key issues
At first when the two companies where merging, Fiat was to attain a 20 percent stake of Chrysler, however, this is set to rise to 35 percent if the performance targets are met and will rise up to 51 percent, if the government loans are fully paid. Fiat will not have to pay anything for its share and at the same time it will have access to the North American market place. However, Chrysler will be able to take advantage of Fiat’s expertise when it comes to making smaller and more fuel efficient cars in the existing United States factories. The new company will be run by a new chief executive officer as well as a nine member board which will be selected by the government and three of them will be selected by Fiat.
However, there are some analysts that have stated that the two companies, in actuality do not have a lot that they can offer each other. Fiat is believed in some circles to be the weakest company because the revenue that it makes can hardly sustain the investment that it makes in the first place supposedly. As such, entering the US market has not been easy for anyone especially in the automotive sector. A good example is the Japanese and German car makers that have made it in America such as Toyota and Mercedes. At the same time, the entry of Fiat into the scheme of things at the recession is not ideal as a condition.
- Quote paper
- Kathy Morgan (Author), 2011, Market Entry Proposal for Automotive Companies, Munich, GRIN Verlag, https://www.grin.com/document/267033