Case Questions

1. According to a major economics consulting firms, Fiat`s ¨South American operations are the jewel in the Italian company`s global operations¨. Fiat has plants in Brazil and Argentina, and Brazil is the biggest market, well ahead of its home-country market. In 2011, with the Chrysler venture taking up more and more of the firm`s attention – and as European sales suffered a steep decline – rumors began to circulate that Marchionne might move Fiat headquarters from Italy to the United States. Discuss Fiat´s takeover of Chrysler as part of strategy to transform itself from international business into a multinational or global business
2. What benefit does fiat hope to gain from its arrangement with Chrysler what potential …show more content…

Today’s announcement specifically mentions city and compact vehicles, products Chrysler will need should American consumers actually decide to buy the small, fuel-efficient cars U.S. lawmakers claim they want. Chrysler will also get better distribution of its products, certainly in Europe, but also in places such as India—Fiat has a partnership with Tata Motors—and Brazil. Fiat also has a deal with Chery, the Chinese automaker with which Chrysler had been trying to partner. Both Chrysler and Fiat will also be able to better leverage their global supplier ties and therefore see cost savings in larger volume.
What’s in it for Fiat?
For Fiat, the reward is simple: distribution channels. Currently, Fiat only sells Maserati and Ferrari in the U.S., although Alfa’s gorgeous 8C has been sold here in extremely limited numbers, as well. If Fiat wants to become a truly global entity, a foothold in North America would be most helpful. Alfa Romeo has been promising a proper return to the U.S. market for some time, and Chrysler’s distribution network could ease that brand’s return to our shores—perhaps even saving some Chrysler dealers from closing altogether—and could also serve as a point of sale for potential Fiat and Lancia imports, too.
Fiat will also likely be able to use excess global production capacity to assemble Chrysler-badged variants of its products.