Strategic Management and Strategic Competitiveness: Fiat Chrysler Automobiles

2279 words (9 pages) Business Assignment

27th Apr 2020 Business Assignment Reference this

Tags: Business AssignmentsTechnologyManagementInternal AnalysisExternal AnalysisBusinessStakeholderBusiness Strategy

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Introduction

This paper will address one public corporation in the automobile industry. The public organization chosen for this assignment is Fiat Chrysler Automobiles or FCA. Fiat Chrysler Automobiles have had several name changes over the decades as the company continued to grow, expand and take upon new ventures.  FCA, once called Jeep Chrysler is a brand that emerged in 1940. Mark A. Smith is the founded of Jeep Jamboree USA also known as Jeep Cherokee. Mark Smith was iconic to the 4×4 off the road engineering, and a noteworthy inspiration on everything that the Jeep brand stands for today.  The first vehicle made was the Willys Quad. This vehicle was made for soldiers around the world (1). The target customers for the Jeep Cherokee brand are the young at heart, adventurous, patriotic and loving life individual who requires quality and safety (1).

Assess how globalization and technology changes have impacted the corporation you researched

Globalization and technology changes and advancements have impacted Fiat Chrysler is many ways. They have caused the company not only to prosper and progress but to join forces with other companies to create alliances, third-party companies and subsidiaries. For example, technology has moved from just 4×4 off-road capability to GPS, tracking services, in lane assistant driving, car cameras, voice control, self-driving cars, and the list goes on and on. With all these new capabilities at high demand and being available within the automobile industry; FCA had to continue to be innovative and therefore invested in research and development and hired some of the best engineers (4).

Globalization made a huge difference because FCA was able to own and manage offshore business, expand their brands and become well-known in other parts of the world, making a mark in the world-wide economy (4).  For example, FCA designs, engineers, manufactures and sells vehicles and related parts, services and production systems worldwide. The Group operates 102 manufacturing facilities and 46 Research and Development centers; and it sells through dealers and distributors in more than 135 countries. The FCA Group’s businesses also include Mopar (automotive parts and service) (7). Mopar also offers protections packages to customers for the FCA group’s vehicles world-wide (7).

In addition, there is Comau, which is an Italian multinational company based in Turin, Italy and is a subsidiary of automaker Fiat Chrysler Automobiles (8).  Comau is an integrated company in the industrial automation field with an international network of 35 operative centers, 15 manufacturing plants and 5 “innovation centers” worldwide (8).  Also, Teksid, ​originally known as Ferriere Piemontesi and owned by Fiat since 1917, the company was renamed Teksid in 1978 following the merger of all the Group’s iron and casting activities under one roof (9).

One of the world’s largest producers of gray and nodular iron castings, Teksid is also a leader in production technologies for aluminum cylinder heads and engine components (9). ​Today, Teksid has seven plants (four in Europe, and one each in South America, Central America and China) and two business lines: Teksid Iron, behind which there is a century-long tradition and experience, produces iron parts for engines and suspensions, and other components for the automotive and industrial vehicle sector (9). ​​​Teksid Aluminum, with its well-known expertise and proactive approach to co-designing, simultaneous engineering and product development, produces aluminum engine parts (9). ​

Cleary, you can see how technology and globalizations has affected FCA by causing the company to think forward, stay innovative, diverse and progress.

Apply the industrial organization model and the resource-based model to determine how your corporation could earn above-average returns

A strategy is the combination of actions to exploit core competencies through which a company creates its own competitive edge. Every firm has or must make a strategy. A strategy is the only way that gives a clear-cut path for a company or firm to excel (10). The strategic management process is the full set of strategic actions, commitment and decisions required for a firm to meet strategic competitiveness and earn above average returns. There are two theories to make strategies (10). The first theory is the I/O Model or Industrial organization model and the other is the Resource-Based Model. These two models assist with companies and/or investors to make in excess to what is expected to earn from other investments with a similar amount of risk. Theses excess returns are called above average returns. 910).

The resource-based model assumes that each organization is a collection of unique resource and capabilities that provides the basis for its strategy and that is the primary source of their return (10). According to this model, differences in firms’ performances across time are due primarily to their unique resources and capabilities rather than the industry’s structural characteristics. So, this model focuses on unique resources and capabilities (3). If you have those unique resources, then you can develop the capabilities to gain competitive advantage (3).

Next is the Industrial Organization Model- External Environment- This model explains it is the external environment which you should take care of before you make your strategy (10). The Industrial Organization model elucidates that the industry in which a firm chooses to compete has a stronger influence on the firm’s performance than do the choices managers make inside the organization (10).  The I/O model has four assumptions, the first is the external environment that creates pressures and constraints for a firm to make its strategy. The second assumption is that the firms competing within an industry has similar resources under their control. Therefore, the firms under these industries are more, or less equal (10). The third assumption is that the resources that are under their control are highly mobile and lastly the fourth is the organizational people are rational human beings (10).

Some of both models is used in FCA’s business strategy. However, the model that yields above average returns for the company, is the Industrial Organization, I/O Model. Within the I/O Model, is the External Environment, which consists of the General environment, the industry environment and the competitor environment (10). Regarding the general environment such as society, demographics and customers, the FCA brands reach all age groups. They have created fun driving, sporty automobiles, SUVs, family-oriented vehicles, safety focus cars and luxury automobiles. The prices of their brands are affordable from the student to successful business owners and retirees.

The automobile industry remains to be attractive because society must be mobile and have ability to get from one destination to another independently. FCA is looking forward and is attractive to the aerospace industry for flying vehicles as well as continue to develop and enhance electric vehicle capabilities to include also solar technology. Competitors have not been a threat to FCA. The competition has been healthy for the company. It allows them to keep their cost low while retaining innovation.

Within the I/O Model are the five forces of competition. the Five Forces of competition analysis is a framework that helps analyzing the level of competition within a certain industry (6). It is especially useful when starting a new business or when entering a new industry sector. According to this framework, competitiveness does not only come from competitors (6). The five forces of competition entail these five categories: the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of new substitutes and the rivalry among competitors (6). FCA incorporates and considers all the aspects of the five forces of competition in order to stay profitable and relevant in the industry.

Assess how the vision statement and mission statement of the corporation influence its overall success.

According to the textbook, Strategic Management: Concepts and Cases: Competitiveness and Globalization (10 ed.), “The vision of a corporation is the image of what the company wants to be and in far-reaching what it desires to accomplish (10). A mission statement for a company stipulates the business or businesses in which the firm contends to oppose and the customers it aims to serve.  The vision statement is the foundation of the mission statement” (10). The founding philosophy of Chrysler was “design with purpose” and that root of that ideal continues with its future generations (2). The Chrysler Group says it has a vision-driven mission to create a brand that consumers will repeatedly patronize: “Our vision is to build cars and trucks people want to buy, will enjoy driving and will want to buy again.” The company further defines its “purpose”: “To create the type of exciting, efficient, reliable, safe vehicles you expect and deserve.” (2.) I would say that the vision and mission statement of the corporations has influenced their accomplishment in a positive way. Their goal to do great and be great, has afforded them the overall success that they continue to achieve yearly.

Evaluate how each category of stakeholder impacts the overall success of this corporation.

The stakeholders of an organization are the strategic leaders, organizational culture and human capital (10). There are three categories of stakeholders and they all impact FCA’s overall success in various ways. The first level or category of stakeholders are the Capital Market Stakeholders (10). The capital markets stakeholders consist of its shareholders, individuals who invest capital into the firm and major suppliers that include creditors and banks. These stakeholders proposition funds that in provision of the company’s new business endeavors whereby they expect to earn a return on their investment. Also, FCA will at times convince the capital market shareholders to support the company with further funds so that it can participate in other new ventures and invention. This enables FCA to maximize efficiency and minimize capital costs.

FCA’s product market stakeholders consists of its unions, suppliers, host communities, and primary customers that influence the performance of the company through an effective supply chain management 910). The product marker stakeholders empower FCA to satisfy its stakeholder’s expectations and attain its global success since its customers request high quality and dependable products at reasonable prices (10). The company safeguards that it has unified its technology vastly so that it can communicate with its suppliers. Imploring these practices creates transparency, as well as decreases conflicts, which matures gratification among them. It also allows the company to deliver and develop economical customized products.

Regarding the Organizational Stakeholders for FCA, they consist of its managers and employees that enable the company’s supply chain to operate efficiently and effectively (10).     Employees who mastered to use new knowledge effectively and efficiently are critical to organizational success (10). In a communal sense, the schooling and skills of a firm’s labor force, are competitive weapons affecting strategy implementation and firm performance (10). Strategic leaders are accountable for serving the needs of organizational stakeholders on a daily basis. To be effective, strategic leaders must efficiently use the firm’s human capital (10).

After reviewing all the information included within this assignment, FCA is a competitive entity. They utilize the strategic competitiveness which entails the Resource-Based Model, the Industrial Organization Model for its strategic management, and the stakeholder tactic.  Using this strategy methodology permits FCA to secure wide-ranging prospects and create a competitive edge above their competitors.

Sources

  1.  https://www.fcagroup.com/en-US/group/Pages/group_overview.aspx
  2.  https://www.thebalancesmb.com/auto-industry-mission-statements-4068550
  3.  https://www.linkedin.com/pulse/resource-based-model-io-which-best-choose-your-personal-pratik-poudel
  4. https://www.google.com/search?rlz=1C1ZCEB_enUS847US847&q=how+has+globalization+and+technology+changes+impacted+FCA+US+LLC&tbm=isch&source=univ&sa=X&ved=2ahUKEwjRqKORsrfjAhVBGs0KHV6bB9kQsAR6BAgCEAE&biw=1920&bih=1089#imgrc=TuCh4hzswK8yQM:
  5. https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001513153&type=&dateb=&owner=exclude&start=0&count=40
  6. https://www.business-to-you.com/porters-five-forces/
  7. https://www.mopar.com/en-us/care/mopar-vehicle-protection/contact.html
  8. https://www.fcagroup.com/en-US/brands/Pages/comau.aspx
  9. https://www.fcagroup.com/en-US/brands/Pages/teksid.aspx
  10. Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2013). Strategic management: Concepts and cases: Competitiveness and globalization (10th ed.). Mason, OH: South-Western Cengage Learning.

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