Introduction
Fiat Chrysler Automobiles is also referred to as FCA. It is an Italian American multinational and currently sits as the seventh largest car manufacturing company globally. The organization was formed in the year 2014 following the merger of Fiat S.p.A. Fiat S.p.A. consisted of many brands including Fiat, Ferrari, Maserati, Alfa Romeo, Maserati, the Chrysler group amongst many other models. The company merged and incorporated in Netherlands into Fiat Chrysler Automobiles. Fiat was established in 1889 and has been involved in many endeavors including railway manufacturing, railway engines, military cars, aircrafts, and farm tractors. Over the years, the company has acquired many other brands into its portfolio and has created a strong brand that has managed to stand a test of time. The company has manufacturing plants in various locations around the world. The largest plant outside Italy is the Brazilian plant where the company brand Fiat dominates the market. In this research paper, we shall assess the company’s competencies, business model, value chain analysis in and offer recommendations on the best strategy that can position the company in a better to land a better merger partner (FCA, 2015).
Today, Fiat Chrysler Automobiles is one of the leading car manufacturers and has continued to grow its revenue and market share. In the year December 2015, the company managed to grow its revenue by 16.4% which was above the industry average of 15.9% in the European region. On the full period, the company sales grew by 13.6% against the market average of 9.2%. The sales were driven by the company’s newest models Fiat 500X and Jeep Renegade that have captured the small SUV market in the 2015 financial year. Fiat 500, 500L and Panda models also made significant contributions to the company dominance in the market (PRNewswire, 2016). In the United States, the company has continued to grow its market share from the tatters of bankruptcy that it faced in the year 2009. According to a Detroit news paper, the company has managed to grow its monthly sales for 56 months in a row from 2009. As at 2014, the company had an overall market share of 12.6 in the United States having managed to regain its position from a low of 8.9% in the year 2009 (Snavely, 2014).
Company’s Competences
Fiat Chrysler Automobiles is one of the leading car manufacturers in the world. One of the key competencies that the company has is the fact that the company has been in operations for a long period. This long operation has enabled the company to acquire and build some of the strongest brands in the industry. The strong brands have enabled the company to remain competitive in the market in spite of the increased competition from other companies. Although the company had been in a bankruptcy position in the recent period, its string brand has enabled the company to rise from that position to its current level. As noted above, the company has managed to grow its sales month in month out for over 50 months in a row. Thus, one of the major competitive advantages that FCA has over its competitors is its flagship brands.
The company has a global presence with production lines in different countries. FCA has operations in the United States, Europe, South America and distribution centers in different parts of the world. The company market share is amongst the top in both the US and Europe, which is the two dominating car markets. In addition, the company has one of the largest assembly plants in Brazil, which produces more car that even the plants in Europe. In addition, the company cars dominate the Brazilian market. Brazil being a developing nation possesses huge potential for growth. Off late, Brazil plus many developing nation have witnessed sporadic growth and thus new middle class populations have emerged. The company positioning will allow it to tap into the emerging South American market. Thus, any potential merger will boost the expansion of its products in that market.
Other key strength positions include a team of hardworking and dedicated employees who have stood with the company from the 2009 financial turmoil to date. The team is led by the company CEO Sergio Marchionne, who has managed to steer the company back to profitability after the financial turmoil in the recent past.
Business Strategy
FCA business strategies are focused at increasing the company sales in the already established market; expand in to the emerging markets. This will be achieved through a series of marketing strategies coupled with a new blend of products that appeals to the needs of new customers. The main emerging market that the company has attentions to is China and India. The company intends to boost its presence there through introduction of new brands and expansion of the already existing brands. In a business strategy that was put in place in the year 2014, the company had planned to produce over 7 million cars by the year 2018. The plan has however been revised owing to the below performance of some key market segments including Brazil, China, and India. The revision has been brought about by the increase in the recall costs in case of any fault. Thus the company will focus on consolidating the current market and continue with its effort of building strong brands (Vladimir, 2009). Owing to the strong restriction of the imports and exports in the Chinese market, the company will first concentrate on EMEA and NAFTA countries. The company will focus on serving these markets as it has been able to gain considerate a large share of the market.
Value chain analysis
Value chain refers to the company’s effort to increase the customer values. Many organizations employ different strategies to increase the customer values. FCA main business is in the manufacturing and distribution of cars in the United States, Europe, South America and Asia. The company has various flagship brands that dominate the luxury car market and well. The company has cars for all the market segments. They have brands that target upper middle income people and as well cheaper brands that target the vast majority who have just modest incomes. FCA cars are different from the other brands in the market owing to an Italian touch in the cars (Jurevicius, 2013).
The company has been on the right recovery track and has a well laid down strategy for expansion. The company has an ambitious goal of producing seven million cars by 2018. However, the production should be aligned to the market dynamics. For instance, year 2015 sales in Europe were driven by the two new brands that were launched this year. For the company to continue with the expansion streak, it should continue creating newer models that will appeal to the market needs.
References
Jurevicius, O. (2013, April 25). Value Chain Analysis | Strategic Management Insight. Retrieved from https://www.strategicmanagementinsight.com/tools/value-chain-analysis.html
FCA. (2015). FCAGroup - Annual Report. Retrieved from http://www.fcagroup.com/en-US/investor_relations/Pages/default.aspx
Vladimir, K. (2009). The Global Emerging Market: Strategic Management and Economics. Routeledge.
PRNewswire. (2016, January 15). Fiat Chrysler Automobiles Sales in Europe December and Full Year 2015. Retrieved from http://www.prnewswire.com/news-releases/fiat-chrysler-automobiles-sales-in-europe-december-and-full-year-2015-565392151.html
Snavely, B. (2014, December 21). Chrysler's jaw-dropping sales streak. Retrieved from http://www.freep.com/story/money/cars/chrysler/2014/12/21/chrysler-fca-sales-streak-months/20676915/
Wheelen, T. L., & Hunger, J. D. (2015) Strategic Management and Business Policy. Globalization, innovation and Sustainability. 14th Edition.
