Sergio Marchionne’s Challenge at Chrysler

6 June 2016

1. Background Information
Fiat CEO Sergio Marchionne took over Chrysler operations in June 2009. Former CEO Robert Nardelli used buyouts and layoffs to cut departments which halted the company to only make Jeep Grand Cherokees and Chrysler 300 Sedan’s.

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1.1 People / Key Players
Sergio Marchionne – CEO of Fiat
Robert Nardelli – Former CEO of Chrysler
Cerberus – Capital Management Firm

1.2 Chronology of Key Relevant Events
Fiat CEO Sergio Marchionne took over Chrysler operations in June 2009. Fiat acquired Chrysler after two years of private-equity ownership under Cerberus Capital Management. Former Chrysler CEO Robert Nardelli used buyouts and layoffs to cut departments. This caused capital spending to be slashed and the only new cars coming off the lines were Jeep Grand Cherokee and Chrysler 300 Sedan’s. Cerberus forgave $2 billion in loans. Chrysler will replace 33% of it s sales volume before 2013, less than half the industry’s average.

1.3 Key Facts
Chrysler is operated by Fiat. Chrysler has only two models coming into the current market. Chrysler is only producing one-third the rate of Ford, Honda and the Korean automakers and less than half the industry.

1.4 Concepts
The car industry is struggling. Fiat CEO took over a mess that will take years to overcome. Chrysler must push forward to get revenue rolling into the company.

1.5 Assumptions
If former CEO Robert Nardelli would have not cut spending so drastically, the company would have goon bankrupt before the government could step in and /or file Chapter 11. CEO Sergio Marchionne must find ways to bring in revenue.

1.6 Point of View
This case is shown from the view point of the automobile industry.

2. Problem Statement
CEO Sergio Marchionne took over operations in June 2009 only to find a mess. The company is currently only producing 33% of its sales volume; less than half the industry’s average. Within the 33% there are only two type of vehicles being produced; Jeep Grand Cherokee and Chrysler 300 Sedan’s.

3. Problem Causal Analysis

4. Management Theory, Process, or Approach
When rebuilding a company such as Chrysler it would be best to use the Face Negotiation Theory. The Chrysler company will be able to use this theory to “save face.” The public image of the company is important and many factors would play into this theory. It will be the goal of CEO Sergio Marchionne to help in this matter.

5. Recommendations
Increasing the sales volume for Chrysler can be accomplished by marketing the new products in a friendly and affordable manor. Introducing one new automobile a year for the next five years will increase productivity and should allow the company to show they are ready for the competitive market. Hiring suitable product engineers will lead to better design and innovation for the company to expand.

6. Assessment
Marketing the “new” Chrysler is important to bring morale to the company. This is possible when working with the right team. In order to produce a new vehicle every year will be imperative to the company’s success. This may not be feasible if the company cannot hire the appropriate engineers. The CEO will need to be the driving force for the company to get started back in the right direction.

7. Implications
If the company were to implement my recommendations it would allow for steady attainable growth. However, if the company were to not fully engage in these recommendations it might allow for the company to once again be in financial struggles. If however, the company was to fully engage in this practice; the sales and profits for the company would become greater. This would allow the company to embark upon more innovative ideas that would bring better profits.

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