Fiat-Chrysler Alliance: Launching the Cinquecento in North America SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Fiat-Chrysler Alliance: Launching the Cinquecento in North America
To maximize their effectiveness, color cases should be printed in color.Fiat ended its 27-year absence in the North American automobile market when the first Cinquecento (500)-a very small, iconic Italian car that had strong sales in Europe-was delivered on March 10, 2011. The Italian automaker re-entered the market through an alliance with Chrysler, the American automaker Fiat acquired in April 2009. For Laura Soave, Chrysler Group's head of Fiat Brand North America, the first delivery marked a watershed in a journey that began 12 months before when she first took responsibility for re-launching the Fiat brand in North America. As the first product of the Fiat-Chrysler alliance, the outcome of the Cinquecento launch would indicate how the integration of operations, and in particular the sharing of technology, platforms, components, manufacturing plants, and distribution networks would drive the long-term health of both Fiat and Chrysler. This case looks at the various strategic and operational challenges Soave faced throughout the process.
Authors :: Gary P. Pisano, Phillip Andrews, Alessandro Di Fiore
Swot Analysis of "Fiat-Chrysler Alliance: Launching the Cinquecento in North America" written by Gary P. Pisano, Phillip Andrews, Alessandro Di Fiore includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fiat Chrysler facing as an external strategic factors. Some of the topics covered in Fiat-Chrysler Alliance: Launching the Cinquecento in North America case study are - Strategic Management Strategies, Growth strategy, Joint ventures, Leadership, Operations management, Product development and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Fiat-Chrysler Alliance: Launching the Cinquecento in North America casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, supply chains are disrupted by pandemic ,
wage bills are increasing, there is backlash against globalization, etc
Introduction to SWOT Analysis of Fiat-Chrysler Alliance: Launching the Cinquecento in North America
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Fiat-Chrysler Alliance: Launching the Cinquecento in North America case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fiat Chrysler, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fiat Chrysler operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Fiat-Chrysler Alliance: Launching the Cinquecento in North America can be done for the following purposes –
1. Strategic planning using facts provided in Fiat-Chrysler Alliance: Launching the Cinquecento in North America case study
2. Improving business portfolio management of Fiat Chrysler
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fiat Chrysler
Strengths Fiat-Chrysler Alliance: Launching the Cinquecento in North America | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fiat Chrysler in Fiat-Chrysler Alliance: Launching the Cinquecento in North America Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Fiat Chrysler in the sector have low bargaining power. Fiat-Chrysler Alliance: Launching the Cinquecento in North America has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Fiat Chrysler to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Fiat Chrysler is one of the leading recruiters in the industry. Managers in the Fiat-Chrysler Alliance: Launching the Cinquecento in North America are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Fiat Chrysler in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Fiat Chrysler is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Fiat Chrysler is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Fiat-Chrysler Alliance: Launching the Cinquecento in North America Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Fiat-Chrysler Alliance: Launching the Cinquecento in North America Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High switching costs
– The high switching costs that Fiat Chrysler has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Training and development
– Fiat Chrysler has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Fiat-Chrysler Alliance: Launching the Cinquecento in North America Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Ability to lead change in Strategy & Execution field
– Fiat Chrysler is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Fiat Chrysler in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Fiat Chrysler is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Fiat Chrysler are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Analytics focus
– Fiat Chrysler is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Gary P. Pisano, Phillip Andrews, Alessandro Di Fiore can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Organizational Resilience of Fiat Chrysler
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fiat Chrysler does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Fiat-Chrysler Alliance: Launching the Cinquecento in North America | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Fiat-Chrysler Alliance: Launching the Cinquecento in North America are -
Slow decision making process
– As mentioned earlier in the report, Fiat Chrysler has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Fiat Chrysler even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Low market penetration in new markets
– Outside its home market of Fiat Chrysler, firm in the HBR case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Fiat Chrysler is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Fiat Chrysler needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fiat Chrysler to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Fiat Chrysler has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
No frontier risks strategy
– After analyzing the HBR case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Interest costs
– Compare to the competition, Fiat Chrysler has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America, is just above the industry average. Fiat Chrysler needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America, in the dynamic environment Fiat Chrysler has struggled to respond to the nimble upstart competition. Fiat Chrysler has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Fiat Chrysler has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Need for greater diversity
– Fiat Chrysler has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Aligning sales with marketing
– It come across in the case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Fiat-Chrysler Alliance: Launching the Cinquecento in North America can leverage the sales team experience to cultivate customer relationships as Fiat Chrysler is planning to shift buying processes online.
Opportunities Fiat-Chrysler Alliance: Launching the Cinquecento in North America | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Fiat Chrysler can use these opportunities to build new business models that can help the communities that Fiat Chrysler operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fiat Chrysler in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fiat Chrysler to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Fiat Chrysler to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Fiat Chrysler can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Fiat Chrysler to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Using analytics as competitive advantage
– Fiat Chrysler has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fiat Chrysler to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Fiat Chrysler to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Fiat Chrysler can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Fiat Chrysler can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Fiat Chrysler can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Fiat-Chrysler Alliance: Launching the Cinquecento in North America suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fiat Chrysler can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Fiat-Chrysler Alliance: Launching the Cinquecento in North America, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Fiat Chrysler has opened avenues for new revenue streams for the organization in the industry. This can help Fiat Chrysler to build a more holistic ecosystem as suggested in the Fiat-Chrysler Alliance: Launching the Cinquecento in North America case study. Fiat Chrysler can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Fiat Chrysler can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Fiat Chrysler can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Fiat-Chrysler Alliance: Launching the Cinquecento in North America External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America are -
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Fiat Chrysler business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Fiat Chrysler can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fiat Chrysler with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Fiat Chrysler is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Fiat Chrysler needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Fiat Chrysler can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Fiat Chrysler in the Strategy & Execution sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fiat Chrysler in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Consumer confidence and its impact on Fiat Chrysler demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fiat Chrysler can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America .
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Fiat Chrysler can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Fiat Chrysler
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Fiat Chrysler.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Fiat Chrysler.
Technology acceleration in Forth Industrial Revolution
– Fiat Chrysler has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Fiat Chrysler needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Weighted SWOT Analysis of Fiat-Chrysler Alliance: Launching the Cinquecento in North America Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Fiat-Chrysler Alliance: Launching the Cinquecento in North America is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Fiat Chrysler needs to make to build a sustainable competitive advantage.