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 - – there is increasing trade war between United States & China, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, increasing energy prices, technology disruption, increasing transportation and logistics costs,
increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, 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 -
Innovation driven organization
– Fiat Chrysler is one of the most innovative firm in sector. Manager in Fiat-Chrysler Alliance: Launching the Cinquecento in North America Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
High brand equity
– Fiat Chrysler has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fiat Chrysler to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Fiat Chrysler has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fiat Chrysler has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Fiat Chrysler digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fiat Chrysler has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
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.
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.
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.
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.
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.
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.
Highly skilled collaborators
– Fiat Chrysler has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Fiat-Chrysler Alliance: Launching the Cinquecento in North America HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 -
Workers concerns about automation
– As automation is fast increasing in the segment, Fiat Chrysler needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
Capital Spending Reduction
– Even during the low interest decade, Fiat Chrysler has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to strategic competitive environment developments
– As Fiat-Chrysler Alliance: Launching the Cinquecento in North America HBR case study mentions - Fiat Chrysler takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Lack of clear differentiation of Fiat Chrysler products
– To increase the profitability and margins on the products, Fiat Chrysler needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Products dominated business model
– Even though Fiat Chrysler has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Fiat-Chrysler Alliance: Launching the Cinquecento in North America should strive to include more intangible value offerings along with its core products and services.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America, it seems that the employees of Fiat Chrysler don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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.
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.
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 -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Fiat Chrysler can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Fiat Chrysler can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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.
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.
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.
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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Fiat Chrysler in the consumer business. Now Fiat Chrysler can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Fiat Chrysler has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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.
Better consumer reach
– The expansion of the 5G network will help Fiat Chrysler to increase its market reach. Fiat Chrysler will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Fiat Chrysler is facing challenges because of the dominance of functional experts in the organization. Fiat-Chrysler Alliance: Launching the Cinquecento in North America case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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 -
High dependence on third party suppliers
– Fiat Chrysler high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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.
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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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.
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.
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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
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 .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Fiat-Chrysler Alliance: Launching the Cinquecento in North America, Fiat Chrysler may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Fiat Chrysler will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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.
