Introduction

Effective leadership directs the firm to its growth whereas great leaders are drivers to change in

an organization having gone through the brink of bankruptcy, Chrysler company undergoes a

strategic change in management under the leadership of Sergio Marchione.  Through his

management, he envisioned both Fiat and Chrysler to be leading global players in the automobile

sector by exploiting synergies of both firms.

Background

In 2007 fiat who is headed by Sergio Marchione rescued Chrysler upon its bankruptcy by

forming strategic alliances with the firm owning 20 percent of its share being appointed as CEO.

Marchione changes the management structure and introduces a new manufacturing process

which brought the firm back to its track however it does not last long with the European market

weighing heavily on the firm's performance and with brands identification issues.

Objective

1. Analyze how Sergio leadership style and management approach change Fiat and Chrysler

2. Identify the challenges faced by the firm which drives the structural change

3. Evaluate the issue and create a solution as well as recommend further actions to sustain the

firms
Statement Problem

Strategic change occurs to Chrysler in the management of Sergio Marchione which eventually

leads to the formation of FCA via merger, however, European Market weighs heavily on the firm

as the company struggles to overcome product reliability issues and firm's sustainability.

Alternative Course of Action

1. Invest in Research and development- having the world in constant technological

advancement, more and more discoveries, as well as inventions, are made available in the

market which in return increases competition in the industry. Having the resources to

create one will give the firm a competitive advantage.

2. Enhance global involvement- with the environment of the automobile industry becoming

saturated and getting very competitive, it would be an advantage if they could expand to

another market that is not yet exploited by other big brands.

3. Develop further innovative strategies- considering that a lot of businesses in the same

industry started to appear and join the competition it would be a huge advantage for the

firm if they have prepared a lot of strategies.

Analysis of Alternative Action

Advantage

Enhancing the firm's research and development could bring the FCA to be competitive enough to

compete with other rival businesses in the industry furthermore, this could bring a lot of

opportunities in the firm. This will also increase the firm's capabilities to generate quality

products and services for their customers.

Disadvantage

Bringing new investment could mean more capital outflows which could bring the firm to

financial fallout issues. Furthermore, it could be risky to fund something with great uncertainty

whether it could bring benefits to the firm or not.

Enhance global involvement

Advantage

Widening the market share means having the chance to cater to various market segments which

in return increases sales volume and profit. This could also help the firm to improve and

strengthen its brand positioning for greater sustainability.

Disadvantage

Penetrating a new market requires thorough analysis and preparation which could be very costly

for the firm. Moreover, this could be risky due to various market barriers that the firm may

encounter.

 
Develop further innovative strategies

Advantage

With new ideas and fresh perspectives within the firm, this will enable them to produce quality

products and services with new and updated features that go well with the trend and development

of the industry.

Disadvantage

It could be risky to introduce new products in the market due to various customer preferences

and in the beginning, it may require large capital outflows from the company for the marketing

and introduction of the new product.

 
Solution

With how the market industry of automotive seems to grow as time passes by and rapidly

develops with the advancement of technology, large businesses also step up their game to fit the

growing needs of the consumer. To maintain the market's position, companies' rivalry in the

same industry becomes fiercer and the market slowly gets saturated. In the case of FCA which is

a newly merged corporation, they may encounter a lot of challenges considering that FIAT and

Chrysler although may have already risen above their prior year's issues it doesn't mean that the

sustainability of the newly merge FCA is secured thus, among that alternative action that I have

proposed, I think they should focus on investing on research and development. Having an

exceptional Research and development resource will enable the company to create high-quality

products and services that could compete in the market with other brands. Such investment does

not only support production operations but also ensures the sustainability of the firm. Moreover,

through this research and development is the creation of new ideas that soon will be turned into

products. Being in a fragile industry wherein it is driven by technological advancement, the firm

must maintain its adaptability and flexibility in terms of innovating ideas. Customer buying

power, as well as preference, are sometimes affected by the trend and development. They always

wanted what's new and got interested in advanced features, which is that FCA needs to invest in

research and development to support their innovative ideas and turn it into outputs to satisfy

customer needs. More than that, such innovative ideas could give the company profit which they

need to increase capital investment at the same time for better brand positioning.

 
Recommendation

Having two companies in control, Sergio must ensure that he has experts and competent

associates that he could trust in handling some operations. With regards to ideas and

development, I suggest that Sergio should focus on strengthening their brand by product

differentiation.  As a car producer or manufacturer, it would be great if they could produce a

sustainable car and environment friendly to introduce in the market especially now that we have

this environmental awareness concern. This is where investment in research and development

comes in because such a product will need a systematic process to assure its effectiveness and

efficiency. They could also invest in advanced equipment and types of machinery that would

help in production and ensure the reliability of the product as well as quality products. To

generate innovative ideas, I suggest that the company should hire fresh graduates or those

individuals that are experts or skilled in designing and technical kinds of stuff. Having young

talented employees will bring new fresh ideas to the company. Furthermore, if the company was

able to sustain its growth or the company's performance then maybe they already have the

resources to expand toward the international market and widen their market share. They could

also turn into alliances with other firms to eliminate future threats such as enhanced competition

between industry businesses. All in all the sustainability lies in how the management will handle

these challenges to create a competitive advantage toward the growing competitive environment

of the automotive industry.

 
Answer to the question

About Section 15.3 what were the types of change pursued at Fiat and Chrysler? Were these

appropriate to the change contexts?

Effective leadership upon organization is shaped by the context in which change has occurred.

Having been in both firms, Sergio found the problems were almost the same such as the

homogenous mindset and the lack of capability among associates. The diversity among

stakeholders and the reluctance to change. Upon seeing these, he pursued a revolutionary

strategic change upon both firms. Where he pursued the change for organizational structure as

well as how the firms were operated. He also instilled new processes values within the

organization and managed to retain certain capabilities while others were disposed of. In terms of

context, the time is short for both firms as they were falling behind the competition in the

market. There is a large scope of change needed in the firm which covers not only the

performance of both firms but also its product differentiation and organizational structure.  While

the capabilities must be enhanced and the implementation of change relies on the hands of Sergio

Marchione as the new CEO of both firms.

How would you describe the leadership style of Sergio Marchionne? Was this appropriate to the

change contexts?

Going through the situation and the change that happens in both firms, I think the leadership

style that Sergio Marchione has shown could be considered a transformational one. Through this
leadership style the urgency, the lack of diversity, and the reluctance to change were given a

response as Marchione took control of the firm. He also tries to instill new processes and

approaches of management to achieve the vision he put to both firms. Furthermore, he was quite

focused on the set vision that he did a lot of structural changes to shape both firms to be stronger,

particularly with the issues of accountability among its managers. This kind of leadership style

was appropriate as the changing context requires urgency for both firms for their sustainability

towards a fiercer competition in the market.

What levers for change were employed by Sergio Marchionne? What others might have been

used and why?

There are many kinds of change levers available. Which levers are most appropriate depends on

the type of change being sought and the context in which it is being carried out.

Marchione has made various structural changes in both Firms FIAT and Chrysler which involves

numbers of executives and managers being dismissed and appointments identified young

talented managers from below and often in areas that were not traditionally routed to the top to

be part of the change he wants to implement. He also tries to bring in managers from the other

firms as well as those managers from outside the industry to help him implement the new

strategies. All these methods are his attempt to introduce fresh perspectives and ideas to the

organization, for it to be able to compete in the developing industry. Aside from it he also

ensures to keep personal engagement among his employees to help develop common values.

There were also symbolic changes that he employed such as his informal style of clothes and the

way he handled the change to employees by sharing his experience on FIAT. He also tries to stop

the bureaucracy by changing the control chain in decision-making and giving power to his
employees. He also made alterations with some of its offices to make a convenient environment

for its stakeholders. Other levers of change that Sergio could have used is expanding its market

power by associating with some powerful investors and widening its resources to help them build

strong brand recognition. They could form alliances with some firms to have support in terms of

investment and to strengthen their capabilities to combat market development.  He could also

invest in research and development, which seem to be weak in such areas as compared to other

competitors to enhance their capabilities and develop leverage in a growing industry.

4. By what criteria would you assess the effectiveness of the change program at Fiat and

Chrysler?

Through Sergio's management and approaches instilled within the organization, I think it has

been effective due to the success and the fast development of Cinquecento in FIAT and the RAM

in Chrysler. There were also improved quality ratings as a result of the change being

implemented. In terms of financial performance, Marchione was able to bring back FIAT profits

by 2006. Through RAM's success by 2011, he brought Chrysler to announce profit and repaid all

its government loans and at the same time merged the two firms.  However, in the aspect of an

economic entity, the success was hardly recognized and still, there are doubts about the

sustainability of the FCA. With more competitors in the market industry such as Tesla, Ford, and

even the local rivals General Motors development, there is a smaller scale for the firm to achieve

economic viability against those giants' businesses. Furthermore, other competitors spend five

times on research development and have twice as much capital investment than FCA.
 

Reference

https://www.ipl.org/essay/Case-Study-The-Chrysler-Fiat-Strategic-Alliance-F3HBM22FJ4D6

https://www.thecasesolutions.com/project-the-merger-between-fiat-and-chrysler-59832

https://myassignmenthelp.com/free-samples/leadership-and-strategic-change-sergio-marchionne-

in-fiat-company.

https://www.diva-portal.org/smash/get/diva2:326289/FULLTEXT01.pdf&gt