Daimler Chrysler Essays and Research Papers

Instructions for Daimler Chrysler College Essay Examples

Title: European Union business in Europe

  • Total Pages: 12
  • Words: 5865
  • Works Cited:0
  • Citation Style: APA
  • Document Type: Essay
Essay Instructions: Syllabus Summer 2005
The course objectives are to understand cultural, social, infrastructurial, and international
elements that impact the building, engaging, and facilitiating of business exchanges between the U.S. and various European countries.
Students are expected to write a term paper that demonstrates their understanding of and skills
at analyzing opportunities and threats as well as sources of competitive advantage, appreciating
different styles of management, and comparing the socio-cultural differences and political para-
meters when 'doing business' with the European countries.

This paper should provide a foundation for understanding 'doing business' in Europe, including:
o Issues related to the European Union and its impact on Trade and Businesses in the EU
o Laws and regulations related to doing business with European countries
o The role of European Central Banks in maintaining stability in the money supply
o Intern'l Finance issues, e.g. financing international trade, foreign currency fluctuation risks
o Differences in organized labor & managing with different types of labor unions in Europe
o 'Comparative' Marketing, e.g. comparing the 4 Ps for a product (e.g. Champaign vs. Sekt, tourism, insurance etc. across Europe or between a European country and the equivalent in the USA
o Ethics
- Corp. Governance or, say,, Democracy in European Businesses (e.g. 'Mitbestimmung')
- Environmental Issues
- Age, gender, and other factors regarding employees
o Cultural Differences and their impact on management style
- Rituals, e.g. greetings, styles of meetings, decision-making processes, negotiating
- Gender roles at work and family structures across Europe
- Interpersonal relationships at work, e.g. between layers of mgmt. hierarchy
- Values and their impact on organizational structures and behavior, e.g. being process vs. results oriented, having higher or lower power distance
- Other

o Competitive advantages of a European area in a chosen industry (based on M. E. Porter?s Diamond of National Competitive Advantage), e.g. comparing two European regional clusters & industries, such as steel production in the greater Lille region with automotive production in 'Southern' Germany; or life sciences in Switzerland with luxury goods in France, such as LVMH, Dior, CHANEL, Christian Luxcriox; or private or central banking with banking systems/cultures across Europe (UK, Germany, Switzerland, and possibly, the USA)

o Alternatively, exploring the general attractiveness a particular industrial sector (including Porter's five Forces) in one or two European countries and thereby analyze the PESTEL categories in that country regarding opportunities and threats for doing business there.

Length: Approximately 15 to 20 pages. Typed, double-spaced.
Contents: Paper should be complete with:
1. Title page
2. Table of contents
3. Executive summary (single spaced, no more than one page)
4. Introduction
5. Body of paper (see outline below)
6. Conclusion
7. Bibliography
8. Appendices
Information sources:
additional secondary research (the requirement is 10 (ten) additional
1. European Union (required for all)
2. Two elective topics from the list provided in the syllabus
3. Personal Statement: overview
Suggested Outline:
* Title page
* Table of contents
* Executive summary (single spaced, no more than one page)
* Introduction
* Body of paper
* European Union
* Topic 1 (elective)
* Topic 2 (elective)
* Personal impressions and reflections on what was learned
* Conclusion
* Bibliography
* Appendices

My Message:
For the last 2 bulleted points on the syllabus, my prefered 2 elective topic would be on either the steel industry and car industry OR steel industry and the luxury industry, whichever way the writer thinks would be good, I trust in your ability more than mine. For the steel industry, please mention Arcelor, the prof was asking for it as it is massive in Europe though it's not written on the syllabus. If writing about the car industry please mention Porche and Daimler Chrysler as Daimler has a lot of major brands underneath its wings, such as Mercedes, Maybac etc. And VW too, apparently it's a major thing in Europe. In whichever way, the management tools such a PESTEL, 5 forces, diamond etc is required to be applied to them. For example, explaining why Germany is pretty good in car making and how attractive this industry currently is (great problems due to huge overcapacities...).
I'm not too sure about the citation style, though MLA is the only one i know. Is that the standard for undergraduate? I will leave it in your professional hands.

I'm required to write a minimum of 15 pages. After title page, content page, executive summary, bibliography and appendices, that's 10. Also minus the overview of personal statement, that's 9, so the body of the paper would be 9. I'm sure you will be charging for contents, summary and appendices but i'm wondering would you charge me for title page as well? If you do please let me know, i will send the payment as soon as possible. For now, i'm calculating everything to be 12 pages.

There are faxes for this order.

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Works Cited:


Arcelor Annual Report 2003. Retrieved From

http://www.arcelor.it/rls/data/upl/89-60-arcelorgblow2.pdf Accessed on 28 July, 2005

Aspects of Competitive Advantages and Regional Clusters. Retrieved From


Accessed on 28 July, 2005

Big Dog's Leadership Page-Organizational Behavior. Retrieved From

http://www.nwlink.com/~donclark/leader/leadob.html Accessed on 27 July, 2005

Bruni, Franco. The System of European Central Banks and Prudential Regulation. Retrieved From http://www.ecsanet.org/conferences/ecsaworld2/bruni.htm

Accessed on 27 July, 2005

Doing Business Overseas presents Hazards and Hopes. Retrieved From

http://www.deloitte.com/dtt/article/0,1002,sid%253D2003%2526cid%253D15708,00.html Accessed on 27 July, 2005

English rules the world, why globalize? Retrieved From

http://www.cmomagazine.com/analyst/031805_csa.html Accessed on 27 July, 2005

Environment. Retrieved From

http://europa.eu.int/comm/environment/index_en.htm Accessed on 27 July, 2005

European Union: Delegation of the European Commission to the U.S.A. Retrieved From

http://www.eurunion.org/infores/resguide.htm#intro Accessed on 27 July, 2005

Extortion and Bribery in International Business Transactions. 1999. Retrieved From


Accessed on 27 July, 2005

Foster, Dean. The Global Etiquette Guide to Europe: Everything You Need to Know

for Business and Travel Success. Retrieved From


Accessed on 27 July, 2005

Georgas, James. Family Variations and Change across Cultures. Retrieved From

http://www.ac.wwu.edu/~culture/georgea.htm Accessed on 27 July, 2005

Global or Local: The Impact of Country Culture on Leadership style in Europe. Retrieved From http://www.mrg.com/Publications/articles/Euro_Culture.pdf

Accessed on 27 July, 2005

Has the Neo-Conservative wave from Texas reached Europe? Business Environment Risk

Intelligence. Retrieved From http://www.beri.com / Accessed on 27 July, 2005

Innovation and Quality. Retrieved From

http://www.arcelor.com/index.php?lang=en& page=18 Accessed on 28 July, 2005

International Trade Finance. Retrieved From


Accessed on 27 July, 2005

Knox, Noelle. Unions begin to struggle in Europe. USA Today. 11 November, 2004.

Retrieved From http://www.usatoday.com/money/world/2004-11-10-eurolabor_x.htm Accessed on 27 July, 2005

Labor Union. Retrieved From


Accessed on 27 July, 2005

Mercedes Benz: Competitive Forces, Competitive Strategy. Retrieved From

http://www.*****/essay.php?t=26979 Accessed on 28 July, 2005

Quaden, Guy. The Monetary Policy of the European Central Bank and the economic outlook in the euro area. Retrieved From http://www.bis.org/review/r011130a.pdf

Accessed on 27 July, 2005

Quality in work and employment. Retrieved From

http://www.eurofound.eu.int/ewco/surveys/EU0502SR01/EU0502SR01_5.htm Accessed on 27 July, 2005

Regional and Bilateral Initiatives: Canada-European Union - Trade and Investment

Enhancement Agreement. Retrieved From

http://www.international.gc.ca/tna-nac/rb/tiea-en.asp Accessed on 27 July, 2005

Stress and Psychosocial risks, Bullying at work. Retrieved From


Accessed on 27 July, 2005

The Exchange Business: Foreign currency exchange fluctuation. Retrieved From

http://www.exchange-currency.co.uk/fluctuations.htm Accessed on 27 July, 2005

The Marketing Mix: The 4p's of Marketing. Retrieved From

http://www.netmba.com/marketing/mix / Accessed on 27 July, 2005

Trade in the Transatlantic Relationship. Article provided by client. P.6

Weber, Arnold. R. Labor Lessons, Notes from Europe. Retrieved From


Accessed on 27 July, 2005

What Next for German Auto Industry. 11 December, 2004. Retrieved From


Accessed on 28 July, 2005

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Title: hybrid car

  • Total Pages: 2
  • Words: 613
  • Bibliography:0
  • Citation Style: MLA
  • Document Type: Research Paper
Essay Instructions: for the following article i want:
the outhors connection to the subject:
what is the author's connection to the topice? what evidence can you find about the outhor's expertise in the topic? does an indication of the author credentials exist?if the puthor is not an expert is expert information provided from other sources?
does a bias exist based on the author's connection to the subject?or the publication in which the author has her writing published? or the publication itself?
who is the intended audience? how do you know? does the title offer clues about audience? for your web article are there ads? what kind? what does this suggest? what kinds of words information or slant does the writing purport?
is the writing and topic presented persuasively? informatively? what does the author want the reader to take away? why? is a produce being sold? an idea? is there a call to action? does the writing explain a process?
sources are credible? why?what clues lead you to this , about the language, information, readability and sophistication or lack thereof in the ideas and refletion on the topic? is the author an authority on your topice or a reporter?a professor? or student? is the information current? is your topice one about which current thinking changes rapidly?does the writing reflect this?are there out of date links?

Electronic Business, Oct 2002 v28 i10 p64(5)
Hybrid autos REV up: but will SUV-addicted buyers opt for an environmentally friendly car that saves on gas but commands a premium price? (Automotive Electronics). John Thackray.
Full Text: COPYRIGHT 2002 Reed Business Information
They're quiet as a golf cart; they're a little funky looking--in that Volkswagen beetle, so-ugly-you-love-'em way--and best of all they consume gas in dainty sips. SUV gas-guzzlers, move your tank-size, parking-space-hogging, girth aside! There's a new acronym trying to slip into the garage.
The hybrid electric vehicle, or HEV, which incorporates an internal combustion engine that recharges batteries, is out to win the hearts and minds of auto buyers. HEV optimists point to two overriding trends: 1) the increasing number of automakers who are now offering HEVs (Toyota, Honda, Nissan) or plan to introduce them in the next few years (Ford, General Motors and DaimlerChrysler); and 2) the upturn in retail sales, which has perhaps reached a take-off threshold.
Toyota has sold a total of 100,000 of all types of HEVs worldwide in the last five years and boasts that it will crank out 300,000 HEVs annually by 2005, as more car buyers show a preference for lower emissions and better mileage. Even in the U.S market, where at-the-pump prices are a quarter those of Japan or Europe, "The total HEV industry could be as large as one-half-million units by 2007," says Thad Malesh, director of alternative power technologies at J.D. Power & Associates, Westlake Village, CA-based consultants to the auto industry. "Most people don't realize that [the HEV market] has that potential."
These predictions contrast with the less-than-glorious record of the HEV so far. Toyota, which launched the first HEV, the Prius in 1997, has experienced sales considerably below forecast, in large part because of sticker shock triggered by its $20,450 price tag, which sells at a considerable discount to its manufacturing costs. HEV's sell at a premium price. Consumers can do the numbers, and thus far, it's hard to justify the expense (see "Money and mileage," page 68).
Even so, the little gas misers likely will gain better acceptance in the next few years. Why? Because carmakers are moving away from. the pure, and expensive, goals of the lowest possible emissions and the highest mileage numbers. Instead, they're building a new breed of HEVs with smaller sticker premiums and more modest emission-reduction and mileage-enhancement targets. The result is called, in industry jargon, a "mild-HEV."
These new hybrid hybrids are expected to gain momentum in the next few years. And hybrid vehicles will spark new opportunities for electronic component suppliers, and will drive advancements in battery technology. HEVs and mild-HEVs may be stingy on fuel and emissions, but their consumption of components is robust--and it's an appetite the chip industry is happy to satisfy.
Mileage and mild-HEVs
Honda is one of the first carmakers to branch out beyond the HEV with a mild-HEV. It introduced a mild-HEV version of the Honda Civic earlier this year. Where the radical Insight HEV gets 70 mpg on the highway and 61 mpg in the city, the HEV Civic gets 51 mpg on the highway and 46 in the city. That's still 40% better gas mileage than the conventional Civic (although the conventional version sells for $6,000 less).
The Toyota Prius sells on its appeal as a statement of the driver's environmental piety, but the mild-HEVs are more attuned to market realities in a country where gas guzzling is an accepted addiction. "If you do the math, you can see that we can actually save significantly more fuel converting a 20-mpg vehicle into a hybrid than a 30-mpg vehicle, especially if it's a vehicle that sells in high volumes, not a niche vehicle," says Tom Stephens, group vice president, GM Powertrain. GM no doubt is mindful that its fleet mileages are computed under the federal CAFE (Corporate Average Fuel Economy) standards and those set by several states. Beginning in 2004, the company's Silverado and GMC Sierra truck models will have an HEV option, at a yet-to-be-determined price premium.
"It's clear that at this point in time the market has driven us to mild hybrids. There is still a lot of cost associated with a full hybrid. The benefit/cost relationship is not strong enough to make the switch yet," says Jean Botti, chief technologist for the Dynamics and Propulsion Sector of Delphi Corp., Troy, MI. "Mild hybrids have a great chance because they fulfill a lot of needs: fuel economy, range, acceptable cost range and they can be used for boost-assist for smaller and cleaner engines."
In late 2003, Ford Motor plans to launch the first hybrid production model from a U.S automaker. It's an HEV version of its popular Escape SUV which the company predicts will sell in the tens of thousands, and will contain, beneath-the-hood, four classic ingredients of a full hybrid. "One, is the ability to shut down the engine when you don't need it, when you are slowing down or stopped," says Prabhakar Patil, chief program engineer for the HEV Escape. "Two, a downsized gas engine that uses the electrical system not only to make up, but actually to enhance, acceleration performance. Third, is regenerative braking: where you use most of the braking energy and store it in the battery and draw from it when you accelerate. Fourth is the ability to run in a pure electric mode, when it is most efficient, such as city stop-and-go traffic." He adds: "As you add more and more of these elements, the power levels that the electrical system needs to provide go up dramatically."
Components (and we don't mean stereos)
Good news., obviously, to electronic component and system suppliers. Many of the features of the HEV are scaled down versions of ingredients of pure electric vehicles. The HEV Escape will have a humongous 300-volt battery pack that can deliver the peak power of a conventional EV battery, but without the ponderous weight and scale of EV batteries. It also contains "a lot of power electronics, like insulated gate bi-polar transistors, which act as switches. They have the ability to switch 80 kilowatts of power out of small pieces of silicon," says Patil. "Also, there are a large number of electronic controls. The Escape HEV has three additional controls to the standard gas model." One of these controls regenerative braking; two manage the torque output of each motor; and another manages the battery. A vehicle system controller also sits on the others and manages how and where the power is provided in response to driver demand, explains Patil.
"We foresee a lot of opportunities for electronic providers and microprocessor makers to grow because of substantially increased [electronic] content over conventional vehicles in terms of microprocessors and associate controllers," Patil says.
Daimler Chrysler has taken a simpler and lower cost approach with most of its planned HEVs. Whereas the Prius and Insight have both the gas engine and the electric motor driving the car's crankshaft, in the DaimlerChrysler design there are segregated powertrains. The gas engine drives the rear wheels, and an independent electrical motor and battery together power the front axle. The controller module responds to driver prompts, shifting torque between the two, which creates 20% to 30% better mileage over comparable nonhybrids. Sometime next year the company will market its first HEV, but has not yet announced which model line.
With some of these same components, but a much bigger electrical engine, batteries and peripherals, the DaimlerChrysler engineers have designed a Godzilla HEV electronic extravaganza, the Dodge Ram pick-up HEV, dubbed the "contractors special," due out in 2004. It uses "the same electrical componentry that is used to propel and brake the vehicle, [and] regenerative braking and power assist during accelerations will be used as a field generator when parked. We feel this will be a strong additional feature. It also is capable of 20 kilowatts volts of continuous power, which is enough to power five or six households simultaneously," says Larry Oswald, head of U.S. hybrid engineering at DaimlerChrysler More than a truck, Oswald is betting that contractors will flock in droves to hook up saws, power lathes, drills and presses to what is, in effect, a generator under the hood.
Chips under the hood
HEVs are just one manifestation of the increasing contribution of electronics to vehicle control and design, which includes several competing applications for mileage enhancement and emissions reduction. A study by Munich, Germany, consultants Roland Berger predicts that the value of electronic systems could grow from an average of 22% of vehicle content today to as much as 40% by 2010. About 80% to 90% of new innovations today, in the upper-class market segments, are related to electronics, where incidentally European carmakers are in the vanguard.
For example, sales of electronic power steering systems, which improve gas consumption, were 1.5 million units in 1997, roughly 2 million in 2000 and are expected to reach 11.4 million units by 2007, according to a Roland Berger study. "A great deal of effort is going into electric steering, braking, water pumps, heating and air conditioning, tension control--even to the point where some people are experimenting with electronic valve actuation," says Richard Smith, senior vice president of development at Maxwell Technologies Inc., a San Diego-based maker of power and computing components and automated test instruments.
"Over the next two decades, there will be greater peration of vehicles with some percentage of electric traction--ranging from mild- to full-hybrids, to fuel cell power," says Giorgio Rizzoni, professor of mechanical engineering and director of Ohio State's Center for Automotive Research and Intelligent Transportation. "This means that you are going to have to have aboard the vehicle the means for a high-voltage electrical bus, a suite of power electronic devices to do DC-to-DC power conversion, or inverters for AC motors, for battery management, energy system management and so on."
Rizzoni adds: "The primary impact of this new revolution on the electronics industry is going to be that there will be a new, large market for low-cost, highly reliable, electronics devices and systems." However, he cautions exuberant would-be suppliers to remember that the auto industry has challenging requirements for bullet-proof devices built at very low cost.
Batteries--included, but weak
Batteries are perhaps the weakest link in the chain. "One thing that appears to be true of all electric vehicles is that automakers use the batteries gently and carefully, they don't get as much power as they might, because they are keenly aware of the fact that the battery pack is likely to be the least reliable, least durable component," says Rizzoni.
The global market for advanced automotive batteries will likely reach $500 million by 2009, as the annual production of hybrid electric vehicles exceeds 1 million cars, according to Dr. Menahem Anderman, a battery consultant in Oregon Park, CA. Although he adds the caveat that this will only happen if there are some big technological improvements that enable the journey from the present day 12-volt, lead-acid battery to a minimum of 42-volt capability. According to him, the three likeliest candidates are valve-regulated lead acid, nickel metal hydride and lithium ion batteries. Close on their heels is another energy storage contender: the ultra-capacitor or double-layer electrochemical capacitor. It's an energy storage device with characteristics midway between those of batteries and conventional capacitors. An ultra-capacitor stores thousands of times more energy than a conventional capacitor, and its power density exceeds that of batteries by 100% to 500% or more. Their prices have recently come down enough to gain a place in DaimlerChrysler and GM mild-HEVs that will appear in two years.
Capacitors will facilitate distributed power in the future. "The whole concept of how you harness and distribute power around the car is being rethought so that future cars will look more and more like electrical plants and systems," Smith says. "Mild- or light-hybrids need a high-power storage pack. Very high currents are death to batteries. That is where ultra-capacitors come in: They can absorb very high doses quickly and discharge power more quickly," says Smith.
The real significance of the emergence of HEVs, pure or hybrid, is not that they will sweep the world, but that they're a vital phase on the road to more revolutionary car designs powered by fuel cells, which will be supported by reams of power electronics. Ever the technological leader in this domain, this summer Toyota announced plans to sell 20 fuel-cell powered vehicles annually in Japan and the U.S. The numbers may seem trivial, but it could be a significant leap forward for the long-awaited technology.
And guess what? These fuel cells are a hybrid of electric and hydrogen power. And Toyota has said all its future fuel-cell power-trains will be hybrids. "I'd characterize the switch to hybrid propulsion as a big change in [automobile] technology. In 1935, the last production-model electric car was built in the United States. Since then, basically we've been refining the internal combustion engine. The next step will be fuel-cell vehicles," pledges DaimlerChrysler's Oswald.
In the meantime, HEVs and mild-HEVs will be quietly passing by pumps and drafting those sun-blocking SUVs.


share of vehicle production cost (%)

1997 22%
2000 25%
2005 29-33%
2010 33-40%


Note: Table made from bar graph

RELATED ARTICLE: Money and mileage
ENVIRONMENTALISTS LOVE HEVs, but it's hard to make a financial case for them when you do a dollars-and-cents comparison between them and high-mpg conventional autos.
Ward's Auto World. (July 1, 2001) compared the economics of the HEV Toyota Prius against the gasoline-powered Toyota Echo. The latter costs 'about $12,700. The Prius costs $20,450, a difference of $7,750; The Echo, with an automatic, transmission, gets an average of 34 mpg (highway and 'city driving); that will cost most drivers about $730 in annual fuel costs, at $1.70 a gallon. The Prius gets a combined 48 mpg, which translates into an annual fuel cost of $530, 'which represents a $200 a year savings. Because of the Prius' $7,750 premium, the magazine says, "It would take you 38 years to make up the price difference in fuel economy savings. Even at $5 a gallon it would take 12 years to make up the price difference, so it's s no surprise that Japanese. consumers have largely ignored these cars."
Ditto European consumers, which is why perhaps no local car manufacturer has announced plans to introduce one. Volk swagen's Audi division tried in 1997 when it unveiled a hybrid "Duo," with a new Siemens electric power unit, but it was withdrawn due to poor consumer acceptance.
And U.S. automakers have had a history of showing prototype HEVs that fizzle out. "Many of their projects have been delayed," says Paul Hansen, publisher of the Hansen Report on Automotive Electronics, Rye, NH. But another sales assist for HEVs is coming courtesy of the IRS, which will grant buyers a tax deduction of up to $2,000 the year of purchase, to subsidize the incremental cost of? The data to the IRS hybridization. (Manufacturers have supplied for it to compute actual numbers.) Better yet, for consumers who don't take deductions, there also is legislation in congress that would, if passed, grant American HEV buyers a $2,500 federal 'tax credit. Just enough, perhaps, to make buyers mulling options at the car lot drive away in a hybrid.
U.S. Department of Energy, fuel Economy information
U.S. Department of Energy, office of Transportation Technologies' information on hybrid vehicles
Toyota's Prius Web page
Honda's Insight Central Web site
Honda's Civic Hybrid Web site
Ford's Web site on coming hybrid cars
John Thackray is a freelance business writer based in New York city. Reach him by e-mail at .

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However, the article does provide credible statistical evidence to suggest the car's popularity, noting "Toyota has sold a total of 100,000 of all types of HEVs worldwide in the last five years and boasts that it will crank out 300,000 HEVs annually by 2005, as more car buyers show a preference for lower emissions and better mileage." As further testimony to the likely future popularity of the cars it also notes as well that in addition to Toyota, Honda and Nissan have also begun to offer hybrid cars. Other automotive manufacturers plan to introduce electric cars in the next few years, including Ford, General Motors and Daimler Chrysler. All of these manufactures, incidentally, have linked advertisements to this article on the World Wide Web.

The intended audience of this article, however, is clearly more interested in the car's purported power than environmental impact. Although the article does quote a director of alternative power technologies at J.D. Power & Associates, Westlake Village, who notes "the total HEV industry could be as large as one-half-million units by 2007," instead the author is more keen to emphasizes that forward-thinking car makers are "building a new breed of HEVs with smaller sticker premiums and more modest emission-reduction and mileage-enhancement targets." Thackery gently mocks the Toyota Prius, for example, stating that the car "sells on its appeal as a statement of the driver's environmental piety," but the more revved up HEVs, of the future, which are incidentally are more likely to be made by American car manufacturers, "are more attuned to market realities in a country where gas guzzling is an accepted addiction. 'If you do the math, you can see that we can actually save significantly more fuel converting a 20-mpg vehicle into a hybrid than a 30-mpg vehicle, especially if it's a vehicle that sells in high volumes, not a niche vehicle,'" one GM executive is quoted as saying, in defense of GM's future, more modest emissions standards for its electronic vehicles, in contrast to the Toyota Prius.

Thus, the article overall presents solid and credible information about how hybrid cars work, and their burgeoning popularity. But this American car and electronic niche magazine, aimed at car and gadget aficionados rather than the average cost-conscious middle class American car consumer may be too quick to sneer at the petite and cost-conscious hybrids such as the Prius, and too quick to endorse the more mildly conservationist and conserving 'mild-HEVs' that American manufactures plan to make in the future. Although its information its solid, its tone must be regarded with a pinch of proverbial (electrically charged) salt.

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Title: Fiat's Fall From Grace Can Fiat Turn It Around

  • Total Pages: 7
  • Words: 2120
  • Sources:4
  • Citation Style: Harvard
  • Document Type: Essay
Essay Instructions: Fiat’s Fall From Grace – Can Fiat Turn It Around?

Times have changed for Fiat, once the icon of Italian industry. The company literally drove much of the Italian economy for decades, at one stage accounting for 5% of its GDP. The car company is over a century old and is dominated by the Agnelli family dynasty, which still controls 34 percent of Fiat’s shares. The company was once seen as Europe’s leading automotive player but now faces mounting debts which threaten its very survival. Fiat, during the course of its lifetime, has evolved into an unwieldy conglomerate, diversifying into a wide range of industries such as insurance and pharmaceuticals. Nevertheless, Fiat Auto still accounts for 40 percent of the Fiat business.

The car manufacturing operations were seen as the very essence of the Fiat brand, yet Fiat Auto division today is haemorrhaging cash at an enormous rate. The brand has lost much of its lustre due to its market share for both the Italian and European car markets being halved in recent years. Fiat has failed to keep pace with leaner and meaner competitors and the changing needs of the market. So how could a company that made profits of £1.8bn in 1987 now be making losses of nearly £4bn only 18 years later? What went wrong?

The car manufacturing giant has been facing enormous difficulties since the late 1990s: falling sales, falling share price, erosion of market share, disgruntled workers, countless management reshuffles, poor sales of new models, economic difficulties in key overseas markets, retrenchment of foreign expansion, investor discontent and operating losses running into billions of Euros. Its bosses and investors are trying to come up with strategies to halt the decline. The firm has focused primarily on cutting cost and selling off assets and the Fiat group has attempted to raise cash by selling off non-core business and is considering splitting up the company Into separate entities. In addition, setting up Fiat Auto as a totally separate entity from the rest of the group is seen as a viable alternative. In the past, the Italian government would have intervened to help out the beleaguered company but due to EU competition laws it cannot inject cash from government coffers to protect the Italian colossus. The company seems destined to fall into total foreign ownership or face collapse.

Fiat has survived past crises in its eventful life: crippling debts, labour unrest and even terrorist attacks. But this crisis may well prove to be terminal Gianni Agnelli, the Fiat patriarch, died in January 2003, aged 83. Gianni had been one of Italy’s leading industrialists for more than 60 years. In the post war boom period of the 50s and 60s, Italians bought small cars in their thousands and by the mid 60s fiat was producing a million cars a year. It then began diversifying into trucks, tractors and even planes and expanded to further market such as the (then) Soviet Union, Turkey and South America. In 1968, Fiat acquired another Italian carmaker, Lancia. By 1980, Fiat was sprawling conglomerate and due to its diversification strategy was involved in a myriad of enterprises ranging from pharmaceuticals, newspapers, telecoms and trains, even investing in football – the Agnellis owned European soccer giants Juventas.

During this boom period the other large motor manufacturers continually wooed Fiat with offers. Agnelli was courted by Ford, Volkswagen, BMW, Toyota and Daimler Chrysler. In 1986, Fiat bought Alfa Romeo. But Fiat relied heavily on its domestic market and the removal of Italian protectionist policies left it uncompetitive in terms of global market forces. During the 1990s, its share of the Italian auto market fell from 60 percent to 40 percent.

Fiat has always over relied on a few popular car models to be the main earner for the division. On numerous occasions in the past, the company has been saved due to the sales performance of particular small car models such as the Punto, Panda, Uno and the famous 186. The Fiat Uno saved the company in the 1980s, as did the Punto in the 1990s. Fiat is forever seen as a small car specialist. Fiat always prided itself on the performance of its models in this ‘subcompact’ category. In 2001, fiat launced its next great hope for the future, the Stilo, the replacement for the Bravo/Brava model. The stilo was Fiat’s attempt to capture the lucrative mid-size hatchback market, popular with families and fleet buyers. It was seen as Fiat’s attempt to move into the middle-range category of the market.

In 2000 General Motors took a 20% stake in Fiat for 1.75 (Euro) billion but as Fiat losses mounted, Wagoner got into an acrimonious dispute with Fiat management over the five-year put option Fiat negotiated as part of the deal. With Fiat burning $ 1.9 billion a year in cash, GM was desperate to avoid being stuck with the Italian automaker. So on the eve of Valentine’s Day In February 2005 GM ponied up 1.35(Euro) billion to cancel the put and end the foreign engagement. Recently Fiat and Diamler Chrysler signed and agreement calling for strategic co operation. As part of the alliance, Fiat will contribute to Chrysler its world-class technology, platforms and powertrains for small and medium sized cars, allowing the company to offer an expanded product line including environmentally friendly vehicles increasingly in demand by consumers.
Chrysler will also benefit from Fiat’s management expertise in business turn around and access to Fiat’s international distribution network with particular focus on Latin America and Russia.

Now Fiat has launched a cheaper and more basic version of the car. In addition, competitors successfully undertook price cuts on their competing models, which damaged Fiat’s sales even more. Fiat is now experiencing decline in the majority of car categories in which it competes.

Sources: www.businessweek.com


We have to write a report which will be a fairly equal balance between theory and application, by giving answers of the following three questions:

1. Outline and discuss the macro environmental and micro environmental factors that are influencing Fiat’s strategy.

2. Justify your response by referring to the Fiat Group (www.fiatgroup.com) and constructing a detailed SWOT analysis of the Fiat Auto Division and contrast their situation with examples of other companies.

3. Summarize the strategic options available to the Fiat Auto Division and recommend what you consider to be the best option available. Present detailed reasoning for your answer. You must refer to the Fiat case and comment on their general positioning in the global marketplace and you should also make use of other company examples.

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