Lee Iacocca made a name for himself by saving Chrysler Corporation from the brink of bankruptcy in the late 1970s and built it into a powerful and profitable firm in short time. Management and manufacturing changes implemented by Iacocca resulted in a dramatic increase in Chrysler's stock price and Iacocca's ego. However, as the cash flowed in during the early to mid 80's, Iacocca lost focus of what made the company successful and he changed Chrysler's growth strategy by investing large amounts of capital in businesses that were unrelated to the auto industry. In the early 1990s, Chrysler again found itself in a precarious situation with its market share and stock price in steady decline. In early 1993, Robert Eaton was set to succeed Iacocca as CEO in a pivotal period for Chrysler. Through an analysis of the strategic alignment framework, we have developed a plan of action for Eaton as he takes the helm at Chrysler Corporation.
Context of the Chrysler Corporation
In the second half of the 1970s and into the early 1980s, the automobile industry struggled to overcome economic weakness brought on by a combination of stagflation, rising fuel costs, regulatory pressure from Capitol Hill and intense competition from Japanese and German automakers. While these events negatively impacted each of the Big Three American automakers, Chrysler suffered the most due to its formal organizational structure, the attitude of senior management, the lack of culture within the organization and an emphasis on tasks centered on financial management rather than car design.
Chrysler's formal organizational structure preceding Iacocca's tenure involved each business line operating in separate silos; the 35 operating units had no communication with each other. There was no formal structure in place to supervise the cross-pollination of information and ideas across business units. The lack of cohesiveness and idea generation impeded management's ability to react swiftly to the outside forces that endangered Chrysler's financial health.
In addition to a poor organizational structure, Chrysler suffered from ineffective leadership. Before Iacocca, senior management was saturated with people who did not understand the auto industry. Management consisted of financial experts focused solely on tasks such as monitoring short-term results and Chrysler's stock price as opposed to a long-term vision and effective growth strategies. This led to a shortage of capital for investment in the design and engineering of new products critical to the future of Chrysler.
In this argument I will be focusing on Fox Car Rental, Inc. as the basis for a systematic analyses of the organization, as I identify the strength, weaknesses, opportunities, and threats to the existence of the organization and its operations. Also, I will be providing three pitfalls to strategic management. In order to facilitate my argument, the use of a strategic matrix analyses will be utilized.
The Big Three automobile companies, General Motors, Chrysler, and Ford, also had a very demanding labor union, the United Auto Workers or UAW, which asked for many benefits and salary requirements which lowered their ability to compete with other companies on the market, foreign and non-union. The average...
During the Great Depression, every work place was hit hard and many were out of work. The demand for vehicles declined, and the automotive industry took a hit. Once the Second World War began, the automotive industry was given a push in the right direction, and their vehicle production flourished...
The automobile went from being a toy for society’s elite to being an essential item within the economic reach of nearly every American, all thanks to the hard work and ingenuity of Henry Ford. His dedication to quality and attention to detail earned him not only dozens of racing titles, but also the reputation of a respectable businessman. Ford understood his market so well that he knew what the people wanted before they could even ask for it, always ahead of the curve. Ford was a pioneer of American commercialism, and so his production methods were centred around efficiency and mass production, thus allowing him to increase productivity and decrees cost to meet the demand of the masses. Lastly, consideration of the working class and philosophy of raising the wages instead of raising the price point and focusing only on profit. There are a great many lessons to be learned from distinguished businessmen in history, and Henry Ford is no
This paper will focus on the future of the U.S. Automobile industry as the United States recovers from the worst recession we have experienced in the past 75 years. I will provide information on the following topics pertaining to the U.S. automobile industry:
When Mr. Marchionne became CEO of Chrysler he moved his office down where the engineers work on the 4th floor. “No need for a top-floor penthouse, which sits empty where a chairman and three vice chairmen used to be, when a fourth floor office will suffice.” (Allpro.com). This one his first step in creating change of direction in a company which was used to being lead by leaders who didn’t fully engage with the employees. So how does Sergio Marchioone overcome the company’s financial problems?
Ford Motor Company Strategic Audit Abstract The purpose of this paper is to give a brief detail of the strategic audit of Ford Motor Company. The method of research used was Internet research by topic. In addition to the class textbook audit example used, other written references in the area of Ford Motor Company were used, in order to develop the subject more in detail.
General Motors is one of the world's most dominant automakers from 1931. After 1980s economic recession the main goal for automobile companies was cost reduction. Customers became more price-sensitive. Also Japanese competitors came into market with the new effective system of production. So market was highly competitive and directed toward price reduction. The case states that in 1991 GM suffered $ 4.5 billion losses and most part of the costs of manufacturing was due to purchased components. GM NA hired Lopez in order to find the way from "extraordinary" situation and reduce costs.
Fast Company,(139), 69-70,73,16. Retrieved from Research Library. Document ID: 1870795761. Wheelen, Thomas L. & Hunger, J. David, (2010). Strategic management and business policy.
with rheumatic fever. He had a harsh bout with the disease because there was no
In order for one to evaluate and identify with the diverse business structures, he/she must be aware of the meaning and standards that makes that structure. Various businesses functions in different ways as the world is full of technology and new structures, company cultures and new ways in which companies are run. In order to fully grasp the concepts of Organizational structure and culture in the movies, I will use the Movie Up in the Air and The Devil Wear Prada movies to analyze a business scenario from them.
Apple, Inc is a well known name in the computer technology world; Apple, Inc leads the computer industry in innovation thanks to the award winning desktop and notebook computer known as OS X operating system (Yoffie & Slind, 2008). This paper will focus on Apple Inc., strategic management and why is it critical to the success of the organization in meeting its goals and mission. It is therefore important to define strategic management, according to Certo, Peter & Ottensmeyer, (2005), strategic management is a continuous process that directs an organization to be appropriately suited to its internal and external environment. Strategic management benefits organizations by providing personnel, capital, helps to set standards and most importantly activates people. For an organization to have a successful strategic management plan, the mangers must learn to think strategically and have the ability to evaluate their environment and develop new ideas. Steve Jobs one of the founding fathers of Apple Inc used strategic planning to his advantage by making Apple’s mission a simple one- bringing easy to use computers to the general market, revolutionizing the computer market.
Organizational structure can be defined as the “formal arrangement of jobs within an organization” (Robbins & Coulter, 2009, p. 185). Having a defined and unified structure helps employees work more efficiently. Jacques Kemp, former CEO of ING Insurance Asia/Pacific, realized this need early on in his role. The company had been performing well and recently acquired another insurance company to become “one of the largest life insurance companies in Asia-Pacific” (Schotter, 2006, p. 4). However, Kemp’s proactive personality led him to seek out ways to achieve more efficient coordination between the regional office and business units (Robbins & Coulter, 2009). Kemp noticed that “most business unit managers did not even know the current corporate standards” and he began searching for a way to manage the managers (Schotter, 2006, p. 5). ING Insurance Asia/Pacific’s organizational structure was mechanistic and fairly well structured, but for a company that had recently been involved in a major acquisition and was divided across 12 geographically dispersed markets there was a great need to tweak this structure to unify the company (Schotter, 2006). If I had been in Kemp’s position as CEO, I would have made modifications to the organizational chain of command, formalized business processes, and used technology to stimulate collaboration amongst the region to help this company overcome organizational design challenges.
Ford’s production plants rely on very high-tech computers and automated assembly. It takes a significant financial investment and time to reconfigure a production plant after a vehicle model is setup for assembly. Ford has made this mistake in the past and surprisingly hasn’t learned the valuable lesson as evidence from the hybrid revolution their missing out on today. Between 1927 and 1928, Ford set in motion their “1928 Plan” of establishing worldwide operations. Unfortunately, the strategic plan didn’t account for economic factors in Europe driving the demand for smaller vehicles. Henry Ford established plants in Europe for the larger North American model A. Their market share in 1929 was 5.7% in England and 7.2% in France (Dassbach, 1988). Economic changes can wreak havoc on a corporation’s bottom line and profitability as well as their brand.
Marchionne did not believe in this assumption and did not allow it to continue to influence business decisions at Chrysler. Marchionne began establishing a new corporate culture with a top-down approach to reorganizing the management with a focus on decision-making capabilities (Kreitner & Kinicki, 2013). Just as he did when he took over Fiat, Marchionne began to identify management with ingrained basic assumptions that contradicted his values, terminated their employment and replaced them with employees he identified as having great potential (Kreitner & Kinicki, 2013; Marchionne,