Business Case Studies, Organizational Behavior Case Study, Corporate Social Responsibility

This is the second in the 3 part case series on strategic alliances in automobile industry. This case exemplifies how alliances can break up even when they are achieving the desired objectives. The Fiat-GM alliance was focused on cost minimization, by reducing redundancies in primary cost components vis-ŕ-vis purchases and manufacturing processes. The alliance was doing well to this end and it resulted in more-than-perceived savings for both the companies. However, negative developments in both the companies – independent to the alliance - have unfortunately resulted in a situation, where neither Fiat nor GM was willing to carry forward the alliance. This case study helps a debate if the companies were correct in terminating the properly functioning alliance. Did the companies end up taking an emotional call over a business decision? Was there no way that the companies could keep the alliance alive? If that was the case, was entering into the alliance itself a mistake? If so, who was at fault – GM or Fiat?