Strategic Alliances, Collaboration and Joint Ventures Case Study

Alliances in Automobile Industry : From Fiat-GM to Fiat-Ford

OR

Abstract:
Technological advances and process improvements in the automobile industry have made a few company leaders and laggards and left many clueless. Competitive pressures pushed the automobile companies into the triple threat of cost pressures, cutthroat pricing and overcapacity. In order to counter such pressures, consolidation was the need of the hour in the industry. Consolidation took different forms viz, mergers and acquisitions, joint ventures and strategic alliances. Strategic alliances, which offer all the advantages of mergers and acquisitions at a lower capital and resource commitment, appeared a better alternative to bolster their positions. Amidst these circumstances, Fiat entered into an alliance with General Motors in 2000 and come February 2005, rather surprisingly, General Motors withdrew by paying $1.99 billion. Eight months later Fiat aligned with Ford.

Pedagogical Objectives:

• To discuss whether consolidation (in whatever form) is warranted in the automobile industry and to discuss how the strategic alliances make good such a requirement
• To discuss whether Fiat’s swinging fortunes can be bettered by switching partners

Keywords : Fiat;Mergers,Acquisitions,Alliances Case Study; Ford; Automobiles; Strategic alliances; Alliances in automobiles; Fiat-Ford alliance; Fiat-GM alliance; Synergies from alliances; Advantages over mergers and acquisitions

Contents : 
Alliances in Automobile Industry: By Choice or By Force?
Synergies Offered by Alliances in Ideal Situation
Fiat-GM to Fiat-Ford
Decreasing Market Share of Fiat