Fiat and Chrysler

The 2009 Chrysler-Fiat Strategic Alliance

Nowadays, globalization is of high importance as it is currently influencing the world’s economy. Globalization is introducing a wide range of advantages and disadvantages that make some national businesses turn into powerful Multinational Enterprises and some others vulnerable in front of this highly competitive global economy. The changes due to globalization are affecting businesses worldwide, one of which is the increase of economies’ inter-dependence, where trade is as easy as if we were dealing on a one-country scale which makes one simple store in the U.S can affect another store in a totally different region across the globe.

As the world changes it is bringing about much greater business, economic and social impacts than ever before. One reactive strategy of globalization is the strategic alliance which is basically an agreement between two companies that share their resources, leading to mutual benefits & implying higher revenues. In such a coalition companies have more advantages and develop more effective processes, have access to wider resources, expand into new markets, get access to new technologies and know-how, develop advantages over competitors, as well as other possibilities.

Chrysler and Fiat before the Strategic Alliance

Chrysler has had its ups and downs. The company was founded in 1924, producing trucks, tanks and other armaments for the US army during the Second World War. Chrysler was concentrating on producing big cars gas guzzlers and that led production to fall to 26 percent due to the oil embargo in 1973. It then developed minivans and repaid the 1.5 billion U.S dollar loan from the U.S government. Chrysler then bought the American Motor Company for 800 million U.S dollars and took over the Jeep brand, so by 1996 it became the number three car-maker in North America. The Daimler-Chrysler merger that happened in 1998 for 36 billion U.S dollars failed when Daimler sold its 80 percent...