Fiat had gone through major changes some good and some bad



Fiat had gone through major changes some good and some bad in the past years. From the years of 2004 a new comer came on board with fiat named Sergio Marchionne. He was the dominate shareholder in Fiat and took on the job to revive the companies performances when they were at their lowest point. Sergio attempted to cut down the costs and look for new innovative ways to create cars that were stylish and grabbed attention. At this time when he took over the car production had unappealing models and there was a lack of investments.

Fiat group's was in debt and the money was flowing out at a rapid rate, but the banks were repaid with the help of rights issue in late2005. In turn with Mr Marchionne taking over and having all the problems of starting he had an interest and clear goals in making the company succeed. In the time he stated he made many changes and implemented strategies in order to make sure that he achieves innovative and creative automobiles that are of good quality. This case study involves looking at the strengths, weaknesses, opportunities and threat that the company has faced through the years of 2004 to 2008 and compare how things have changed due to Mr Marchionne's plans to better the company. Doing a SWOT analysis on the company will ensure that we examine the company's business structure and operations, history and product and it will provide a summary analysis of the key revenue lines.

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Fiat is a company that is engages in many activities such as manufacturing, distributing, constructing equipment and commercial vehicles. Fiat operates in Europe and North America, with fiat trying to improve their position by been innovative a try change how Fiat is perceived. When Fiat Hired Mr Marchionne the company knew that he was a corporate trouble-shooter but that he had never worked in the auto industry, but by taking the chance as they were on the verge of bankruptcy and thought it would be a good idea to call in an amateur.

1. Undertake a SWOT analysis of Fiat at the time that Mr Marchionne was appointed and suggest how a SWOT analysis in 2008 may differ.

The SWOT analysis provides a company with information that is helpful with matching resources and capabilities to the competitive environment in which it operates. SWOT stands for Strengths (S), Weaknesses (W), Opportunities (O) and Threats (T). Strengths and Weaknesses are usually the internal factors within the environment and the opportunities and threats are the external factors of the firm. ( Bradford, Robert W, Duncan, Peter J, Tarcy: Simplified Strategic Planning)

Therefore during the year 2004 Fiat faced many challenges but overcame some due to their strengths and opportunities. Firstly by looking at the internal factors we can examine the strengths and the weaknesses that the company faced in 2004. The strengths of a company is like an advantage that they have over their competitors and each companies strength differ accordingly and in the case of Fiat their strengths are as follows:

Fiat had qualified staff members that created a competitive advantage by doing accurate forecasting of the market, for example Mr Marchionne said that by reducing time to market is a significant source of competitive advantage For "the guys running the brand who are mostly not engineers, but are people with a very strong consumer product bias". The staff members do not have to predict the market so far ahead. Another strength that Fiat had was that they were determined to exploit the cars' relative fuel efficiency.

Fiat expected its fleet to have lower average emissions that any competitor. Fiat had a new comer to take over and implement changes. This created a advantage due to the fact that Mr Marchionne was able to Fiat offers a variety of products from commercial vehicles to trucks, and been producer of agricultural and construction equipment. Fiat was in a joint venture with Alfa, Ferrari and Lancia, this created a well known brand and image of quality and provided fiat with historical value.

Fiat strength is offering the customer slower average emissions that what fiats competitors do. This is because the company makes a lot of smaller cars and few bigger ones. The strength of fiat is also the fact that they used power-train technology. Fiat became the first carmaker to offer diesel engines that complied with the Euro fuel standards. Fiat had complete openness, fast communication, accountability and when Mr Marchionne demanded those he also stated that he dislikes corporate politics and hierarchy.

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Next is Fiat's Weaknesses in 2004, weaknesses of a company is like a disadvantage. It is something that the company does not particularly perform well in. It is like a gap in capabilities and it is important for a company to remember that it is good to acknowledge their weaknesses and try improve it by wither looking for opportunities or using some of their strengths to overcome a weakness. Fiats weaknesses are as follows: Fiat had lack of investments which caused the factories to be inflexible.

Fiat did not make any form of prototypes, this may have saved them time but it is seen as a weakness due to the fact with a vehicle it is important to do crash testing. There was a lack of cooperation and commitment from employees due to the fact that the employees did not fully understand the customer's needs and the market trends and this resulted in vehicles not been able to sell well as they were unappealing. The cost of production was too high at this stage as when Mr Marchionne came in he had to trim them because he realised that they were over spending with regard to the fact that at the time the car demand was grim.

The next step in the SWOT analysis is to look at the eternal factors that affect the running or the organisation. The opportunities of Fiat are seen as chances that come your way that can help you enhance your company. In the case of Fiat in 2004they came across the following opportunities: Making strategic alliances with GM allowed Fiat to further expand and reach more customers and it enables then to have more financing.

Fiat also got the opportunity of expanding into a high growth market by going on a joint venture with other well known cars, such as Ferrari, Alfa and Lancia. This allowed them to create more recognition as it was associated with well known and established car brands. They also had market opportunities to go international which resulted in making trade much easier and reaching a wider group of customers. Fiat got the opportunity to hire an outsider to help set the company on the right track which allowed them to get expertise advise and help the company to be successful.

The next step is to look at the threats which involves things you cannot control, it is the forces that can possible affect you business in a bad way therefore threats need to be watched and actions need to be put in place in order to ensure that it doesn't harm the business. Therefore the threats that Fait had to face during the year 2004 are as follows: The market at the time was grim meaning that they had difficulty on selling the cars at that time. They entered the market at the wrong time and this could have been because of lack of research done on the environment.

The other weakness was that they did not have superior cars that were very attractive to the market and the competitors. Although they were in joint ventures the cars didn't appeal to what the customers really wanted. The other weakness was that the competitors were realising new models at the time which could have clouded the Fiats cars. Lastly due to the strict emission standards that were put in place Fiat battled to keep up.

In 2004 Fiat was not on its game and was on the verge of bankruptcy but all changed when they hired Sergio Marchionne. Therefore by doing a SWOT analysis for2008 we will be able to identify the changes that were implemented and how it affected the internal and external factors of the business. As previously done by starting with the strengths of Fist in 2008 we can determine whether or not Mr Marchionne had a positive effect to the company as he had never worked in an auto industry.

The strengths are as follows: Fiat eliminated all of its debt, this changed from a weakness in 2004 to a strength in 2008 due to the fact that Mr Marchionne cut the costs down and found innovative ways to create a car that was attractive and of good quality. The profits increase as well by 2007 Mr Marchionne created good relationship with the staff as when he got there he changed the organisational structure to ensure that there was openness for communication. This strength allows the employees to know what was going on in all sections and made each employees feel important with their jobs.

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Before a weakness in 2004 was that the cars been produced were unattractive and now in 2008 after pushing to the limits they are creating stylish cars such as the Bravo. Mr Marchionne brought the company a core competence within the manufacturing process and he made sure that he gave the designers confidence in order to believe that can contend with the best in the world. Bravo was the key success of the company as is showed the strength of the development side of the company.

Another strength that came about with the designing of the cars by ensuring they are fuel efficient, in 2004 the weakness of not knowing what the market wanted and trying to find a solution was their downfall but Mr Marchionne pushed the engineers to find ways to make this happen when the new rules were enforced on carbon dioxide. The other strength that fiat has now over its competitors is the technology that allowed the cost of production to lower.

In 2004 the market was grim and that was a major threat to the company as their sales were just declining even more however due to the changes made by Mr Marchionne with production of their cars and with the increase of demand for Fiat's smaller cars what was a threat then is now seen as a their strength. Mr Marchionne also got the staff members to be more devoted as when he changed the organisational structure he opened up to them and made them feel confident in the company and the product.

Next are the weaknesses of Fiat in 2008: Even though the smaller cars were doing so well when Mr Marchionne joined the company the weakness of the rest of the range vehicles was in much need of renewals they were still not doing as well as the smaller vehicles. In China, India and Russia the performances of Fiat are not going well due to lack of market research on those segments. If they had done market research they could had seen that those countries preferred a certain style car.

Mr Marchionne set some sales standards but the company was not able to reach their target, in fact he set targets for Alfa and Lancia and the results together did not even match the target set for each individually. The market is filled with competitors and Fiats weakness is that even though they have the technical skills they lack insights on markets and have no clue on how long it will last. The decisions making is also a weakness as Fiat needs to be awake and sharp due to a lot of competition but instead Mr Marchionne is dwelling on if making car of lower cost will damage the existing brand. Instead of creating a new one or finding another way the weakness of wasting time.

The weakness in 2004 of not making prototypes still remains the same as Mr Marchionne sees it as saving time and money but this is not the case as you would like to know that the car is safe and strong enough if any accident had to happen. The fact that Mr Marchionne gained independence when GM left he at the same time lost the only parachute they had as GM alarmed them on how much money they were losing and the company can see this as a short term weakness unless they don't do anything about it and not do check up's of finances

Next are the opportunities that came in 2008: With the weakness in 2004 been short of investment Mr Marchionne turned the company around by gaining full control of the company again when he made and agreement with GM to leave the partnership, with this opportunity he knew he could make a lot of smaller cars out of the deal. The idea of leaving GM was for Fiat to get their independence back and Mr Marchionne achieved just that and was able to run the business properly. When there was new rules putting place Fiat saw an opportunity to try abide with the rules and at the same time save cost that is when Fiat used their patented technology to create the first engine with two cylinders.

This allowed Fiat to protect themselves from other manufactures for at least four years. With Fait in good shape now in 2008, due to Mr Marchionne, he decided to look elsewhere to find more opportunities and look for the next task. This task was to look at the underperforming brands of Lancia and the Alfa, but the weakness with this is that they found it hard to categorise the car. When Mr Francois and Mr Marchionne discovered their interest in the brand they decided to hire Carla Bruni as he saw an opportunity for the rebirth of the brands.

Due to the opportunity of going international Fiat reached many countries and is expecting a good growth to come from the emerging markets. Fiats growth came from the opportunity of a joint venture. Mr Marchionne identified opportunities that lead the company to its success today; he was able to get the company out of debt by taking the opportunity of producing the smaller vehicles which is a success.

Lastly by looking at the threats that came about with the changes made by Mr Marchionne we are able to compare the differences between the years. The threats are as follows: There is still a major threat in 2008 with regard to a lot of competitors realising new models, Fiat is still behind it rival and is trying to catch up with companies such as VW and Peugeot and Citroen. These rivals have standardising parts and platforms across model ranges whereas with Fiat their parts are quite different and this can be a threat when it comes to costs of all different suppliers and costs of quality.

By going international you will face some threats and in this case it the threat of the vehicles not selling well in places such as China, Russia and India, in 2004 this was not a threat due to Fiat been base in Europe and America only. There is still the threat of technology changing rapidly and this involves spending a lot of money and even though Fiat is doing much better it still big risks to spend too much money and it is important that one examines if it is worthwhile.


The SWOT analysis was a helpful tool for us to understand the full situation of Fiat and the changes from 2004 to 2008 with the help of Mr Marchionne. As a result some of the weaknesses of Fiat in 2004 became strengths in the analysis for 2008. Mr Marchionne knew that in order to get the company back to sound financial position he had to decrease product cost and this enabled the company to reduce engineering, and development cost. He also achieved an economic advantage for the company as by signing alliances with Ford and therefore gaining experiences and going into new territory with limited risks.

Mr Marchionne basically just focused on simplicity and wanted to ensure that the cars regained attractiveness which they did and as a result the brand was rediscovered and there was brand awareness for Fiat.Mr Marchionne took the company forward and introduced stylish and quality products to the world and he achieved this because he made sure he understood the wants and desires of the customers and their taste, he also catered for the lower and medium segment and separated them from the higher ones and by doing this the company reach different demographics.

Mr Marchionne at the end of the day repositioned the company on affordability and modernity unlike in the 2004 analysis it showed that the vehicles were unappealing to the customers which was a major downfall for Fiat. By providing the customers with affordable cars of good standards Fiat become a hit again. The industry is now at its best and Mr Marchionne states that he truly has devoted staff which can only mean more success for Fiat.

Harvard Referencing:

Bradford, Robert W, Duncan, Peter J, Tarcy: Simplified Strategic Planning, retrieved 7th April 2010,

Humphrey, J. & Memedovic, O. (2003). The Global Automotive IndustryValue Chain: What Prospects for Upgrading by Developing Countries. Vienna: UNIDO -United Nations Industrial Development Organization.

Berta, G. & Ciravegna, L. Una nuova configurazione. Il sistema mondiale dell'auto.