Innovation At Fiat Auto Commerce Essay

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This assignment illustrates Fiat Auto S.p.A `s innovation and also developments which are led by the innovation in the organization. It will also show process and advantages of the innovation while mentioning about car industry history and Fiat`s overwiev.

On the first hand, automotive was not thought of a social or economic factor until 1900 at least in Germany. After 1900 people realised the commercial advantages and this provided competition and innovation to start up among the countries. And automotive was used as a gun during the First World War.(Eckermann, 2001)

On the other hand, automobile industry in US dominated the market around the world without any considerable competitors until the end of the Second World War. After the war, certain European nations especially German and Japan gained speed.(web1)

In the present time, while some developing countries have growth shares in the current trend of market such as Brazil and India, Global Market has recession as a result of decreasing automobile market. And Eastern Europe is now focus on developing markets of Brazil China, India and Russia.(web1)

When looking at Automotive industry today it can be easily comprehend the changes and innovations, also its efficiencies to our social, economic and environmental daily life.

Fiat "Società Anonima Fabbrica Italiana Automobili Torino" was founded in 1899 at Palazzo Bricherasio. During 1899 Fiat had produced only 8 cars. They were built their first factory in 1900 at Corso Dante. Total 150 workers were producing 24 cars per annum at the beginning of the business. (web2)

First innovation and research were made at 1951 in Fiat . The heating and ventilation forms were installed in production at the first time. It was followed by other research on marine and aircraft engines and in 1951 the first Italian jet aircraft was born as G80. Fiat's first diesel engine was introduced in 1953 After that production started growing in 1958 greatly, for automobiles and farm machinery. Mirafiori doubled its factories and Fiat set up new manufacturing plants abroad as well.(web2)

Fiat always kept research and innovation at all time .They have found Multi Jet Engine after 2004 .Multi Jet engines were giving extra power with less fuel to Fiats, also Multi jet system was working based on Common Rail system, because of that multi jet was saving the nature too. (web2)

Market Share of Fiat in 2009

According to association of European automakers, Fiat market share and sales increased in 2009. Sales were increased from %6.3 to % 20.2 and market share rose from %8 to %8.7 (web3)

Beginning, Reasons and Process of the Innovation

The law rate of growth in the European economy had negative effect on Fiat Auto and there was no certainty about its development. The market decrease had effected the company at the time it was making a huge effort to solve problems that caused its sales decrease and low earnings amount and to become less competitive. Things started to go bad for Fiat from the late 1990's until 2004. Fiat Auto declared that it lost about €4 billion in 2002, and imposed retirement on 2,900 worker. Therefore, it made investors very uncomfortable. And they contacted to management to be shaken up, and to be developed.

It is needed to remark that Fiat is Italy's largest car company and the biggest private-sector employer, which has 80 000 worker in Italy, and 162 000 worldwide. If Fiat has under this amount, Italy can face a huge unemployment rate in the motor car sector. Because of all these reasons. It was the time for Fiat planning investments in product and having more qualified managements, to reshape the mission, get new ideas and being more creative,

In 2004 Sergio Marchionne appointed as a new CEO, and 12 of the 19 head management were also replaced, to try to save the firm and to be the best of Europe's car maker again. And they were aware of that they have to have right position for the new products. Of course there was not only one innovation which is multijet engine. They knew they need to introduce new product and have creative ideas on products so they invest more and focus more in process and the market, that was what they exactly had to do to be successful and to have competitive advantage in the market, Therefore this innovative approaches _developing new_ provided an increase to the firm again.

At the beginning of the changing, management started to find out what are the needs of automobile markets and what their market strategy and mission will be . After determining this, multijet engine was born as a new idea. Secondly this new idea needed to be engaged the employees to make the change successfully, in this stage managers have big roles in organization to have employees', who are in the new team, support and make them adapted to new technology. In addition to this Fiat tried to make team act as a leader in the all stage of the organization. There were other management responsibilities that managers must undertake which are reinforce the success of new technology and ensure implementation of adaptation to the new technology.

Innovation at Fiat Auto S. p. A and Its Benefits

Innovation has the meaning of new idea about a new product, service or process which also consist of its implementation in order to have dynamic power and development in the economy and as well as to have increase of profit and employment. (Child, Kagono, Urabe, 1988 ).

"He.. who made the discovery of the machine, or who first usefully applied it, would enjoy an additional advantage, by making great profits for a time" (Ricardo, 1830)

Having top performance and saving fuel this multijet engine provides great success to Fiat's new models. This new system comes from the evolution of the 'Common Rail' system and also it can be said new second generation of Fiat engine which is 150 bhp and the powerful 1.4 90 bhp and the small 1.3 Multijet 16v, the sporty 1.9 Multijet 120. Multijet Engines are developed models of Common Rail systems. Common-rail systems for cars inject diesel engines with a range of environmental and operating advantage over gasoline-powered vehicles. According to the Fiat, the technology provide a power train solution that can increase fuel economy by up to 30%, decrease carbon dioxide emissions by nearly 25% and deliver a 50% development in torque to increase performance of vehicle. Company is further improving piezo and solenoid-valve injectors to increase the performance and exhaust feature of diesel engines, this ensure that this modern diesel engine has future emission standart. In addition to this, product line has particulate filter and urea-based devices to decrease diesel emissions.(web4)

Today not only Fiat most of former automobile manufacturers are prefer multijet engines in their products. Innovations for Multijet systems are still alive at Fiat Auto S.p.A . . And it ca be said that company's best achievements, particularly must be the Multijet Engine as the second generation Common Rail engine which is significantly improved performance.

Fiat Auto S.p.A start to be a Market Leader after many years they had introduce Multijet system to automotive industry. Automotive manufacturers are competing with their technological superiority and power saving advantages all around world. Also car owners are interested in more safety, more useful, smarter and comfortable cars .Therefore this factors have given non price advantage to the firm. And this demands and supply equilibriums are pushing engineers to more investigations.

Triggers of the Innovation and Marketing Strategy and Value Chain

Most of drivers are want to drive more with less fuel and also no one wants to pollute the environment as well as manufacturer want to supply cars which has this advantages. Background of this aims are first need to be hold customer satisfaction and while gaining customers satisfactory also to be friendly with environment. Therefore it shows that this marketing strategy which is based on the innovation provide direct value to the customer satisfaction by using value chain approach.

Common Rails system is the first model that was giving economical powerful and environmental drive advantages. Fiat had developed this system with under the name of Multijet engine. The CO2 emissions are very low at Multijet systems because exhaust gas recirculation happen in the engine and those gasses turn back as a power and energy to Fiat Automobiles.

Multijet Engine Innovation Leads to the Organization to Other Developments

Environmental and Mobility Developments

Automotive industry is growing day by day. Because of this development; pollutions and energy consuming are increasing. As leader of this sector Fiat is investing on peerless projects for saving and making easy our lives. Some of Fiat Auto S.p.A projects are listed below

Energy Efficiency

Fiat study on more efficient engines. Fiat engineers are trying to develop more efficient and less wasteful cars at all time. Because of this they have 2 new projects at the moment one of them named as High Efficiency Air Conditioning system and second smart alternator


Oil and gas industry is one of independent sector but related with automotive industry .Because most of cars work with oils and mixture of oils and gasses- Technologic and innovative improvements are doing in oil and gas industry for develop more efficient and environmental products- Also Fiat is doing researches in that way, Managers of Fiat and its engineers are trying to invest on Weight Reduced Materials , R-744 CO2 Air Conditioning System, Two -Cylinder Engine, Use of Natural Gas and Hydrogen Blend for Urban Vehicles

Multi Ecological Systems

This technology delivers sustainable solutions for decreasing CO emission which is efficient and entirely recyclable. The purpose has been used to design vehicles to decrease emission in urban places. And this purpose is being used entirely product life, it starts from manufacturing to end of product life (web5)


Automotive industry is a key sector which impossible to belong for only one nation, it has very strategic power on people. Countries can only find chance whenever they get this technological superiority. Because this superiority all nations want to produce their cars in their land or at least they build universities for understanding it.

Fiat is doing well and when Fiat is compared with other automotive manufacturers it is easily said that Fiat is in better place at the moment. To compare, Toyota is seen as market leader in 2008 manufacturers rankings. However, Toyota Motor industry founded after 1935. Therefore Toyota has 45 years less experienced manufacturer then Fiat but they start Research and Development programs (TOYOTA PRODUCTION SYSTEM) at 1950s. This simple judgement gives us idea about importance of management and making true decision at true time.

Fiat should keep focus on developments, open their mind for new ideas and pursue their production strategy while continue their responsibilities for future which are promoting new technologies that friendly to the environment and developing new drive concepts to become the market leader in the future. In addition to this, company should invest to have more non price factors to support the innovation and their leadership in the market.

Finally, as continuous change is the most important ability to survive, Fiat should continue to focus on developing, such as Intel Wall-Mart, 3M, Hewlett Packard and Gillette, the capability to change quickly and continuously by developing new technology, is at the hart of their firm culture (Brown,1997), Therefore evolution of multijet engine innovation has not finished even if it is said that this technology is perfect, because of the mean of perfect which changes every day.