Product details

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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 US$1.99 billion. Eight months later Fiat aligned with Ford. This case study enables a discussion on whether consolidation (in whatever form) is warranted in the automobile industry and how the strategic alliances make good such a requirement. This case study also triggers a debate on whether Fiat?s swinging fortunes can be bettered by switching partners.
Industry:
Other setting(s):
November 2005

About

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 US$1.99 billion. Eight months later Fiat aligned with Ford. This case study enables a discussion on whether consolidation (in whatever form) is warranted in the automobile industry and how the strategic alliances make good such a requirement. This case study also triggers a debate on whether Fiat?s swinging fortunes can be bettered by switching partners.

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Industry:
Other setting(s):
November 2005

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