Product details

This is the first of a two-case series (ESMT-305-0039-1 and ESMT-305-0040-1). Fiat''s construction equipment (CE) business was extremely weak during the 1990s, and it had considered divesting the entire division (CNH Global, which was then called Fiat New Holland). With very little US market share, no heavy excavators (which accounted for 50% of the total CE market) and no hydraulics technology (crucial for excavators), Fiat''s CE business appeared dismal. Ten years later, CNH Global had become one of the world''s leading CE manufacturers, with nearly $4 billion in annual revenues and a complete CE product portfolio, ranking first in light and medium CE, and third in heavy excavators, and was number three in overall market share. It had achieved growth through a series of global acquisitions, joint ventures and alliances on a major scale, involving players on the European, North American and Japanese markets. This enabled it to leverage synergies with its agricultural equipment business, access to key hydraulics technology, an improved market position in Europe and the US, and greater market access for its full range of CE products. Case (A) describes these acquisitions, as well as the development of CNH Global''s CE ''Multi-Brand and Multi-Channel'' strategy, and makes sense of its mix of multiple brands, national and corporate cultures, customer groups, organisational functions and geographies. Product differentiation was central to its strategy, enabling it to maintain distinct brands and retain market share. The worldwide reorganisation of the CE business during 1999 and 2000 was a major challenge due to the existing cultural, geographic and organisational differences. To support the implementation of its strategy, a matrix organisation was designed, which had two dimensions: the global product leaders on the one hand and the local brands and distribution on the other. Case (B) describes the approach, which was used to convey the new strategic, managerial and marketing spirit throughout the organisation: map alignment. This relied on global managers leading project teams on business issues that were critical to the implementation of the new organisation, as well as the establishment of clear guidelines for policy and co-ordination purposes, and the creation of a worldwide platform strategy.