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Reference no. 802-049-1
Subject category: Entrepreneurship
Published by:
Babson College (2002)
23 pages
Data source:
Field research


Chrysler was Forbes magazine's 'Company of the Year' in 1997. Eighteen years earlier, however, a loan guarantee by the Federal Government was necessary to prevent the nation's third largest automaker from succumbing to bankruptcy. President Lee Iacocca turned the company around by thinning the ranks of top management, closing plants, persuading labour unions to accept layoffs and by introducing the highly successful K-cars. Chrysler repaid off its loans in 1983 - seven years ahead of schedule. Chrysler experienced another major downturn in the late 1980s and early 1990s. This time Iacocca himself was placed on the retirement rolls and replaced by the spectacular management team of CEO Bob Eaton and President Bob Lutz. Both executives were known as 'car guys' by industry aficionados, and they proved to be worthy of the moniker as they changed the corporate culture, teamed with suppliers and dramatically reduced the design to production cycle. The teaching note includes strategies for case presentation, key concepts, solutions to the assignment questions, and suggestions for the most effective ways to work this case into a course. The case series 'DaimlerChrysler' (BAB041 and BAB042) can be used as a follow on.


Corporate culture; Autos; Bailout; Turnaround; Entrepreneur; Extended enterprise
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