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Search Fiat Case Analysis 1. During the era of globalization, the auto industry, like many industries, saw an increase in marketplace growth.
The case throws out a perplexing statistics that one in seven people own an automobile on a global basis, equating to roughly million cars and light vehicles. The marketplace was strong and advancing.
Exhibit 2 of the case validates our thinking that the U. After reading further into the case, the stronghold of top Case hbs fiat tata essay in the auto industry was justified by the significant capital that was required to enter the industry.
Of the same importance as capital were the relationships that firms must build. A typical firm would source supplies from 30 direct suppliers and 70 indirect suppliers. As with the ever changing environment around us, the auto industry was motivated to adjust its strategies and internationalize.
Some of the motivators we discussed in class that apply to this case are secure key suppliers, access to low cost factors of production, and global scanning and learning behaviors.
One such item that propelled change was the oversupply of cars that could be made. This oversupply caused car makers to engage in price wars and unintentionally destroyed their margins thus reducing profits of the entire industry. In order to counteract the reduced profits, auto makers attempted to reduce their costs by setting up factories in Emerging Markets.
Not only did production costs drop, the industry gained access to growing marketplaces. These marketplaces created opportunity for collaboration.
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|Tata Motors and Fiat Auto: Joining Forces Case Study||How loyal are customers to your brand Price sensitivity How well differentiated your product is Availability ofsubstitutes Having a customer that has the leverage to dictate your prices is not a good position. Bargaining power of suppliers This relates to what your suppliers can do in relationship with you.|
We learned in class about the scenarios of the future which included common ground, survival of the fittest, tempestuous times, and worlds apart. The growing marketplaces that the auto industry began expanding into came at a high cost, so alliances were formed to battle these costs as well as reduce labor, energy, and raw material costs.
Through comparative analysis, alliances could adjust their strategies to specialize in what others lacked.
The more common ground that companies could find, the better the alliance could develop. Why Fiat does global? Why Fiat targets Indian markets?
In recent years Fiat has attempted to create partnerships with various other automotive companies all of which have been related to increasing efficiencies and reducing costs and while some have helped they have not allowed Fiat to penetrate new markets.
India has a population of 1. Historically it has been very difficult to do business in India. Foreign companies had to license their products to Indian owned companies and had little to no control over the Indian operations.
In changes to Indian laws allowed Fiat to open a wholly owned subsidiary in India giving them a more direct access to the Indian market. Labor disputes had halted production for long periods of time, their plant was flooded and their products meet with disappointing sales due to low fuel efficiency and poor service from the dealers.
In addition to these issues the geographic distance made it difficult for people to travel from Italy to India, and rules requiring Indians to be quarantined prior to entry into Italy made it almost impossible to travel from India to Italy for business.
However, due to the potential for growth in the Indian automobile market made these obstacles did not deter Fiat from attempting to increase their penetration into the market.
Why Fiat entered into strategic alliance with Tata? In Fiat Group and Tata Motors signed a memorandum of understanding that was the beginning of a joint venture in which the companies would jointly manufacture pickup trucks and share distribution channels from production to sales activities.
When firms partner together the collaborating companies have to understand how to capitalize on strengths and mitigate weaknesses, both existing and those derived from the partnership.
If this is not planned out in the early stages the partnership will be doomed from day one. With previous American companies such as GM the partnerships ended due to the management structures of the joint ventures.
To mitigate this with the future endeavor Fiat and Tata created a management team for the joint venture with execs from both companies, and while those execs reported to both companies, a newly created board of directors had majority say on what went on. This minimized the approval chain and created a faster decision making process.
Fiat had a minimal distribution presence in India. When looking for partners they needed someone who had the existing infrastructure to sell Fiat products countrywide from day one.
Tata motors had the capacity and resources to sell cars for Fiat throughout India.Case – HBS: Fiat -- Tata Case questions: 1 What is Fiat’s current situation in India? Fiat is an Italian automobile manufacturer based in Turin.
Fiat India in Indian car market is facing the dilemma of poor sales. It had a very small market share in India comparing to other existing automobile competitors.
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For Tata, this alliance with Fiat helped Tata get technologies and new design in future which is a win-win situation. Compared with the Fiat-GM relationship, Fiat and Tata might have better future.
After Fiat and GM cooperation, their market share was decreased and had high debts issues. In addition he implemented and created a Group Executive Office whose members were represented on the boards of the Tata companies, in addition to Tata Business Excellence Model (TBEM) that he introduced which was the Tata Group’s largest change initiative.
Fiat's Strategic Alliance with Tata Case Solution, This Case is about NEGOTIATIONS PUBLICATION DATE: March 05, PRODUCT #: IESPDF-ENG This case scenario looks at the automotive business, Fiat and Ta. Tata Motors, previously known as Tata Engineering, is one of the biggest and most prominent companies in the Tata Group, with an annual turnover of US$ billion in Area of Business Tata Motors' product range covers passenger cars, multi-utility vehicles and light, medium and heavy commercial vehicles for goods and passenger transport.1/5(1).