Fiat’s New Deal

Fiat Industrial, a division of Fiat specializing in trucks and construction/agricultural equipment has announced a change in management structure to help the transition of acquiring a new subsidiary, CNH Global (agricultural equipment maker).

The new structure will emphasize brands and brand awareness, in addition to region by region operations. The adoption strategy will be similar to when Fiat acquired the American car company Chrysler in 2011.

While negotiations of the acquisition are still in progress, Fiat Chairman Sergio Marchionne is confident they will succeed, however expensive it may be. While this may briefly take a toll on the company’s overall revenue and income, its assets will increase with the purchase of a new division. Since CNH Global is a company with nearly $20 Billion in revenue yearly and business in over 150 countries, the deal should turn out to benefit Fiat in the end.



In addition to acquiring CNH Global to bolster Fiat Industrial, Marchionne has announced that Alfredo Altavilla will take over operations in an attempt to turn around Chrysler Group LLC, the failing American car company that is 58.5% owned by Fiat. in addition to American sales, Fiat announced it will be focusing on returning Chrysler’s market presence in Europe, the Middle East and Africa as well.

In the next two years, due to the aforementioned acquisitions and the attempted turnaround of Chrysler, Fiat expects to lose money. As a result they are turning to innovation to differentiate themselves. They plan to introduce 19 new models in the next four years including a Jeep compact car. Also, they are making efficiency a priority in their Italian factories they feel are under performing. By renovating and innovating they are attempting to stop the tide of losing money Chrysler faced due to the American economic crisis of recent years. Making a Jeep compact and over half a dozen new Alfa Romeos and Maseratis is going to push Fiat’s products into new market segments that will bring them more customers and greater revenue. Maximizing efficiency of existing processes, in addition to reducing costs and raising output, may have the added benefit of improved products, which could help them to retain customers better.

Additionally, visionary leader Marchionne has approached leaders of American car company General Motors and French car company Peugeot with an idea of combining forces to take over Volkswagen’s dominance of the European automobile market.  However, it is unclear if such a deal would ever take place, especially considering that both GM and Peugeot have taken bailout money from their respective governments in recent years, weakening their financial position.






Works Cited:

4 thoughts on “Fiat’s New Deal

  1. I am a huge fan of Sergio Marchionne. I am not certain that all of his ideas are going to work out, but I think it is great that he is looking to act opposed to just standing still. He is trying to create useful partnerships that will be mutually beneficial in struggling economies. My only concern with Marchionne is that he may be spreading himself too thin. With interests in so many ventures, it will be difficult to manage everything effectively.

  2. Reading this post and the respective articles, I agree that it seems Marchionne has gotten himself into many segments of the automobile industry with companies that he now needs to effectively turnaround and that may create a challenge for him. Visionary Leadership seems to be a core value that involves a very hands-on upper management approach, and with many of Fiat’s different family brands struggling due to the economy, it will be interesting to see if all of the brand managers can institue the type of change through visionary leadership that Marchionne wants.

  3. It is an interesting situation, especially that the management organizational structure is one of the pieces that “made the news.” First, to have a 20-person team making decisions is a large group that could become unweidly; especially if not everyone believes in Marchionne’s vision. But, what is more interesting is that it sounds like a matrixed structure across some combination of brands, regions, and internal operations/production. While many companies have been moving to this as businesses become more and more global, it can have a couple of unintended consequences. The first is for the individuals to not know who they report to, or who their boss is, so to speak and if the two different bosses are giving conflicting instructions, it’s an issue. The second is that people are ultimately motivated by incentives, so which structure is “primary” (brand or region, for example) could be the deciding factor in which areas of the business thrive, and which do not.

Leave a Reply

Your email address will not be published. Required fields are marked *