Case Study Of The Chrysler Group

explanatory Essay
2703 words
2703 words

On January 21st 2014, Italian car giant Fiat announced it had acquired the remaining shares needed to complete a full takeover of the Chrysler Group of the United States. 1 This deal provides Fiat with access to the previously unbroached US car market and the resources and facilities already established by Chrysler in the United States. Having a foothold in the United States also gives Fiat the opportunity to expand its operations into other regions nearby. This is evident with the recent announcement by Fiat that it plans to open a new production facility in Brazil within the next 3 years. 2 A merger between two companies within the same industry potentially allows for greater investment in research and development of new products and technologies. As the union between the two companies will be generating higher profits, more funds can be made available to invest in research projects which can be seen as low yield and financially hazardous. With Fiat and Chrysler becoming a single company, their increased size and multinational scale of the new company will be advantageous to competing globally in the automotive market. Many smaller companies will choose to merge organisations and keep their identities rather than be subject to a takeover from a much larger company. This can have an effect on consumer confidence, mainly among customers loyal to the Chrysler brand, who may feel that the brands ‘All American’ image has been diminished by being overtaken by a European car manufacturer. By creating a larger company, Fiat can benefit from producing vehicles on a more massive scale which will in turn reduce the average cost of producing each car. This is referred to as increase in economies of scale meaning that the cost involved with ... ... middle of paper ... ...he raw milk from outside sources. Many large companies will acquire a smaller company if it is the producer of a raw material required for the larger company’s production needs. On some occasions it can be cheaper for a company to purchase another that produces the material it needs rather than develop the production internally. This is an example of a vertical merger. 44 The acquisition of Robert Wiseman by Müller can be viewed as a vertical merger because they are purchasing a company that produces a raw material vital to their production. In conclusion I feel that I have listed most of the major impacts caused by the takeover of Robert Wiseman by Müller. The effects and outcomes I have made note of occurred rather quickly following the takeover, but with the merger of the two companies taking place fairly recently, some consequences may take longer to manifest.

In this essay, the author

  • Explains mergers occur when two companies cordially agree to become one entity, usually for mutually beneficial purposes. by doing so, smaller companies can protect themselves from takeovers from competitors, share previously established business relationships and resources.
  • Explains that a takeover is similar to mergers but with the key difference being that the company being purchased will be absorbed into the purchasing organisation.
  • Explains that sometimes a takeover or merger can be deemed 'inappropriate' because shareholders were misled or had vital information deliberately withheld from them regarding the future of the combined companies.
  • Explains that the buying company may make promises and guarantees to managers and employees of the company being purchased, which affect the acceptance and ease of a takeover or merger.
  • Explains that robert wiseman dairies enjoy the stability and trust of consumers and business partners partly due to their consistency to keep the business within the family.
  • Explains that being taken over by a larger company can allow the purchased company to enter new areas of business that they previously hadn't been involved in.
  • Explains that the acquisition of chrysler gives fiat access to the previously unbroached us car market and the resources and facilities established by chrysler.
  • Explains that india has strict government regulations to encourage 'home grown' businesses and to ward off potential foreign investors.
  • Explains that müller wiseman dairies was created in january 2012 with the takeover of the east kilbride based robert wi.
  • Opines that the acquisition of robert wiseman by müller can be viewed as a vertical merger because they are purchasing the raw material vital to their production.
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