Case Study Of The Chrysler Group

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.