Introduction
In 2002, Fiat recorded one of the biggest annual losses in the history of the Italian corporate world. Its pre-tax loss for the year was a massive €429 million and this heralded the beginning of a tough decade for the auto company. The loss was the conclusion of an ambitious diversification that Fiat had aggressively pursued beginning in the late 90s. The company had been expanding its businesses while at the same time buying other related and even unrelated companies sinking in hundreds of millions of euros in these ventures. Some of the moves did not achieve the success the company had anticipated and the company’s financial condition worsened leading the management to embark on cost cutting measures that included lay-offs (Jennings, 2007).
Lay-offs as a cost cutting measure of course did not go down well with the company’s employees. Labor problems soon emerged between the company’s employees and the management eventually attracting government attention. The government would later intervene and complicate matters even more. The whole crisis brought three major issues to the forefront. These issues include poor management, political intervention, and internal conflicts (Szczesny, 2009). Fiat had for a long time enjoyed success as a respectable automobile company successfully competing against auto giants such as Renault, Mercedes, VW and Toyota. More liberalization within the European automobile industry saw companies such as Toyota and GM aggressively entering the predominantly market and quickly eroding Fiat’s market share.
Faced with competition from companies that had invested billions of euros in advancing their brands in addition to introducing several other models, Fiat put its hopes in a new vehicle model...
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...a of Japan. Fiat is competing at a global level and just being a step ahead of its European competitors does not mean that the company will eventually regain its earlier success due to the fact that there are other competitors to look out for. The company will therefore have to prove its competitive advantage to the global market if it wants to succeed.
Works Cited
Fiat Auto (2011). "Fiat increases its interest in Chrysler", Retrieved from: fiatspa.com. 25
May 2011.
Jennings, B. (2007). "Fiat centenary something to crow over", retrieved from www.drive.com.au
Pieper J. (2002). “Fiat Auto: The Italian Giant in Trouble”, The Independent.
Simpson, I. (2010). "Fiat shareholders approve corporate split", Reuters, 16 September 2010.
Szczesny, R. (2009). "Here Come the Fiats: Vrooom", The Times, 7 May 2009.
The Fiat Auto website: www.fiat.com
www.wikipedia.com
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