CMSE11097 Corporate Strategy

Fiat’s current situation in India

Fiat Automobiles is considered as an Italian automobile manufacturer, which is popular due to their range of premium products in the market. The brand operates in the automotive sector across the world and at present, the firm has implemented wide range of business strategies that can enable this business to enhance the customer base. Study shows that the concerned brand or Fiat have focussed on implementing joint venture with the Tata Motors (Olabi, Wilberforce and Abdelkareem 2021). Other than that, they have also developed plans to establish new models in the nearby future.

At present, the automotive industry in India is analysed to become world third largest automotive market with respect to volume by the fiscal year of 2026 (Olabi, Wilberforce and Abdelkareem 2021). On the other hand, the market situation of Fiat is studied to be developing to a huge extent and their output rate is comparatively higher under Fiat standards. Specifically, the average output growth rate under the Fiat standards is estimated to be 3.53% each year whereas, under commodity standards, the firm is estimated to gain a growth rate of 2.55% per year (Olabi, Wilberforce and Abdelkareem 2021). According to their annual reports, it has been studied that in 2020, the Fiat has been observed to grow by 3.4% as compared to 2019. Further, the brand has also achieved the rank holder for best market share in 2020 at 19.3% (Mayrhofer 2021).

Business opportunity in India. Analysis of Fiat

Fiat is studied to be faced with potential challenge in India due to lack of infrastructure and technological advancement in the business (Olabi, Wilberforce and Abdelkareem 2021). In addition to that, the company has faced with major economic losses in the market due to presence of stiff competition in the market. Study shows that presence of market competition results in potential challenge for a firm that might cause major setbacks both in short as well as in the long run. Thus, it can be said that the business opportunity for Fiat is huge, which might positively influence the brand to gain a competitive advantage.

The automobile industry in India is valued to be more than 23 billion dollars in 2006, which further underwent major evolution that improved the overall sales (Delic and Eyers 2020). Studying both the present as well as forecasted market demand, it can be analysed that Fiat might need to develop partnership with other automobile firm for expanding their customer base as well as for retaining the overall profit margin. It has been studied that developing partnership in business assists a firm to gain competitive advantage from the market (Olabi, Wilberforce and Abdelkareem 2021).   

Evaluation of Fiat and Tata partnership

Fiat is studied to be one of the popular Italian brands that became one of the largest car makers and it is also known to be the nation’s dominant industrial groups. From various studies, it can be analysed that Fiat has been able to increase 49.3% of their net revenues in automobile and 20.3% in agricultural & construction equipment (Olabi, Wilberforce and Abdelkareem 2021). On the other hand, Tata Group is India’s biggest conglomerates with ownership in major product and service line. Hence, in order to expand the customer base of Fiat, they should be focused on developing partnership with the Tata Motors. On the other hand, it can also be studied that the mission statement of these two brands (Fiat and Tata Group) are highly similar due to which, they might be able to improve their sales in the market (Tripathi and Kumar 2020).

Challenges in strategic alliance

It has been studied that Fiat along with GM signed an agreement for exchanging 20% on Fiat Automobiles with the 5.1% of GM shares where both the company is valued to be at 2.4 billion dollars (Olabi, Wilberforce and Abdelkareem 2021). However, the firm has faced major challenges in the market due to increase in costs. It has been studied that the firm might witness huge challenges because of their development and manufacturing issue. Strategic alliance is termed as an essential component in a business (Tjemkes, Vos and Burgers 2017). However, lack of appropriate corporate culture and presence of rivalries among companies might result in potential drawbacks to the firm thereby resulting in economic losses. Therefore, if a firm lacks appropriate planning, then they will be faced with major challenge that might reduce the overall effectiveness in its execution (Russo and Cesarani 2017).

References

Delic, M. and Eyers, D.R., 2020. The effect of additive manufacturing adoption on supply chain flexibility and performance: An empirical analysis from the automotive industry. International Journal of Production Economics, 228, p.107689

Mayrhofer, U., 2021. Stellantis: the PSA-Fiat Chrysler merger [Stellantis: la fusion PSA-Fiat Chrysler] (No. halshs-03145118).

Olabi, A.G., Wilberforce, T. and Abdelkareem, M.A., 2021. Fuel cell application in the automotive industry and future perspective. Energy, 214, p.118955.

Russo, M. and Cesarani, M., 2017. Strategic alliance success factors: A literature review on alliance lifecycle. International Journal of Business Administration, 8(3), pp.1-9.

Tjemkes, B., Vos, P. and Burgers, K., 2017. Strategic alliance management. Routledge.

Tripathi, R. and Kumar, A., 2020. Humanistic leadership in the Tata group: the synergy in personal values, organisational strategy and national cultural ethos. Cross Cultural & Strategic Management.

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