Fiat & GM Analyzing the Term Paper

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Considering that GM has acquired 20% of the Fiat Company, it can be mentioned the financial advantages gained by the Italian company, considering its decrease in the last years. As intangible resource, it may be mentioned that Fiat has increased its reputation on the market, on the basis of this alliance with GM. The possibility to reduce the cost and consequently to better compete on the market remains the most important intangible resource of the alliance.

The Value chain activities are the inbound logistics (receiving and warehousing the raw materials, and their distribution to the manufacturing), the operations (the processes of transforming inputs into finished products and services), outbound logistics (the warehousing and distribution of finished goods), marketing and sales (the identification of the customers needs and generation of sales) and service (the support of customers after the products and services are sold to them). Although, the two partners have initially thought in terms of common platforms in order to standardize the performance, in the final, they have decided to pursue only a "common architecture" which it means a differentiation on vehicles for the satisfaction of the need to customize brands. The two allies work on all vehicle segments, seeking the highest possible unification on all architecture, but developing specific solutions for the individual brands in order to obtain the desired performance in each brand, in accordance with the strategy of the GM-Fiat alliance that states: the two car producers are allied in costs but strong competitors in the marketplace. It can be concluded in this way that the operations, marketing & sale and the service remain the individual preoccupation of each company that will tend to use its competitive advantages to enhance their selling and profits.

Considering the purchasing function, it must be outlined that Fiat and GM have rationalized the purchasing activities through the establishment of a company named GM-Fiat Worldwide Purchasing B.V. The company's objective is to supply the manufacturing and assembly plants directly managed by Fiat Auto (plants in South Africa, Morocco, Egypt, India and China) and by General Motors in Europe and Latin America.

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This means that the inbound and outbound logistics tend to involve the both car producers, adopting some common strategies. In this sense, it can be outlined that the Fiat - GM alliance has its main competencies in the activities related to the inbound and outbound logistics.

6. It cannot be stated that the Fiat - GM alliance has a competitive advantage in the world auto industry in comparison with other mergers and acquisitions that have produced on this market. The possibility to benefit from the partner's market share and to reduce certain costs is among the classical advantages that are taken into consideration when one decides to form an alliance.

7. The objectives of the alliance are based on industrial consideration and focuses on cost reduction and product quality enhancement, which may be achieved though a centralized reorganization of the activities concerning the purchasing of parts and components. Furthermore, the alliance intends to develop new technologies and commonly use materials and components "under the skin" that do not affect the brands. It can be considered as a good beginning strategy, that it may be developed while the two partners know better and trust each other and obtain positive results.

8. The alliance between Fiat and General Motors has represented two joint ventures: the first focuses on purchasing activities and the second produces engines and gear equipment. From a technical point-of-view, it was a swap of shares, as GM has bought 20% shares in Fiat (2.4 billion euro) and the Italian company has obtained 5.1% of GM that is worth also 2.4 billion dollars.

It can not be stated that this alliance is a very successful one, which will bring enormous benefits to both companies, considering the tight competition on this market. Through this alliance, Fiat will consolidate or extend its position on the international market, whereas General Motors may improve the quality of its products, learning from the European partner. Recommendations for the two partners would be to maximum explore the benefices granted by this alliance and to find….....

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