Restructuring / Turnaround Strategies Case Study

Fiat Auto: Turning Around the Turnaround Strategies?

Abstract:
Fiat Auto, the $24 billion flagship company of Italy's largest industrial group Fabbrica Italiana Automobili Torino (FIAT), has accumulated $9.3 billion in net losses from 1999 to 2003, and the Fiat group is struggling to turnaround its auto business. Fiat was established in 1899 and the group's core business is automobile manufacturing. Over the years, Fiat Auto has produced some very popular passenger car models but the company's profits have been on a decline since 1995. The company's problems stem from inflexible production lines producing only one model, huge production overheads, and unyielding labour unions leading to constant government intervention and a lack of any research and development and innovation policy.

Pedagogical Objectives:

• To discuss the reasons for the decline of the company and the turnaround strategies that have been implemented since 1999
• To understand the various factors that have resulted in the failure of the turnaround strategies.

Keywords : Agnelli family; Diversification of the Fiat Group; Bankruptcy; Luca Di Montezemolo; Restructuring / Turnaround Strategies Case Study; Inflexible production lines; Dependence on single model; Government intervention; Turnaround efforts