Summary of the article
This article is about the turnaround that has been experienced in Chrysler Automaker as a result of the innovative leadership approach by its CEO Sergio Marchionne. The innovative manager who also doubles up as the CEO of FIAT has effectively instituted measures that have ensured that Chrysler’s fortune in the competitive car market industry is rekindled after a period of bankruptcy. This article, therefore, presents Marchionne’s leadership style and illustrates how this has turned around Chrysler to the path of competitiveness and profitability.
Through the adoption of a centralized system of management, Marchionne has effectively managed to leave the door open to his subordinates and make the swift decision that underlines speed (Taylor, 2006). In a competitive industry such as the car industry, speed is an important ingredient that defines the capacity to smoke away from the competition. The transformational approach to leadership that this article presents as his style enables close interaction between himself and his top 25 executives at Chrysler. This has leveled the platform for fast decision-making processes in a manner that encourages innovation and growth. The results of these initiatives have been demonstrated in Chrysler’s ability to remain competitive and ward off competition from traditional competitors such as Honda (Verbeke, Bagozzi, & Farris, 2006). Alex Taylor, in this powerful article, the Speed Merchant has therefore presented a very powerful analysis of the successful leadership style that drives Chrysler.
Competitive Advantage
Most companies in the world of capitalism always want more (Gulati & Jason, 2000). They want more profit, more shareholder value, and more market share, among others and Chrysler has not been left out in this bracket. The realizations of these objectives have been attained through the successful initiation, development, and management of brands in most instances. Indeed, the effective development and management of brands has become a major priority for all organizations of all sizes in the different industries and markets and more significantly the car industry.
Several definitions of competitive advantage have been presented in the literature, but the most appropriate one in the context of this paper is the analysis of Chrysler one presented by Grant (2003) who asserts that “when two or more firms compete within the same market, one firm posses a competitive advantage over the rivals when it earns (or has the potential to earn) a persistently higher rate of profit.” In essence, this means that a firm that outperforms the others in the primary goal of performance-profitability has a competitive advantage (Lawson, 2001). A reference back to the branding generic model of firms can be made, where the question of whether firms are branding strategies is cost-driven or value-added arises. In the analysis of the article by Alex Taylor, Chrysler has achieved high levels of competitive advantage against other automakers because of the innovative leadership approach injected into the company by its CEO and the powerful presence of Chrysler Brand.
Goals
Two goals have been presented in this article. One important goal is the demonstration of the correlation between better management systems and the levels of organizational profitability. As has been stated, Marchionne’s innovative approach to leadership that combines both the aspects of speed in decision making and access to all subordinates combine to the realization of the goals of the company. The second goal of this article is to illustrate the level of competition that exists among car manufacturing industries. However, the article takes Chrysler as the point of argument in the analysis of the levels of competition.
Environment
The reason behind the great attachment of the environment in the core management issues of most companies is because consumers in the rest of the world are realizing the need for concerted environmental conservation efforts. In addition to the above, legislations that seek to govern better manufacturing practices that are sensitive to the environment have been on the rise in the recent past. Companies that have demonstrated the capacity to adopt these policies have been viewed by many as sensitive to the changing customer demands. Chrysler has entrenched a strict environmental policy in its manufacturing process that is aimed at staying sensitive to the current industry demands.
Furthermore, the market environment in which Chrysler operates demands has been described by most literature as most competitive. The industry is characterized by cut-throat competition that has been described as “car-wars”. To stay competitive, Chrysler has adopted cross-cutting measures that ensure its survival and competitiveness.
Resources
It can be discerned from the analysis of the article and other related literature that Chrysler has immense resources at its disposal for driving up competition. These include better management practices, availability of internal resources, and trained manpower capable of driving innovation through research.
Implementation
The process of implementation f these resources with the central view of achieving the goals and objectives of the company have been successfully attained through a transformational leadership style that begins from the top of the management ladder.
The Porter 5 forces
According to Porter’s 5 force industry model, the 5 forces are suppliers, potential entrants, substitutes, buyers, and industry competitors. The car industry that Chrysler finds itself in has been dominated by the five forces. The existence of potential suppliers within the car industry with strong position of sellers defines the competitive nature of this industry. This is characterized by high levels of bargaining power of suppliers. The threat of potential entrants within this market is not easy because of the existence of a number of barriers such overreliance on brand names by consumers. However, the existence of substitute car models that can be delivered at cheaper prices is very real in the market especially the threat posed by the global leader in the car industry – Toyota. The position of the buyer is very high with the ever increasing global consumption of products. Chrysler therefore has the capacity to grow its market share by taking advantage of the existing loopholes in buyer demographics. This industry constitutes very high competing industry players that pose real challenge to the growth and penetration of the Chrysler.
References
Grant, R. (2003). Contemporary Strategy Analysis: concepts, techniques, applications. Oxford: Blackwell publishing.
Gulati, R. and Jason, G. (2000). Get the Right Mix of Bricks & Clicks. Harvard Business Review, 2000, 107-114.
Lawson, K. (2001). Commercials That Name Competing Brands. Journal of Advertising Research, 16: 7-14.
Taylor, A. (September 6, 2006). Chrysler’s Speed Merchant. Fortune. 34-38.
Verbeke, W., Bagozzi, R. P., & Farris, P. (2006). Manufacturing, Retailing industry, Brands, Vendor supplier relations, Marketing, Distribution channels, Studies. European Journal of Marketing, 40, (5-6): 502-509..