EVMI as a technology is an opportunity; the challenge for Chrysler is to transform their supply chain into a support infrastructure that can fully make this opportunity realizable. Additional opportunities for the company include the continual improvement of their quality management and compliance systems so they will be able to exceed CAFE requirement and create alliances with the NTSA, EPA and California emissions boards (Campbell, 2007). For the EVMI project to gain any momentum it would need to have the support of these three governing bodies. For Chrysler to realize the potential of the EVMI initiative it must also seek to transform its new product introduction process into one that can capitalize on low costs (Ibusuki, 2005) while also embracing innovation. This organizationally will be a very significant challenge for the company yet one that when completed will yield significant results.
Threats
Clearly the global recession is the greatest threat to Chrysler from a strategic perspective, yet it becomes clear just how badly this industry is doing when the quarterly revenue and growth figures are analysed as shown in the following table. This is clearly a contracting, cost-challenged industry today.
U.S. Auto Industry Quarterly Revenue Growth
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
Quarterly Revenue $m
22825.0
21023.1
21124.8
21526.1
21857.6
22057.4
22101.5
22472.0
Real Revenue Growth
-15.7
-7.9
0.5
1.9
1.5
0.9
0.2
1.7
Source: (Ford Investor Relations, 2009, 10K & 10Q documents)
Additional weaknesses include the systematic failure at partnerships, especially in the EVMI area and the risk of the triad of partnerships so critical for the company to succeed not approving this new technology. There is also the risk of Fiat itself being acquired by Tata Motors or another Asian manufacturer who due to the robustness of those economies have liquidity today.
Recommendation
Given the contraction in the market and the long-shot risk of EVMI as a marketable technology given the current state of the company's supply chain, it makes the most sense for the New Chrysler LCC to continue rapid process re-engineering and cost reduction strategies (Welch, 2007) while collaborating with Fiat on small, entry-level fuel effiiceint cars for Asian nations including India and China, and other smaller economies in that region of the world. The failed partnership Chrysler had with Cherry, the Chinese auto manufacturer could be more attributed to cultural differences (Bennett, 2009). What Chrysler must do is cost-reduce its processes and seek to create more of an entry-level auto for 3rd world nations, using these sales to bolster development of the EVMI technology. It supply chain needs to recuperate and strengthen before any massive new electrical vehicle program is developed and launched.
References
Jeff Bennett. (2009, September 2). Car Makers Upbeat as Sales Rebound. Wall Street Journal (Eastern Edition), p. B.1.
Gillian Campbell. (2007, June). Big Changes for the Big Three? Quality, 46(6), 6.
Ford Motor Company, Investor Relations (2009). Ford Filings with the Securities and Exchange Commission. Retrieved September 1, 2009, from Ford Investor Relations Web site: http://finance.yahoo.com/q/sec?s=F
Hout, Thomas M. (1996). Time-based competition is not enough. Research Technology Management, 39(4), 15.
Roland, N. (2009, July). 430 GM, Chrysler suppliers get aid from government.
Automotive News, 83(6368), 8.
David Welch. (2007, April). BUYER BEWARE at CHRYSLER: Whoever buys the carmaker Daimler is ditching won't get a stand-alone company. Business Week,(4031), 34-36.
Michael Valenti. (2002). Building it better. Mechanical Engineering, 124(3), 54-57.
Appendices
Appendix a: ADJUSTED (CONSTANT) PRICES
2005
2006
2007
2008
2009
Industry Revenue
$97,449.3
$100,671.8
$98,684
$96,216.9
$86,499
$Mil
Industry Gross Product
$11,198.1
$11,184.8
$10,970.4
$9,705.4
$7,352.4
$Mil
Number of Establishments
Units
Number of Enterprises
Units
Employment
71,479
74,335
70,175
66,068
57,365
Units
Exports
$11,198.6
$14,347.6
$16,835.5
$18,358.2
$15,993.7
$Mil
Imports
$74,454.2
$78,659.5
$76,094
$74,100.4
69,898.8
$Mil
Total Wages
$5,903.5
$5,718
$5,694.7
$5,375.6
$4,757.4
$Mil
Domestic Demand
$160,704.9
$164,983.7
$157,942.6
$151,959.1
$140,404.1
$Mil
Car Production
4,321,272
4,366,996
3,924,268
3,787,775
2,958,252
Units
APPENDIX B: REAL GROWTH
2005
2006
2007
2008
2009
Industry Revenue
-1.5
3.3
-2.0
-2.5
-10.1
Industry Gross Product
2.4
-0.1
-1.9
-11.5
-24.2
Number of Establishments
-1.6
0.6
-3.3
-5.1
-10.2
Number of Enterprises
-1.2
0.6
-3.0
-4.9
-10.4
Employment
-3.9
4.0
-5.6
-5.9
-13.2
Exports
15.1
28.1
17.3
9.0
-12.9
Imports
-1.3
5.6
-3.3
-2.6
-5.7
Total Wages
-2.3
-3.1
-0.4
-5.6
-11.5
Domestic Demand
-2.4
2.7
-4.3
-3.8
-7.6
APPENDIX C: RATIO TABLE
2005
2006
2007
2008
2009
Imports share of Domestic Demand
46.33
47.68
48.18
48.76
49.78
Exports Share of Revenue
11.49
14.25
17.06
19.08
18.49
Average Revenue per Employee
$1.36
$1.35
$1.41
$1.46
$1.51
$Mil
Wages and Salaries Share of Revenue
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