Chrysler Case

In: Business and Management

Submitted By liliasnava
Words 969
Pages 4
Case Studies in Finance
Case 5: Chrysler

Ratio Analysis Before Chysler merged to become DaimlerChrysler AG, they were presented with a takeover bid of $55 per share by MGM billionaire Kirk Kerkorian and former Chrysler chairman Lee Iacocca. Kirk Kerkorian was a stockholder in Chrysler and an experienced takeover financier who apparently found Chrysler to be a good buy. Chrysler rejected the offer, however, stating that the firm was not for sale. Further, many Wall Street experts felt that Kerkorian could not come up with the $20 billion necessary to complete the deal.
After Chrysler rejected Kirk Kerkorian's bid of $55 per share, Kerkorian decided to have his people repeat the analysis of the firm's financial performance over the two most recent years to determine if he should increase his bid in this friendly takeover attempt. To measure the financial performance of Chrysler over the past two years, key financial ratios will have to be computed and compared with industry averages. To help in this endeavor, Chrysler's financial statements are found on the following pages.
Chrysler Corporation's Balance Sheet for the year ending December 31 (in millions) This Last year year
Current Assets Cash and cash equivalents $ 5,543 $ 5,145 Marketable securities $ 2,582 $ 3,226 Accounts receivable $ 2,003 $ 1,695 Inventories $ 4,448 $ 3,356 Prepaid taxes $ 985 $ 1,330 Finance receivables $13,623 $12,433 Total Current Assets $29,184 $27,185
Property & equipment $20,468 $18,281
Less: Accumulated Depreciation $ 7,873 $ 7,208 Net Plant & Equipment $12,595 $11,073…...

Similar Documents

Case Study – Chrysler-Fiat Strategic Alliance

...Case Study – Chrysler-Fiat Strategic Alliance 1. What are your views of the 2009 Chrysler-Fiat strategic alliance and its future prospects in the auto industry? * According to me, the alliance is good both for Chrysler and fiat. Fiat can take care of the technology of Chrysler. It can have fiats well-developed distribution network in European market. Fiat will have the advantage of North American market. Combined production capacity will bring profits. * They also have problems in many aspects. Different corporate culture Mismatch of brands Regulatory issues 2. Analyze and evaluate Chrysler and Fiat’s strengths and weaknesses before and after their 2009 strategic alliance (see Table II and III). Fiat | Strengths | Weakness | Before Alliance | * Fiat acquires Lancia and 50% of Italian icon Ferrari. * Fiat became the largest automaker in Europe by acquiring Alfa Romeo from the Italian government. * Fiat hires Sergio Marchionne to become its CEO * Fiat was the largest automaker in Europe. | * Fiat had labor strikes and assembly line problems. * Took off jobs of many employees. | AfterAlliance | * Fiat have the advantage of getting new technology * Large distribution network in Europe and North America. | * Labor union problems * Ownership problems | Chrysler | Strengths | Weakness | Before Alliance | * Chrysler had a market share of 12.5% in U.S in 2008. * The company was a big player in North America in mini...

Words: 492 - Pages: 2


...“Chrysler in Trouble” Synopsis: In 2008, the United States economy experienced some major down turn. Banks ceased lending, there were problems in the real estate markets, there was a rise in unemployment, and there was a decrease in personal spending among consumers. The United States car industry was affected tremendously. Consumers found it difficult to get an auto loan and that the actual financing was too expensive. The auto industry had its worse year since 1992 in 2008. There was an 18% decrease since 2007. Chrysler’s market was restricted to the United States and since the crisis started there, Chrysler’s sales were affected greatly. Chrysler found it hard to carry its own business. Chrysler Motors, LLC was the third largest automobile manufacturer in the United States who filed for bankruptcy protection on April 30, 2009, under section 363 of chapter 11 of the bankruptcy code. The company included its 24 subsidiaries in the filing. In order to remain viable and as a condition of the bankruptcy filing, Chrysler announced that it would form an alliance with Fiat SpA. Fiat was scheduled to receive a 20% stake in the company and it would increase to 35% over time. The Voluntary Employees Benefit Association would secure a 55% stake in the company once it emerged from bankruptcy. The United States Treasury would also participate in the restructuring of the company since they considered Chrysler an integral part of the United States economy and for their...

Words: 1722 - Pages: 7

Chrysler Tqm

...Term project Operation Management CHRYSLER: [pic] Total Quality Management Submitted to Dr. Chafik Abid CONTENTS -Introduction…………………………………………………. -Chrysler Total Quality management………………………. -Chrysler SWOT Analysis…………………………………… -Chrysler service Quality…………………………………….. -Chrysler service and dealership Problems (Middle East)… -Chrysler Service solution……………………………………. -Conclusion……………………………………………………. -Work Cited…………………………………………………… INTRODUCTION: DaimlerChrysler AG with its businesses Mercedes-Benz Cars, Daimler Trucks, Daimler Financial Services, Mercedes-Benz Vans and Daimler Buses, is a globally leading producer of premium passenger cars and the largest manufacturer of commercial vehicles in the world. As it can be seen above that the integration of the two different companies with similar line of production makes the company stronger, reliable, and caters the best for its customer needs and satisfactions. As a result, we chose this company to discuss further on its Total Quality Management and other related issues. Total Quality Management is a set of management practices throughout the organization, geared to ensure the organization consistently meets or exceeds customer requirements. TQM places strong focus on process measurement and controls as means of continuous improvement. TQM views an organization as a collection of processes. It maintains that organizations must strive to continuously improve these processes by incorporating the......

Words: 2668 - Pages: 11


...Chrysler The company I selected to research is Chrysler. My husband drives a Dodge Ram and I drive a Dodge Journey, so I was intrigued to write about a company that my husband and I support. In the following business brief, I will inform you of Chrysler’s history, the industry, and the organizational structure. History Chrysler was founded in 1925. The company was founded by Walter P. Chrysler in Detroit. In 1928, Chrysler bought Dodge Brothers and also Plymouth and DeSoto Lines. The same year, Walter P. Chrysler was named Man of the Year (Wilson, 2011). In 1934, Chrysler introduced the first aerodynamically designed vehicle. They were praised for the forward design, but the commercial was a failure. In 1940, Walter P. Chrysler died. From 1942 to 1945 the Chrysler plant was shut down due to World War II, so the plant made Sherman tanks and other military vehicles (Wilson, 2011). In 1973 the first OPEC oil embargo drives up gas prices, which devastated full-size car sales (Wilson, 2011). In 1979, Chrysler was saved by Congress and President Carter from bankruptcy, and the following year the President signed the Chrysler Loan Guarantee Act, providing $1.5 billion in loan guarantees. In 1983, sales soar as Chrysler introduced the first minivan and fuel efficient cars they called K-cars. This enabled Chrysler to pay off their government loan seven years early. In 1987, Chrysler bought American Motors Corp, which gave them possession of the Jeep brand. In 1998...

Words: 590 - Pages: 3


...Walter P. Chrysler established Chrysler in the 1920’s. He teamed up with Carl Breer, Fred Zeder and Owen Skelton to provide people with an affordable luxury vehicle, in 1924, called the “Chrysler Six.” Their first car was equipped with several different options designed for top-flight engineering. Some of these options were not available yet with other auto companies giving them the upper hand in the industry. In just ten years time the company earned the leadership label of Detroit’s “engineering company.” The creation of the well-known engine HEMI, in 1951, showed great success in development for Chrysler. In 1955, Chrysler started changing the design of their cars, and this change created the Chrysler 300. This car ended up being the first muscle car. Setting several different records the 300 was the most powerful and fastest car on the market in America at that time. By 1965 the sales for Chrysler had increased a significant 65 percent. Chrysler also moved up in national rankings from eleventh place to ninth. In the 70’s Chrysler saw the need for smaller cars. In this era they created some of the most memorable cars on the market. As of today with all of our new technology Chrysler has continued to innovate several memorable models. They redesigned the Chrysler 300 in 2005 and that was a major boost in the market for Chrysler along with the creation of the PT Cruiser and the Town & Country. Chrysler has recently teamed up with the FIAT Group, and this has helped them......

Words: 267 - Pages: 2


...| | | Chrysler and General Motors | | Chrysler and GM Chrysler is a car manufacture created by Walter Chrysler during June 6, 1925 when the Maxwell Motor Company was re-organized into the Chrysler Corporation. It happened because in the early 1920s the Maxwell Chalmers Company were having troubled with their operation which made the company to end in 1923 and one year later Chrysler had launched the eponymous automobile which was referred as the 70’s. This vehicle was a 6-cylinder, designed to provide customers with an advanced, which was also a well-engineered vehicle, at a more affordable price than they thought. In the summer of 2009 Chrysler has filled for bankruptcies. In 2011 Chrysler has a 10.5% in the market. It is in the fourth position while GM is first, Ford is Second, and Toyota is third. This company is doing badly because their new products are not to the customer satisfaction. (Chrysler) GM is another car manufacturer which was located at Flint, Michigan. It was created on September 16, 1908 by William C. Durant and the GM's co-founder Charles Stewart Mott but it was originally owned by Buick as a holding company. During 1909, Durant had brought Cadillac, Elmore, Oakland and several others vehicles cooperation. In 1910 Durant had lost control of his company GM to a banker trust because of all the large debt he had due to the collapse of the new vehicles sales. GM in 2009 had filled for Bankruptcies but since their stock has increased and...

Words: 1046 - Pages: 5

Case 7 : 2009 Chrysler-Fiat

...1. While this was not the most ideal situation for Chrysler, I think the alliance with Fiat was a necessity. Chrysler had a tremendous loss in profits, had to lay off many workers, and was going to have to file for bankruptcy. This was a great option to help them stay afloat and get help from an outside source. Obviously for Fiat this was a good move. They did take a risk since Chrysler was going into bankruptcy, but they were able to acquire it for a reasonable price and also help themselves to re-enter into North America with a company that already had a solid market share. Fiat most recently purchased the 41% of Chrysler they did not own. The company is definitely on the upswing and will be able to better compete with GM and Ford. 2. Before 2009 strategic alliance: Chrysler – Strengths of Chrysler were they have a strong brand name and recognition within North America. In addition, their Jeep and minivan lines are very popular. They were one of the top three recognized auto brands in North America. Weaknesses were there was no presence in overseas in Europe, they were going into bankruptcy, and their de-merger with DaimlerChrysler hurt them financially. They also remained behind the other manufactures for quality and satisfaction with consumers and had little or no sub-compact cars. Fiat – Strengths of Fiat were they had reinvented themselves overseas in the European markets and are one of the most visible brands of small brand cars in Europe and quality is......

Words: 838 - Pages: 4

Case Study: the 2009 Chrysler-Fiat Strategic Alliance

...views of the 2009 Chrysler-Fiat strategic alliance and its future prospects in the auto industry? The alignment between Fiat and Chrysler does not exactly save Chrysler. It gives Fiat an entry into the U.S. In short, Fiat is to get 35% of Chrysler, will not pay any cash for the stake, and it will give Chrysler access to its technology. Fiat had publicly said it wanted a production base in North America for its Alfa Romeo brand--and presumably the Fiat brand, too. Through its35% interest that it is getting in Chrysler, it would presumably have access to a U.S. plant to build its cars. The case is intended to have students look at the 2009 Chrysler-Fiat strategic alliance, its current issues, and future viability in the global auto industry. The new landscape of the American auto industry and the role of Fiat is analyzed in the cross-border tie-up. After de-merging with Daimler in 2007, Chrysler did not do well because of the 2008-2009 global financial crises and its bankruptcy filing. Chrysler’s other problems included its financial constraints and heightened competition in North America. The company had no choice but to look for a partner. During this process, Chrysler explored the possibility of a tie-up with GM, Ford, Volkswagen, Tata Motors, Nissan and Fiat. Eventually Chrysler decided on creating a strategic alliance where Fiat agreed on taking a 20 percent stake in Chrysler. In the next five years, the tie-up may increase Fiat’s ownership of Chrysler to 35 percent.......

Words: 1088 - Pages: 5

Daimler Chrysler Case Analysis

...Travis McPhail MGMT 4390 Spring 2015 Dr. Jones Case Analysis: DaimlerChrysler In the case “DaimlerChrysler: Post-Merger News”, DaimlerChrysler is facing the strategic issue of figuring out how to bring together the two cultural differences between Daimler-Benz AG and the Chrysler Corporation that would create a positive and profitable synergy for DaimlerChrysler as a whole, while regaining stockholders trust. As the post-merger integration process accelerates, they need to identify opportunities to increase sales, reduce purchasing costs, and create new markets for DaimlerChrysler. DaimlerChrysler internal environment, the company went through many changes post-merger. Starting with the creation of the “Dream Team” in 1998, resignations of key members of the dream team led to a two-tiered board system: the supervisory board and the board of management. There was apparent unrest among top executives and a growing chasm between the Americans and Germans due to differences in management styles, processes, cultures and work styles. DaimlerChrysler implemented a variety of exchange programs designed to help the two companies meld an understanding of the cultural differences between the two and their respective countries. They created the Automotive Council, which allowed the sharing of innovation, knowledge, technologies and ideas between the two companies to drive future product integration. They also created the Executive Automotive Committee (EAC) which worked towards...

Words: 733 - Pages: 3

Chrysler Case Study

...In order to persist in a competitive market, corporations must make profit. The basic structure of all interactions under competitive conditions can be a Catch-22 (McGrath, 1984). There will always be mutual and contradictory interests at the same time. Chrysler Corporation had common economic interest, however they had conflicting cultural and moral views. In order to create value in and for organizations, it is sometimes effective to focus on expanding options, creating new ideas, self-organizing, and collaborative learning. Executive Chief Sergio Marchionne put a great deal of emphasis on changing the corporate culture at Chrysler. One way to assess his vision for Chrysler’s new culture is to classify it using the competing values framework (CVF). CVF provides a practical way for managers to understand, measure, and change organizational culture. The four basic types of culture include clan, adhocracy, hierarchy, and market (Kreitner & Kinicki 2013). As is the case with Chrysler, organizations may possess characteristics of each type, but they generally have one that is more dominant. At first glance it appears that Chrysler’s functions under a market culture; “a market culture has a strong external focus and values stability and control (Kreitner & Kinicki 2013).” It is clear that the primary goal of Marchionne was profitability, giving the company an external position. Secondly, Marchionne implemented change by his reaction to incidents and organizational......

Words: 532 - Pages: 3

Chrysler Case

...CHRYSLER’S WARRANTS: SEPTEMBER 1983 (Written Analysis of Case) I. Statement of the Problem With Chrysler’s rapid recovery, exceeding profit expectations and increasing negative market factor resiliency, is the request to return its warrants held by government at no cost valid and justifiable? II. Objectives 1. Value the Chrysler warrants held by the government. 2. Determine the factors that affected the value of warrants over time. 3. Determine if the government’s guarantee is overpriced or underpriced. 4. Determine Chrysler’s bid price taking into account all the risks the government had run. 5. State a well-defined, reasonable, and accurate justification to support Chrysler’s claim. III. Areas of Consideration 1. The government’s warrant of Chrysler saved the company from a financial tragedy. 2. The impact on the federal budget of a Chrysler failure would be greater than the cost of assistance. 3. A Chrysler failure would disproportionately affect a city and a region that already had substantial economic problems. 4. Failure of Chrysler would lead to either greater monopoly power by surviving US firms, or worsening balance of payments as foreign producers captured increase US market share. 5. In the long term forecast, Chrysler actually has an increasing demand. 6. Common Stock Warrants 7. Chrysler requested from the government to surrender the warrants at little or no cost. 8. Lee Iacocca, CEO of Chrysler, stated that the government’s money......

Words: 1551 - Pages: 7


...kommunikationsanalyse * Retoriskanalyse (appelformer?) * Altid spørg hvorfor har de gjort det? Under vurderingen: * Analyser appelformer og brug dem (retoriskanalyse) * Inddrag måskenoget om virksomhedens uafhængige omverden som er et led under omverdensmodellen dette gøres for at finde frem til kulturen. * Kapitel 15/16 markedsføringsplan (afsætning) Valgt Chrysler som firma Følgende reklame: * Der henvises meget til USA * Bob Dylan * Efter 0:40 siger han noget med at USA var de første og at det var dem der inspirerede alle andre - amerikaner kultur? * ”Cars made America” - amerikanerne stolte af deres biler det er en del af dem og en ting de går meget op i, bruger dem til udadtil at vise sig selv frem * Referes til det der med at lave det aller bedste kræver hårdt arbejde - hårdt arbejde og god kvalitet hænger sammen i USA * Hele reklamen henvender sig til Amerikansk kultur - rodeo, bar (det der bliver sagt) SRO - vejledning. (hvad skal vi) * Find problemformulerin 1. Redegør for Bil-branchen i USA. Analyserer Chryslers reklamekampagne fra super bowl i 2014. Vurder kommunikation i forhold til den amerikanske bilkultur....

Words: 254 - Pages: 2

Chrysler Daimler Harvard Business School Case Study

...Chrysler & DaimlerAcquisition-Merger Case Study | | Situation faced by company After facing some hardships and bad acquisitions in the 80s and 90s, Daimler-Benz led by Jurgen Schrempp began to see the light in the mid-90s. By focusing on the most profitable businesses within Daimler and reducing the number of businesses at Daimler from 35 to 23, Shrempp was able to post high profits in 1996 and 1997 despite the poor looking financials in the previous years. In order to remain profitable in this highly competitive market, Shrempp knew that the company had to continue to grow. They needed to reach customers down market without compromising their high-quality brand. To do this, they began selling vehicles to the market’s premium niches and were quite successful. Along with broadening their product offering, they were becoming more and more international with their production because of the high amount of revenues being generated internationally. Schrempp knew that these steps would only keep them competitive for so long though. With the nature and frequency of alliances and mergers in the automotive industry becoming more and more frequent, he knew that to keep up with the changing industry and increased time and cost pressures, he had to take another step in order to not fall behind the competition. SWOT analysis Daimler-Benz | Strengths * Attention to detail * Brand image * Engineering * Global distribution network | Weaknesses * High-cost &......

Words: 5532 - Pages: 23

Daimler Chrysler Case Study

...The merger between Chrysler, the smallest yet most efficient US auto maker with Daimler’s legendary Mercedes-Benz was supposed to be a match made in Heaven. However, Chrysler’s management expectations were quickly erased as CEO Juergen Schrempp of Daimler never intended equality in running the new acquisition. Within the first year, it became apparent that Chrysler had become a division of Daimler - a point Schrempp verified in interviews with the media. Schrempp’s attempts at boosting Chrysler’s sales had flopped; the company experienced huge losses and Schrempp began to send his orders though his German assistant Deiter Zetsche, who was at least able to make some positive progress. However, with no input from Chrysler executives once again, Schrempp made another huge deal by acquiring 34% of Mistubishi Motors, which had been losing money as well. Schrempp also refused to meet with the 3rd largest holder of Daimler/Chrysler stock Kirk Kokorain to explain how he intended to turn the company around, most likely as a result of a clash of cultures, different nationalities, the German focus on hierarchy, or. order and planning. No turnarounds had been made and in 2006, Chrysler posted a 3rd quarter loss of $1.5 billion and it became apparent that Daimler would sell off Chrysler. The merger was over. The underlying intentions of Jurgen Schrempp to never accept the Chrysler merger as an equal should be considered unethical because of his attempts to take advantage of a smaller......

Words: 1404 - Pages: 6


...Lee Iacocca Chrysler Turnaround Rodger Strother Keller Graduate School of Management Executive Summary Chrysler was founded by Walter Chrysler on June 6, 1925 when the Maxwell Motor Company (established 1904) was re-organized into the Chrysler Corporation. Walter Chrysler has arrived at the Maxwell organization in the early 1920’s and launched the Chrysler vehicle. This new vehicle had six cylinders with advanced engineering and was more affordable. This vehicle included (new at the time) air filter for carburetor, a high compression engine, full pressure lubrication. Among the new innovations at the time was the fact that it was the first mass produced practical four wheel hydraulic brakes and rubber engine mounts to reduce vibrations. It was during the early 1920’s that Walter Chrysler assumed the presidency of Maxwell and the company incorporated under the Chrysler name. From the company’s conception the Chrysler name continued down the path of continued growth and acquisitions of various and numerous brands that would in the years be associated with the Chrysler name. Dodge, Plymouth, AMC, DeSoto and various others over the years. The years following the Second World War with the restraint on consumer goods lifted there was an increase demand for automobiles. Vehicles steadily became more reliable and the implementation of interstate highway plans with more paved roads this attracted more motorist. This resulted in an overall expansion of the automotive......

Words: 4227 - Pages: 17