Abstract

The case examines the problems faced by the Italy-based Fiat Auto, the flagship company of the Fiat Group (Fiat). Fiat diversified into various related and unrelated businesses and expanded its operations across the world through the years. Some of these expansion and diversification moves were not successful and resulted in huge debts for the group. As a result, Fiat Auto's financial condition deteriorated, forcing it to announce lay-offs and divest some of its businesses. Such moves led to employee agitation against the group. Fiat's financial crisis and its labor problems attracted government intervention, which further complicated matters for the group.The case examines how poor management, internal conflicts in the company and political intervention in the company's management, brought one of the most honored and reputed companies in the world to a sorry state. The case also takes a look at Fiat's future prospects in light of increased competition and the measures being taken to restructure the company.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• External environment and performance
• Diversification
• Failures in strategy.

Keywords

Problems, Italy, Fiat Auto, Fiat Group, operations, world, huge debts, group, financial condition, deteriorated, lay-offs, divest, businesses, employee agitation, labor problems, government intervention, poor management, internal conflicts, political intervention, honored, future prospects, increased competition