Fiat Auto: The Italian Giant in Trouble

Taking advantage of the easily available workforce and favorable social environment of Turin, Giovanni Agnelli made Turin a center for innovations, especially in the field of automobile manufacturing. Fiat's automobiles achieved instant popularity, not only in Italy, but also internationally. From the very beginning, Fiat followed a two-pronged growth strategy: penetration into foreign markets and focus on innovation. The focus on innovation resulted in the group's diversification into many different businesses over the decades. Giovanni Agnelli strengthened the production system of the group's automobile division and set up Lingotto, the biggest automotive complex in Europe. The project's objective was to make automobiles affordable to the common man.

After the death of Giovanni Agnelli in 1945, Vittorio Valletta (Valletta) his close associate and a key executive in Fiat, became the chairman. Under his leadership, Fiat entered an era of prosperity, which can largely be attributed to the growth of the mass car market in Italy during the 1950s. By the mid-1960s, Fiat was manufacturing over one million vehicles per annum and its annual sales amounted to over $1.5 billion. In 1966, Gianni Agnelli, the grandson of Giovanni Agnelli and the head of the Agnelli family, took over as the chairman. A firm believer in the 'American style of management', he fired many old managers and introduced assembly-line production in Fiat. Under his leadership, Fiat gave a lot of importance to strengthening operations outside Italy through mergers and alliances...