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Chrysler LLC

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Chrysler LLC ...

Chrysler LLC

    The Revival of a Dying American Car Brand Lauren Mary Gotimer, Graham Gottlieb, Brandon Millette &

    Adrian Wong

    MG 345

Chrysler LLC

    Table of Contents

    Industry Analysis - Automobiles ................................................................................................................... 3 Company Analysis Chrysler LLC .................................................................................................................. 4 Chrysler’s Culture ...................................................................................................................................... 8 Chrysler’s Stakeholders ............................................................................................................................. 9 Market effectiveness ................................................................................................................................ 9 Financial analysis ..................................................................................................................................... 10 Recommendations ...................................................................................................................................... 11 Appendix A .................................................................................................................................................. 13 Appendix B .................................................................................................................................................. 14 Appendix C .................................................................................................................................................. 15 Appendix D .................................................................................................................................................. 15 Appendix E .................................................................................................................................................. 15 Appendix F .................................................................................................................................................. 16 Appendix G .................................................................................................................................................. 16 Appendix H .................................................................................................................................................. 17 Endnotes …………………………………………………………………………………………………………………………………………… 17

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    Industry Analysis - Automobiles

     The automotive industry is made up of car companies that manufacture vehicles ranging from

    compact vehicles to large trucks. The industry consists of domestic and foreign companies. The domestic

    companies are known as the “Big Three”; it consists of GM, Ford, and Chrysler. The foreign companies

    consist of Toyota, Honda, Daimler, BMW, etc. The current state of the industry is marked with

    uncertainty due to the slowing economy and shifting trends. Daft identifies two ways how the external

    environment influences the company; they are the need for information about the environment and the ineed for resources from the environment. With changes happening within the industry, Chrysler will

    need to incorporate boundary-spanning roles to be more fluid and adaptable with the industry and

    external environment. These boundary-spanning roles link and coordinate Chrysler; key elements are

    the exchange of information to detect and bring into Chrysler information about changes in the iienvironment and send information into the environment that presents Chrysler in a favorable light.

     The Big Three have continually dominated the U.S. markets for many years. GM once garnered a

    dominating 47.7% market share in 1978, only muster a mere 23.8% by year end of 2006. Ford and

    Chrysler followed suit as their market share dropped from 43% combined in the 1990s to 30.3% in 2006. iiiOverall, the Big Three retained only 54.9% of the US market in 2006 compared to 63% in 2002. The

    balance of car sales in the US has switched over to foreign car companies. However, the light truck

    division is still dominated by the Big Three as the Big Three account for more than 67% of sales.

    Consumers’ wants are ever-changing and currently focus on fuel efficiency and technology.

    Amidst gasoline prices soaring (as discussed later), Americans began to abandon their large SUVs and

    pick-up trucks for smaller, more gas efficient cars. One type of gas efficient vehicles is a hybrid, which is

    an engine that consists of two types of propulsion: electricity and gasoline. The Toyota Prius, remodeled

    in 2004, is considered to be one of the most successful hybrids due to its timing with record-high

    gasoline prices and ability to capitalize on being first to market. Since the vehicle’s redesign, the Prius

    has been a strong demand and at times inventory was backlogged. With the success of the Prius, many

    other car companies looked for other alternative fuel supplies: ethanol, biodiesel, and hydrogen but

    none that compete with a hybrid. However, J.D. Power and Associates reports that there will be a 247% ivincrease in volume throughout the US between 2007-2011, resulting in other automakers either

    pushing for more R&D for hybrid technology or acquiring licensing from Toyota.

     Other trends involve the technology and safety of vehicles. Consumers now value vehicles for

    their technological capabilities. Consumers want more airbags standard in each car. In addition,

    consumers also want electronic damping controls that adjust shocks to increase stability for a

    comfortable ride and electronic stability programs mainly for SUVs to prevent them from rollovers. In

    the interior of the car, consumers are wooed with or by more information and entertainment systems,

    from navigation systems to satellite radio to DVD players.

     Sales are predicted to fall in 2007, with a lot of factors surrounding the credit crunch; rising oil

    and slumping housing reports. Standard & Poor projected that light vehicle sales volume would fall vabout 1.0% to 16.4 million units in 2007, down from 16.5 million in 2006. In an updated report, it is said

    that only 16.0 million units will be sold in 2007. Medium to heavy-duty trucks, which have done

    generally well in the domestic markets, reached a height of 545,000 units sold in 2006, up 26% two

    years ago, is reported to retreat back to 420,000 in 2007. The Big Three continue to struggle as they

    reorganize and revamp their product line as foreign car companies, particularly the Japanese, have

    gained in each year for the past decade or more. J.D. Power Automotive Forecasting predicts that the

    Big Three will continue to suffer in the short term but at a lower rate towards the end of 2007-2011 viforecast periods.

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     A contributing factor for sluggish car sales throughout the US is the rising of costs. A growing

    concern for the Big Three is increasing healthcare costs and pensions for unionized workers. In 2007, the

    Big Three created new contracts with the UAW (labor union for automotive workers). Union leaders

    understand that in order for the Big Three not to guarantee job security, a compromise to cut healthcare

    costs was necessary to reduce costs by billions of dollars.

     Raw materials also remain a pressing issue. With China’s GDP growing in double digit numbers and growing hunger for more raw materials (especially energy and metal), raw material costs remain

    very high and continue to climb. Automotive companies have already cited that these rising costs have

    cut into their first quarter profits in 2007. As of September 19, 2007, gas prices have reached a record of

    $82 per barrel, reaffirming the demand for fuel-efficient smaller vehicles and at the expense of SUVs and

    pickup trucks.

     Due to higher oil prices and the deteriorating environment in May 2007, the Senate approved

    an increase in fuel economy standards in automobiles from 25mpg to 35mpg by 2020. This legislation

    would then help raise standards 40% by 2020 and 4% thereafter until 2030. Although praised as an

    achievement to battle gas prices and global warming, it creates an additional financial burden for

    already embattled car companies to invest in fuel efficiency. Despite higher-than-expected costs, cars

    have been more affordable than in the past. In 1995, families needed 22.6 weeks to buy an average-vii. priced car compared to 20.5 weeks in 2006

     In the automotive industry, standard practices are common when it comes to design and

    manufacturing. In the past, it took five years for a new model go from a sketch to the production line-

    today it is cut down to two-three years. The Big Three is trying to streamline the business by employing

    “simultaneous engineering” – collaboration between engineers and designers during the design phase

    to minimize redesign work and therefore saving money. After each redesign, there is a 20% to 30%

    reduction rate in extra parts placed in a car; few parts equal lower production costs. When a car is ready

    for production, they are sent to a plant that operates three eight-hour shifts per 24 hours. Another cost

    saving method the automobile industry is implementing is being dependant on suppliers to develop

    better designs and engineering. Chrysler will need to better integrate their computer integrated

    manufacturing systems that will foster fast and efficient teamwork, adaptability, and flexible mass

    customizations.

    Company Analysis Chrysler LLC

    Chrysler LLC is an American automobile manufacturer that has been producing automobiles

    since 1925. During that era, Chrysler's goal, as written in their mission statement focused on consumer

    satisfaction: "Chrysler's primary goal is to achieve consumer satisfaction. We do it through engineering

    viiiexcellence, innovative products, high quality and superior service. And we do it as a team”. Chrysler

    has faced vast changes over the last decade, which forced them to create a new mission. Such changes

    include the merger with Daimler-Benz in 1998 and the sale of 80.1% of the company to Cerberus Capital Management in 2007. Due to these transformations, Chrysler’s new focus is to restructure and concentrate on long-term sustainability of the company.

    Currently, Chrysler is unstable because of new management and the industry itself. Some of the

    top car companies are losing money; therefore, they are now trying to create cars that are more fuel

    efficient to increase revenues. Due to factors in the environment, such as higher gas prices, Chrysler is

    investing in research and development to create cars that are more fuel efficient and that will ensure

    more stability for the company in the long run. In an article by Dee-Ann Durbin titled “Chrysler to Cut up

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    ix , it discusses plans to cut up to 15 percent of its workforce and cut four vehicle models to 12,000 Jobs”

    from its lineup. This article states, “the cuts come in addition to the 13,000 layoffs Chrysler announced

    xin February as part of a massive restructuring plan”. Also later stated in the article in reference to the elimination of four car models, Jim Press says, “These actions reflect our new customer-driven

    philosophy and allow us to focus our resources on new, more profitable and appealing products”. These

    quotes show how Chrysler is trying to reposition itself and make decisions that will positively impact the

    company in future years.

    In continuation, from Jim Press’s quote, another focus area is the needs and wants of the

    customer. Since gas prices continue to rise, the demand for more fuel efficient cars is greater. Hybrid

    cars are becoming more popular as the high gas price trend continues. Chrysler is implementing

    technology changes, which are “changes in an organization’s production process, including knowledge

    xiand skill base that enable distinctive competence”, to produce two new hybrid models in their lineup. This change also relates to product because these new models will hopefully increase market share and

    bring in new customers.

     Chrysler Group’s management team has been shaken up in the past couple of months due to

    Cerberus Capital Management buying out 80% of Chrysler from DaimlerChrysler in August 2007.

    Chrysler’s organizational design has a hybrid structure and vertical communication. The company is

    divided up by location and by department. There is a North America, Asia and Europe division and each

    of those divisions are then broken up by functions. While there are sometimes issues with this sort of

    divisional structure since it can sometimes be confusing as to who actually reports to whom, it does not

    pose a problem to Chrysler as everyone reports up the chain within their region and then the CEO of

    each region reports to the head management of Chrysler LLC. This structure works well for Chrysler, as it

    would for any automotive company, because it is important for the company to focus on the market in

    which it is selling its cars. By being divided up into three divisions based on location, Chrysler has been

    able to eliminate a large problem of people in Asia, Europe and North America all wanting different

    things from a car company. By dividing this way, each division only needs to understand the market in

    the continent they are working in, for Chrysler to be able to meet the needs of its customers. Also, by

    having the hybrid structure, Chrysler not only has people understand the market they are working in,

    but Chrysler is able to employ people who are proficient in each area of the business, i.e.; accounting,

    marketing, operations, etc., so the company can run as effectively and efficiently as possible.

    One of the first of many management changes made was that Robert Nardelli, former CEO of

    xiiHome Depot, was named Chairman and CEO of Chrysler LLC on August 4, 2007. Tom LaSorda, former

    CEO of Chrysler Group since September 2005, was demoted and renamed Vice-Chairman and Co-

    President of Chrysler LLC. He is in charge of the manufacturing side of Chrysler’s business. Jim Press left his position as COO of Toyota North America to become Vice-Chairman and Co-President of Chrysler LLC

    xiiias well. He is considered to be the head of sales and marketing for the company.

     Deborah Meyer was also hired away from Toyota Motor Corporation. She left her position as

    Vice President of Marketing for the Lexus division to become the Vice President and Chief Marketing

    xivOfficer at the end of August 2007. Jason Vines, who has been with the Chrysler Group since 2003,

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    keeps his job as the Vice President of Communications at the new Chrysler LLC. Phil Murtaugh was xv. appointed to the position of CEO of Asia Operations on September 7, 2007

    The new Senior VP & CFO of Chrysler LLC is Ronald E. Kolka, former Vice President - Corporate

    Finance of Chrysler. “The newly created CFO position adds to its reporting structure: Treasury, ITM, Tax

    xviand Audit. Kolka will report to Nardelli.” Former VP of Product, Procurement and Cost Management

    xviiFinance, Kim Harris Jones was appointed VP & Chief Controller. Former Director of Corporate Audit

    xviiiAmericas, Laurie A. Macaddino is appointed VP of Corporate Audit and Compliance. Former VP of

    Controlling and Finance DaimlerChrysler Financial Services Americas, Karla E. Middlebrooks, was named

    xixVP of Product, Procurement and Cost Management Finance. And former Chief Tax Counsel, Paul L.

    xxWolff, was named VP & Chief Tax Counsel. See Appendix A for a pictorial diagram of the management

    team of Chrysler LLC.

    Lastly, one of the most important people involved with the architecture of the Chrysler buyout

    deal is Wolfgang Bernhard. He was the former Chief Operating Officer at Chrysler from 2000 to 2004.

    After his stint at Chrysler, Bernhard was CEO of Volkswagen, A.G., and he is a current partner at

    Cerberus Capital Management. Bernhard is the liaison between Chrysler and Cerberus. Due to his

    separation agreement with Volkswagen, he cannot work directly for Chrysler as a result of a non-

    xxicompete clause.

     Chrysler employs a broad differentiation strategy. By having three different brands of cars,

    Chrysler, Dodge and Jeep, they are able to market to a very broad market and they focus their strategy

    on being unique, not low-cost. Daft states “in a differentiation strategy, organizations attempt to

    xxiidistinguish their products or services from others in the industry”, and this is exactly what Chrysler is trying to do. With Jeep, Chrysler focuses on marketing to a more outdoorsy type of market with cars

    built for off-roading and the ability to carry large loads both in and on top of the cars. Their Chrysler and

    Dodge lines of cars are also marketed with the focus on the versatility of each car. Also, Daft discusses

    how different strategies affect organization designs. He says, “organization design characteristics need

    to support the firm’s competitive approach. Chrysler is designed in a hybrid structure and their

    xxiiidifferentiation strategy is effective because of their ability to be ‘flexible’ and innovative.”

     Chrysler’s as an organization has fallen back to the collectivity stage of its life cycle with a new

    management team now in place. Chrysler was in the formalization stage already in which there was an

    xxiv“installation and use of rules, procedures, and control systems”, but the new management team made it fall back to the previous stage. Hopefully this new team of leaders can help Chrysler get back on

    track and keep the company growing. With all this new management, Chrysler will need to make sure

    everyone knows where they fall in the hierarchy of the company and what their new job truly entails.

    xxvWhile Chrysler is working on this, they will also need to “begin to develop clear goals and direction.”

    Once this is accomplished, Chrysler will move back to the formalization stage as the “top management

    becomes concerned with issues such as strategy and planning, and leaves the operations of the firm to

    xxvimiddle management.” When Chrysler reaches this stage, formalization within the organization at the

    lower end will not be drastically changed, if at all, due to the bureaucratic control of the company and

    the specificity already in place through contracts with the UAW.

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    In terms of size and structural control, Chrysler is a very large and regulated company. There is very high formalization because of the size of Chrysler. There are a lot of rules and regulations and

    explicit policy manuals which are well described and are in correlation with respect to standardizations

    across the entire industry. Job descriptions are also highly specific due to the UAW contracts which

    increase the level of formalization within Chrysler. This formalization results in a very vertical, top-down

    hierarchy where the management makes the decisions and the workers on the factory floor have very

    little ability to make decisions in how things are run. There are currently 45,000 UAW employees

    working for Chrysler along with 8,300 white collar and approximately 3,000 temporary employees at

    Corporate Chrysler. These numbers do not include the amount of people that work at the approximately

    3,700 Chrysler dealerships, and that number changes constantly.

    Chrysler uses bureaucratic control; they are specifically a rational-legal authority. “The primary xxvii This purpose of bureaucratic rules and procedures is to standardize and control employee behavior.”

    type of control works well for Chrysler because you need to report up the chain so a command can be

    issued as Chrysler believes only upper level management should make important decisions. Chryslers

    employs four of the subsystems of bureaucratic control; budgets, statistical reports, reward systems and

    operating procedures. Their current budget shows that they need to lower operating costs; therefore,

    xxviiixxixthey are laying off 13,000 people over three years and 1,500 white collar jobs. Chrysler uses

    quarterly statistical reports to see how production and sales in the company are progressing. Now that

    Cerberus owns Chrysler, these reports are not visible to the public but are still used within the company.

    Their reward systems are used to compensate upper management and salesmen receive commission.

    Their operating procedures have a high level of formalization. Everyone has a specific task to accomplish

    and there is little to no flexibility as Task A must be completed in order for Task B to occur and so on.

    Chrysler also employs some market control through model year-end price reductions, special financing rates, and special lease rates. This works for Chrysler, and other automotive companies,

    because price is an important factor to many customers when buying a new car. Depending on how

    much inventory is left towards the beginning of the summer, this determines the amount of price

    reduction ($5000 off any new current model), special financing such as 0% financing, and lease rates as

    low as $199 per month for a certain vehicle. Also, Chrysler emulates its competitors for market control.

    When GM had the “Employee Pricing for Everyone”, Chrysler created the “Employee Pricing Plus”

    xxxprogram.

    Chrysler currently does not have any clan control since it was recently sold to Cerberus Capital Management. There is a lack of “…corporate culture, shared values, commitment, traditions, and

    xxxibeliefs…” Chrysler and Cerberus are just starting to get to know each other. Also, Chrysler did not retain any traditions, shared values, corporate culture, etc. while it was merged with Daimler. The two

    companies did not work closely together until some of the more recent Chrysler models (new Jeep

    Grand Cherokee and Chrysler 300). In order for Chrysler to prosper in the future, Cerberus and Chrysler

    must work on together so that employees and dealers do not feel shafted by the new management

    regime.

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    Chrysler’s Culture

    “Get ready for the next 100 years.” This phrase is an implication and vision Chrysler envisions

    itself to create value, loyalty, commitment, and innovation. “Culture is the set of values, guiding beliefs,

    understandings, and ways of thinking that is shared by members of an organization and taught to new

    xxxiimembers as correct.” Chrysler seeks to provide a flexible external environment where it has the

    ability to quickly adjust to the environment while maintaining an internal stability to create consistency

    for the company.

    Adaptability culture is the “strategic focus on the external environment through flexibility and

    xxxiiichange to meet customer needs”. Due to the high demand from the industry, politics, and society for rapid change in taste amongst consumers, Chrysler has long strived to restructure its business model to

    fit high volatility. In the 1980-1990s, Chrysler created the QIP (quality imaging products) program. This

    program encouraged employees to be responsible for their own work but to respond to questioning of

    xxxiv“why” things were done in a certain way. Furthermore, in recent ads in 2007, Chrysler released their motto “Engineered beautifully” to transcribe their commitment to excellence and quality amongst their

    core brand and car-lineup. In addition, Chrysler has studied customer satisfaction trends and has

    implemented several initiatives to further enhance loyalty and commitment to servicing, such as the

    Chrysler forum, where Chrysler car owners can network with other Chrysler car owners and discuss

    similar interests. The “Chrysler experience” was created within Chrysler to appeal to car owner’s other

    interests, varying from food to song selection. A phenomenon has been the “Jeep Wave” that creates

    loyalty. It is described as below:

    The Jeep Wave: An honor bestowed upon those drivers with the superior intelligence, taste,

    class, and discomfort tolerance to own the ultimate vehicle - the Jeep: Generally consists of

    vigorous side-to-side motion of one or both hands, but may be modified to suit circumstances

    and locally accepted etiquette. Examples of commonly accepted modifications:

    ? Top off: One handed wave above windshield or outside body tub

    ? Top off during blizzard: Shiver and nod, hands may remain frozen to steering wheel xxxv? Southern/rural locations: Raise fingers from steering wheel, nod

    Bureaucratic culture has an internal focus and consistency orientation for a stable environment.

    Chrysler supports a methodical approach to doing business by sticking to its traditional symbols and rich

    history. The mission “get prepared for the next 100 years” is as much internal as it is external. It stands

    for the company’s commitment to become a viable competitive player in the industry and for its own

    workers. However, Chrysler also needs to strengthen its mission culture to clearly emphasize their vision,

    market share, sales growth, and profitability. One example is for Chrysler to develop specific cars for the

    trend shifts happening within the industry. The Pentastar is the symbolic trademark for Chrysler and its subsidiaries. It resembles in the words of Robert Stanley creator of the Pentastar as “something

    simple, a classic, dynamic but stable shape for a mark that would lend itself to a highly designed, styled

    product… basically, was a classic geometric form… It provides a certain tension and a dynamic

    xxxviquality.” A few stories help embody Chrysler’s rich history are as provided:

    - 1883: Three Musketeers - ZSB -- Walter Chrysler called the trio of talented engineers he

    brought to Willys-Overland from Studebaker Motors the Three Musketeers.

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    - 1940: The Jeep Story 1940 - 1970 -- In June 1940, the U.S. military informed automakers that

    it was looking for a light reconnaissance vehicle to replace the Army's motorcycle.

    - 1951: In 1951, Chrysler Corporation introduced its entry in the post-war horsepower race, a

    V-8 engine designed with hemispherical combustion chambers. Quickly dubbed the

    "HEMI?," its power and efficiency made it an instant favorite for all sorts of motor sport

    vehicles. xxxvii - The 1955 Chrysler C-300 model was America's first "Muscle Car."

    These artifacts and stories have helped propel Chrysler become one of the most recognized domestic

    car brand in the United States of past and modern era. And the company is reintroducing legendary

    name plates such as the 300C, Charger, and Challenger. It also recognized the consumer’s drive for

    social responsibility by introducing “Flex Fuel Vehicles” into the market and creating ultra-clean

    emissions engines that offers cleaner burning for cleaner air. Chrysler’s Stakeholders

     Chrysler LLC is very heavily reliant on its stakeholders, just as the stakeholders are dependent on

    Chrysler. They need their suppliers in order to get a cheap price on their raw materials so they can

    produce their cars. The main raw material suppliers they rely on are steel/alloy, rubber, cloth, leather

    plastic and glass. They are also heavily reliant on the UAW, which is the union for the workers in US auto

    factories that are responsible for helping to produce the vehicles. Chrysler also relies on Mopar, Sirius

    Satellite Radio, Boston Acoustics and Goodyear Tires for their products as they have partnerships with

    each company to only use their products in the cars they manufacture.

     In addition, Chrysler relies on Mercedes Benz, GM and BMW. Their dependence on GM and

    BMW are in the form of a joint venture to create a hybrid engine system that all three companies are

    working on producing together. Chrysler also relies on Mercedes Benz as Daimler still owns 20% of the

    company and many Chrysler cars are manufactured with their engines and safety features.

     Chrysler’s other main dependence is on the dealer network. Without the dealerships to sell their

    products, they would have no one to sell their products. Not only do the dealerships sell cars, but they

    also service all Chrysler models and use Mopar products to fix any problems a customer may be having

    with their cars. At the same time, dealers and customers are also heavily dependent on Chrysler. Both

    rely on Chrysler to produce high quality cars that will sell and do not need maintenance all the time.

    Chrysler’s dependence on their stakeholders has given the company little bargaining leverage with any

    of the stakeholders. Chrysler uses its legal department to ensure it follows all laws and regulations while

    the marketing and sales departments are use to ensure the customers are aware that Chrysler views

    their needs and wants as being of utmost importance. While this is not very attractive, Chrysler does not

    have any options to make it less reliant on their stakeholders as it is seen industry wide. (Appendix B

    has a Stakeholder Analysis Chart of all stakeholders of Chrysler LLC.)

    Market effectiveness

    xxxviiiMarket effectiveness is “the degree to which an organization dominates their market.

    Chrysler’s market effectiveness has not penetrated the auto industry market with a clear direction or

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    positive image. The car company’s main target market is generation X & Y (ages 18-28). In the past decade and more, Chrysler consistently missed its target audience that fits into their target market and

    mission statement. Two clear cut examples is the three-year $14 million deal with Celine Dion and the

    chairman of then Daimler-Chrysler to appear in car advertisement, fetching older audiences that would

    have been the target audience’s parents or grandparents. As the end result, Chrysler was only able to

    garner stagnant sales as imported auto brands reached a record high of 49.4 percent of U.S. sales in xxxix. However, Chrysler has had its own luck in January 2007 as Toyota gained 1.8% in one year in 2006

    retaining 12.8% market share due to Jeep’s increased sales as Chrysler’s flagship brand. While total U.S.

    auto sales were down 2.8% in 2007, Chrysler was down only 2.7% as sales of Jeep Wrangler went up

    xl71%. Nonetheless, Chrysler relied heavily on adding incentives to push cars off the dealer lot with an

    xliestimated $4,140 per vehicle sold compared to $2,899 per vehicle for GM.

    To start afresh, Chrysler hired former Lexus marketing exec Deborah Meyer to head its

    marketing segment with a new focus with clear and definitive goals. With over 80 percent of Chrysler’s

    brand product portfolio being new or redesigned, its marketing department plans on presenting them to

    “showcase that there is more behind the sheet metal and distinctive style…that every Chrysler possess

    xliiworld-class quality and engineering at an extraordinary value.” The Jeep brand will be delivered as

    freedom, adventure, mastery, authenticity and capability; the Dodge brand will represent full-of-life,

    street-smart people and strong self-expressiveness. Chrysler’s future market effectiveness will be determined by its ability to figure out how to penetrate and saturate global markets currently only 8%

    of sales and boosting online media outlets. Furthermore, its principles are clearer cut according to

    Chrysler’s Executive Vice President Joe Eberhardt:

    1. Clearly define your brand.

    2. Don’t try to be something you’re not.

    3. Take some risks.

    4. Stand behind your controversial decisions, if they make sense.

    xliii5. Have a strategy and execute, execute, execute.

    With a new focus, Chrysler has gone back to its grassroots, starting with branding as top engineering

    ingenuity and not selling discount cars. Some risks Chrysler’s taking are slashing dealerships and

    downsizing car models. Due to this decision, Chrysler will need to let go thousands of workers which has

    xlivcreated controversy with the labor union. However, in order for Chrysler to re-image their company image, it will need to re-stratgize (given in recommendations further in the paper) the company to

    regain effective design.

    Financial analysis

    Chrysler’s financial effectiveness has been extremely volatile in the past five years. Its revenue

    went from $62.6 billion in 2002 up to nearly $67 billion, but then tanked to $59.3 billion. Chrysler did

    make a revenue comeback in 2006 when revenue climbed back up to $62 billion. Just like the roller

    coaster of revenues, operating profits varied dramatically from year to year. In 2002, Chrysler had an

    operating profit of around $640 million, but the next year the company lost nearly the same amount. In

    2004, Chrysler operating profit soared over $1.93 billion, and dipped a little the next year to around

    $1.84 billion. Then the company hits its financial troubles in 2006 and suffered an operating loss of a

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