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Autocratic Success in the American Car Industry

The automobile industry has always played a substantial role in the economics of any modern country. It provides thousands of people with workplaces, and its products are invaluable in the daily life of an ordinary citizen. However, it is impossible to ignore the fact that their products are expensive and are directly tied to the customer’s purchasing power. In times of economic crises, people prioritize saving money for things of immediate necessity like food, medicine, and insurance but not brand new car models. The volatility of the car industry market has led several companies to bankruptcy, and American Chrysler was on the verge of extinction in 2009 following the events of the financial crisis of 2007. This particular company managed to stay in business; however, owing to Sergio Marchionne, a new CEO that, despite the risks, managed to keep it afloat. It is necessary to examine how strong leadership and an unorthodox approach to management can save a company.

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Perhaps the most noticeable change was leadership style and the company’s hierarchy. Sergio Marchionne was an autocratic man who wanted to maintain control of the dying business. He had previously saved his own company, Fiat, from bankruptcy and was willing to do the same for Chrysler. Such experience proved to be invaluable in reforming Chrysler’s inner structure to make it face the challenges of the financial crisis. He was known as a man who would take the most direct approach in solving urgent problems as well as someone ruthless during negotiations.

Buying Chrysler was a risky decision on the part of Fiat, but Sergio Marchionne saw the opportunity and took it. He stated that both companies had gone through hell, and it united them. He also mentioned that even though there was no competition while he was buying the company, it also meant that it was undesirable (CBS News, 2012). Many other manufacturers saw Chrysler as financial ruin. This decision involved all sorts of risks and could bring an end to Chrysler, and

potentially become a complete waste of resources on Fiat’s behalf. Substantial sums of money were spent on modernizing the equipment of the company’s plants to increase the quality of cars. Some may argue that such investments are unjustified, but Sergio Marchionne thought otherwise. He often described two companies as two sides of a single coin. Fiat was focused on making small cars with fuel-efficient engines, while Chrysler gained its success producing trucks, minivans, and jeeps. Combining two technologies may have yielded profitable results.

Reforming the company’s management was the most crucial decision that the new CEO had to make. In 2009, it resembled a bureaucratic hierarchy severely disconnected from the working force. The plan was to get rid of the old system and replace it with a new one. Sergio Marchionne has promoted 26 specialists that would answer directly to him, and surprisingly the majority of these workers were not members of the former management structure. Rather they were talented engineers and manufacturers that could not make their way to the top because of the old bureaucratic system impeding their progress and career development as a whole. Some employees stated that the company had never experienced a lack of gifted workforce, but rather a lack of funds and resources.

Giving important positions to talented people should always be any company’s priority. Promoting people from within the company and not hiring those who may apply has several benefits. No other than the company employee knows its strengths and weaknesses, can point at flaws, and provide constructive criticism on how to alleviate problems present in the company. This particular experience may provide invaluable feedback for employers and help them find a reasonable solution in times of crisis.

Sergio Marchionne’s personality and attitude were vastly different from his former counterpart. The first thing he noticed taking control of the company was fear in faces of his employees. One of the most important things in modern society is stable income and assurance in the day to come. Employees who experience constant fear and doubt their company’s ability to provide them with means to pay their bills will inevitably underperform or even consider looking for another employer (CBS News, 2012). In order to solve the issue, Sergio Marchionne decided to close the gap between him and his employees by repositioning his office directly to the factory. Rather than sitting in the chairman’s office on top of the company’s main building, he insisted that his office should be in close proximity to his workers. That alone has not only drastically improved performance but also gave his employees much-needed motivation.

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The company’s marketing strategy has changed much as well. They needed a new public image to encourage both their workers and customers to persevere, endure, and overcome hardships. Their campaign was rightfully named “Imported From Detroit” and starred celebrities like Clint Eastwood and Eminem. It portrayed Detroit gradually coming back to life, rising from financial ruin, and producing high-quality vehicles once again, which drew similarities to the state Chrysler used to be in. Improving employees’ morale is crucial for the performance of the company, and it did not go nor unnoticed neither underutilized.

Chrysler automobile manufacturer has suffered severe financial losses due to the financial crisis but managed to endure and stay on the market. Crucial and often risky decisions made by Sergio Marchionne such as replacement of the bureaucratic system, unorthodox leadership approach as well as a new marketing campaign have made it all possible. He made drastic changes, but in the end, they prevented the company from collapsing.

Reference

CBS News. (2012). Sergio Machionne: Ressurecting Chrysler [Video]. Web.

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