Fiat Chrysler Automobiles

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  1. The relevant business environment in Italy

Political environment. For the automobile industry, as well as for other industries, the political environment of Italy cannot be considered ideal. While the country has been struggling with corruption for a long time, more issues still exist, and they can create obstacles for foreign companies entering the market. Issues with labor legislation, labor unions and strikes are not positive for businesses, too.

Economic environment. In general, Italy is considered a country with high average income. Thus, local customers are likely to have money for vehicles and to buy them. The main problem in economy is instability caused by fluctuations all over the EU countries.

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Legal environment. Legal system of Italy is quite positive for business. Corruption issues are becoming more and more rare. Italy occupies the 50th position in the ranking of 189 economies by the ease of starting business. By paying taxes, Italy is 137th among 189 countries, as taxes require much time to document, prepare and pay, and account for 64.8% of total profit. At the same time, Italy is among the best countries for importing and exporting (Doing Business, 2016).

Technological environment. Italy is a country with high level of development. Thus, new technologies can be acquired. However, some problems with corruption may undermine further technological advancement of Italy.

CSR. In Italy, CSR does not have a long history. However, it is developing quickly now, and the public as well as companies are paying more and more attention to it. Italian firm are beginning to focus more on environment and community in line with CSR requirements (Idowu, Capaldi, Zu, & Das Gupta, 2013).

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  1. In 2008-2009, economic crisis was happening in the USA, and it influenced many economic spheres, including automotive market. As a result, the sales of cars and trucks declined, and many producers suffered losses. Chrysler was among them.
  2. The US government offered loans to Chrysler to help it recover from downturn in sales and other problems. The loans were repaid by Chrysler-Fiat alliance in 2011, prior to the due date.
  3. Chrysler decided to enter the alliance with Fiat because it had performance issues. In the US, the sales of cars declined because of economic crisis and high prices for oil products. The company suffered losses and had declining revenues. Thus, it began looking for a partner to develop an alliance and enter foreign markets. The possible variants included Nissan, GM, Volkswagen and Fiat. Finally, Fiat was selected. In its turn, Fiat was looking for an alliance because it had problems with sales in Europe after the crisis of 2011. Moreover, it also had issues with labor legislation, unions and strikes, because they provided obstacles to production and technological development.
  4. In 2016, the alliance of Chrysler and Fiat continued successfully. Two companies received additional money and resources for further development. Moreover, they became able to enter both European and American markets and succeed there.
  5. There are two possible outcomes of the alliance in another three to five years. The first alternative is to continue focusing on European and American markets, where those companies were operating for a long time, and gain reasonable experience. Such alternative can be beneficial because those markets are investigated well, and the shares of the companies in these parts of the world are reasonable. However, such alternative may fail in case of crisis in the US or Europe.

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The second alternative is changing the focus and shifting promotion and sales to the developed countries. Nevertheless, this alternative is promising, because developing countries have a good potential for growing automobile sales in the nearest years.