612 Words3 Pages
What Went Wrong? The major reasons for Chrysler’s present financial problems were its poor business strategy, lack of innovation, and the global financial crisis. Chrysler failed to bring out new vehicles that met changing customer needs ahead of the competition. The global financial crisis in 2008 only resulted in further deterioration of the company’s financial health. Reason 1 Poor Business Strategy * An analyst attributes Chrysler’s financial problems to its poor business management. * In 1970, when fuel prices were going up and consumers in the United States started preferring fuel – efficient vehicles (eg Japanese companies like Toyota and Honda – coming out with compact and fuel – efficient cars to cater to these needs). * However, Chrysler’s focus remained more on SUVs and trucks. * Chrysler’s decision to merge with Daimler and to run Chrysler as a stand – alone division has been criticized. Reason 2 Lack of Innovation * Chrysler’s sluggishness in launching innovative models when its Japanese competitors kept coming out with new designs resulted in the company’s declining sales. * Japanese companies continue to offer fuel – efficient vehicles to consumers while Chrysler continued to produce fuel – guzzling trucks. * After merge with Daimler, Chrysler introduced some new models but those models did not get much consumer attention. * Chrysler could not invest enough money in research and development even Cerberus has bought a majority stake in Chrysler due to the declining sales of Chrysler’s vehicles. * Chrysler’s products have also historically underperformed in terms of quality, which remains a significant challenge. Reason 3 The Global Financial Crisis * In 2008, the tight credit situation, volatility in the stock markets, problems in the U.S housing market, increase in unemployment, and declines in incomes

More about Chrysler’s

Open Document