Chrysler :Iacoccas Legacy

Chrysler was found by innovative Engineer Walter Chrysler in 1925.Chrysler had acquired 25 % of domestic automobile market & surpassed Ford to become second largest automobile Company.But over the next 38 years Chrysler lost ground but still remained third in automobile industry.In 1978,financial position of Chrysler was at its worst so in order to revive the company Lee Iacocca was hired. Lee Iacocca was an Italian immigrant who had a successful 32 yrs in Ford motors which was Chryslers rival.But he was fired from his position as CEO from Chrysler during 1978 by Ford due to personal reasons. This decision proved to be beneficial initially as Lee Iacocca made a name for himself by saving Chrysler Corporation from the brink of bankruptcy in the late 1970s and built it into a powerful and profitable firm in short time. Management and manufacturing changes implemented by Iacocca resulted in a dramatic increase in Chrysler's stock price and Iacocca's ego. However, as the cash flowed in during the early to mid 80's, Iacocca lost focus of what made the company successful and he changed Chrysler's growth strategy by investing large amounts of capital in businesses that were unrelated to the auto industry. In the early 1990s, Chrysler again found itself in a precarious situation with its market share and stock price in steady decline. In early 1993, Robert Eaton was set to succeed Iacocca as CEO in a pivotal period for Chrysler. During his tenure Chrysler brought about many functional changes which transformed Chrysler from a company which was predisposed to change & adaptability.He made a list of managerial talent needed to revive Chrysler of its financial mess.. With a vision of turning around Chrysler, Iacocca started by focusing on the three pillars of people, product and profits. His trait of promoting intellectual stimulation led him to first deal with Chryslers inefficient management. He fired a huge number of people, replacing them by a competent team which included his former Ford colleagues at managerial positions, as well as experts in production quality from GM and Volkswagen. Labor was next dealt with but knowing that telling style wont work. He first hired president of Chryslers labor union to the board of director. Then he used the selling style by first reducing his salary, and then giving the labor an option of cutting their salary or leaving Chrysler. To deal with losses, he convinced the federal government for a $1.5 billion loan guarantees largely by taking the onus of Chryslers turnaround. He assured the government that the steps being taken would reinstate Chrysler. Alongside dealing with finance, Iacocca understood that a strong, innovative product lineup was needed to restore customer confidence as well as to survive. Under his leadership Chrysler produced a new range of small front wheel drive economical car line the K-car. These cheap low cost cars with their excellent fuel economy and improved standards of economy helped Chrysler revive. Iacocca also launched a major new advertisement campaign for their products in which he took centre stage demonstrating his inspirational motivation skills. Inspite of this Chrysler suffered losses during mid 80s due to investment in new car development programs.Profits slowed down & Share prices went low hence during 1989 Iaccoca introduced cost cutting policy which continued till 1991.In spite of these policies debts were rising & sales had come down. In 1992 transition of power was made when Robert Eaton,former chief engineer of GM took over Chrysler in 1992 and was left with many decisions to make.This move did not go down well with some insiders of the company.It was believed that Chryslers success lied in Eatons young shoulders without much pressure from Iaccoca.Eaton did not believe much in future vision & dealt with the grave situation of the company as the day came by.He went into few mergers with fellow companies to make Chrysler a global company