Well played, sir. Sergio Marchionne – great car name, by the way – has cleverly set out to build his very own car empire. His true plans have come to light (like when Bunny Lebowski was kidnapped) now that Fiat and Chrysler have become more closely associated in the minds of the business public.
Marchionne initially said nothing about merging the two companies when he took the reins – that may have been too much of a shock to the American public, not to mention politically disruptive to the Obama administration. However, now that the dust has settled a bit and the American public has grown tired of hearing about the failure of some of their signature businesses, Marchionne has floated the idea of merging Chrysler with Fiat – a partnership that will rival global brands such as Ford, GM and Toyota.
Also, by skillfully keeping his name in the business press, Machionne is gradually building his reputation as a wheeler and dealer. Part of the status quo bias is that if people hear your name enough, they become accustomed to it and just begin to naturally assume that you know what you’re doing – the best example of this is the difficulty of defeating an incumbent in an election.
I could not begin to predict whether a full merger will be good or bad for Chrysler and Fiat. However, neither could Marchionne, or anyone else for that matter. Of course, he’ll say there are opportunities for economies of scale, cost reduction in the form of duplicate personnel, greater rates of asset usage, and opportunities for greater procurement leverage. What he won’t mention are things like potentially added layers of bureaucracy, the potential for becoming less in tune with customer needs, and the fact that many large scale change projects fail for various other reasons.
However, if Marchionne is as good at running a car company as he is at convincing people to give him greater power, Chrysler is in good shape.
(Image is provided by Wikipedia Commons)