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Unit 9: Financial Estimates and Projections

the product line in trouble but the merger was too. While there were many reasons for its Notes
failure, the one most frequently cited was a clash of corporate cultures.
Cerberus

In 2007 DaimlerChrysler sold Chrysler to Cerberus Capital Management, a private equity
firm with no experience in making cars. Bob Nardelli, former CEO of Home Depot, was
chosen to head the company. For many, it was clear that the deal was strictly financial and
few believed that Cerberus was committed to building a competitive company in an
increasingly competitive auto industry plagued with too much capacity.
Nardelli was a “tough-as-nails” CEO. Business Week, in August 2007, said that he “alienated
... virtually all of the management he inherited.” While many thought that his military
style was exactly what Chrysler needed, it didn’t work. In that Business Week article, a
University of Michigan Professor, Gerald Meyers, said that Cerberus had the right idea,
but Nardelli was the “wrong guy.”
Then, Chrysler was hit by the perfect storm. Oil rose to over $140 per barrel, the economy
went into a tailspin, and Chrysler was caught with a product line dominated by gas
guzzlers no one wanted to buy.
Marchionne’s Challenge

It is within this context that Fiat has taken a 20 percent stake in Chrysler. Marchionne
inherits an organisation shattered by the distant, yet dominant, style of Schrempp and the
“tough-as-nails” style of Nardelli. He inherits a workforce that has endured job losses,
pay cuts, deterioration in benefits, and the anxiety of an uncertain future. But above all, he
inherits a workplace that has suffered one lackluster project after the other, and a project
culture that has failed to stress markets not methodology.
Here is the problem; his leadership style, characterised by the quick and disruptive changes
he made five years ago, may not be very different from the leadership style practiced by
his two predecessors at Chrysler.

But he must be different if he is to succeed in making sustainable changes.
Is he flexible enough to become the transformational leader that Chrysler so desperately
needs or will he ignore Chrysler’s rough ride over the last ten years, grab the reins, ignore
the cultural differences, and simply repeat history? Can he be tough on the problems but
at the same time restore morale and create a project-based environment that motivates
not alienates its project teams?
Or, will he be the third in a string of tough CEOs and continue with the beatings until the
morale at Chrysler improves?
Question:
1. Analyse the case and discuss the case facts.

Source: http://www.projectsmart.co.uk/project-failures-from-the-top-down-can-marchionne-save-
chrysler.html

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