Chrysler Failure Case Study

in alignment with the market. Otherwise, a successful strategy in the past can be a failure in the present.

2.2. Failure in management

When Chrysler recognized that they needed renovate their out-of-date management system, they hired McKinsey & Company for the consultancy service. McKinsey advisors gave Chrysler several recommendations, most of which later became the cause of Chrysler failure.

The first mistake was the shift to decentralized management system, giving the management of subsidiaries to managers at their discretion, as GM was doing. Chrysler also learned a lot from GM, such as the establishment of many small brands with the intention to produce "cars for every purse and for every kind of purpose", and this new approach of decentralized

But 1975 was also the year that marked the penetration of Japanese players into the US market. Toyota has introduced the Celica being inspired by Mustang Boss 302 of Ford in 1969 - a legendary in Japan at that time. Right afterwards was Honda with the first Accord, which was considered to be a game changer in the US.

During this time, Chrysler also achieved a notable success which was the introduction of the luxury car - Chrysler Cordoba. However, the rush introduction of the Dodge Aspen and Plymouth Volare in 1976 incurred huge maintenance costs for their technical errors. Chrysler Europe practically went into bankrupt sin 1977 and was transferred to Peugeot the following year. Not long after, Chrysler Australia was sold to Mitsubishi.

Automotive industry is highly competitive with many strong players. Therefore, Japanese firms, with competitive advantages of high quality and fuel efficiency, entering the US market made it harder for domestic companies to win the game. Meanwhile, Chrysler didn’t have an effective strategy to make it stand out from other competitors. Many continuing mistakes led to the bankruptcy of Chrysler in different