Case Study

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Merging AMC into Chrysler – Case Study

M.H.R.D.M

1. How does the purchase of AMC help Chrysler to manage its environment?  After purchasing AMC, Chrysler managed its environment by using the following technologies. a. Cost cutting.  Chrysler closed down AMC’s 86 year old Kenosha, Wisconsin plant which eliminated 5500 jobs and total capacity of 2, 30,000 vehicles.  Reducing steel inventories and stamping plants by 80% and eliminating duplication in the production of parts. b. Close monitoring.  Iacocca kept every minute count during the six months after purchase of AMC, for example to boost jeep production fast at AMC’s well known Toledo plant. c. Increasing production by paying overtime.  Iacocca got workers to work overtime on Saturdays in return for a promise to keep the factory running through 1992.

2. If you had been Iacocca in August 1987, what actions would you have taken to reduce resistance among AMC personnel to changes caused by Chrysler’s acquisition? 

If I would have been in place of Iacocca in August 1987, I would had taken following

a.

steps to reduce resistance amongst AMC personnel. Train Employees so that the adjust with new culture b. Increase Salary of employees so that they are happy with the new c.

management. It won’t affect Iacocca as he has closed few plants. Set strict rules and regulations so employees don’t waste time and work

efficiently and effectively. d. Give new and more responsibility to the performing employee and set an example to other employees by giving him promotions and increment with few authorities and responsibility. 3. At the time of Chrysler’s purchase of AMC, was Chrysler a growing, stagnant or declining organisation? How about AMC?  At the time of Chrysler’s purchase of AMC – a. Chrysler was a declining organisation  Chrysler line of cars had slid 16 percent.  Chrysler’s pre - tax profit margin was going down to 8.3% from 10.2% in 1986. b. AMC was a stagnant organisation.  AMC regularly held fourth place among the so called Big four U.S. automobile manufacturers – behind General Motors, Ford, and Chrysler. 4. Are management efforts to increase efficiency through reductions in staff indicative of an organisation in decline? Discuss?

J. B. I. M. S.

Organisational Structure Theories and Design

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13 – H – 031



Merging AMC into Chrysler – Case Study

M.H.R.D.M

No, it does not indicate an organisation in decline. Chrysler and AMC had merged and since it was overstaffed there was reduction in labour to increase efficiency.

5. How is the acquisition of AMC likely to change Chrysler’s organisation structure?  Change in Organisational Structure after acquisition and merger of AMC and Chrysler is explained in the below diagram.

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AMC’s Organisational Structure.

J. B. I. M. S.

Organisational Structure Theories and Design

Page 2

13 – H – 031

Merging AMC into Chrysler – Case Study

M.H.R.D.M

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Chrysler’s Organisational Structure

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O Organisational Structure of Chrysler and AMC after Acquisition and Merger

J. B. I. M. S.

Organisational Structure Theories and Design

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