Question

Discuss different ways to build/strengthen capabilities as well as examples of companies that have used some of these methods? Explain.

there are three approaches to build/strengthen capabilities. These include, "developing and strengthening capabilities internally, acquiring capabilities through mergers and acquisitions, and developing new capabilities via collaborative partnerships." Developing and strengthening capabilities internally can include hiring the right sort of people that have the capability to develop new products in a fast and efficient manner. If this can't be done internally, then the company can accomplish this by merging with another business or acquiring another business that has the capabilities that are needed. If both of the above approaches do not work, a company can form a collaborative partnership with another company. This can help both sides of the companies by allowing them to share their knowledge and experiences with each other, as well as granting access to their suppliers. Therefore, building and strengthening the capabilities of each partner.

Answer 1

A classic example of the company to build/strengthen capabilities is the acquisition of Chrysler by Fiat. The acquisition or you can even call it integration between the two companies dated back in 2009 when Chrysler filed bankruptcy due to its financial crisis. Late Ex-CEO Sergio Marchionne saved Chrysler from the brink of bankruptcy through the workers’ pension fund of Fiat. Initially, the principal owners of Chrysler were the governments of U.S and Canada and Fiat. Fiat had just 20% stake in Chrysler’s stocks. Later, it was able to obtain about 50 % of the stock and finally Chrysler became the wholly owned subsidiary of Fiat. Marchionne was able to turn the table around and make Chrysler a profitable company by interchanging the knowledge, expertise and technology between Chrysler and Fiat. Fiat is an Italian based automobile manufacturing company. Chrysler is also an automobile manufacturer but based in United States. Chrysler was able to strengthen its capabilities through the collaborative partnership with Fiat. Also, Chrysler shared its knowledge with Fiat to sustain its profitability and design. Thus, Fiat Chrysler became leading automobile giants through this successful merger.

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