Chrysler 1999 Annual Report Download - page 9

7
Report on Operations – Overview
business. At the same time, Viasat, a joint venture created
with Telecom Italia to provide infomobility services, has
become a leading player in the European market.
The new businesses created during this past fiscal year will
face their first significant test in the year 2000. We are aware
that the process of integrating businesses is always a difficult
task. Our job will be to implement quickly the necessary
measures, so that potential synergies in the areas of technical
skills, products, technologies and markets can be exploited
successfully in the immediate future. We shall pursue this
goal very aggressively and with unflagging determination.
Fiat Auto continued to build on its strong points, particularly
in the compact car segment. Examples of this strategy are
the 1999 launch of the new Punto and the presentation of the
Lancia Lybra, which targets a higher market band. The renewal
of the product line will continue this year with the introduction
of important new Alfa Romeo models and the presentation of a
new Fiat multipurpose vehicle. Additional products scheduled for
launch in 2001 include a strategically important new intermediate
Fiat car, which will be based on an innovative platform developed
using spaceframe technology. The Sector’s goal is to
introduce an average of four new models each year.
During the year, the Group evaluated all available opportunities,
including alliances, that would strengthen Fiat Auto’s
competitive position. As part of this process, it entertained
negotiations with General Motors which, as explained at
the end of this report, were ultimately successful.
The strategy pursued by Fiat Auto to bolster its competitive
position is based not only on product innovation and the
enhancement of its brands, but also on the establishment of
partnership relationships with its suppliers, the use of platform
technologies, the continuous improvement of the organization
and skills of its sales network, and a steady lengthening of the
value chain through the introduction of financial and mobility
services.
Expansion in the emerging market represents a key avenue
of growth for the Automobile Sector. In 1998 and 1999, the
profitability of Fiat Auto was penalized by the investments
made to establish a presence in new markets — which by
their very nature have a long payback period — and by the
profound crisis that affected most of the emerging economies.
However, the potential of these markets remains intact.
Fiat Auto has already built a solid foundation in these regions,
which will be a source of increased profitability over the
intermediate and long term. An especially noteworthy
development in this area was the establishment in 1999
of a Chinese joint venture with Yuejin Motor Corporation.
THE FUNCTION OF INFORMATION AND
COMMUNICATIONS TECHNOLOGY
Our commitment to transforming the Group is also based
on the pervasive use of information and communication
technology (ICT), which represents a key tool in lengthening
the value chain, creating new business opportunities and
fostering the development of innovative work modalities.
In 1999, CIAOHOLDING, a joint venture owned in equal
shares by Fiat and Ifil, launched a wide-ranging Internet
initiative. This new company, which intends to become an
Italian leader in this rapidly growing business, operates the
Ciaoweb portal and is active in such other fields as venture
capital investments, specialized e-commerce projects and
professional services. In the area of business-to-consumer
e-commerce, Ciaoweb’s mission includes helping Group
companies, Ifil and their sales networks expand the range of
products and services that they can offer online. At the same
time, the online offer available on the portal is enriched with
new contents and technologies provided through collaboration
with other partners.
An even more significant development is the steadily growing
use of new technologies throughout the Group’s industrial
organization. Important initiatives are also under way in the
business-to-business segment, including virtual sourcing of
consumables, management of the entire purchasing cycle for
direct production materials, and the use of the Internet in the
distribution of replacement parts.
We intend to continue moving aggressively with the goal of
maximizing the potential benefits offered by an increased use
of these tools, in view of the key role that ICT can play as the
Company seeks to increase the productivity of its organization
by simplifying its processes, ensuring the unimpeded flow
of information and adopting innovative work modalities.
During 1999, we significantly accelerated the rate at which
new technologies are introduced throughout the organization,
investing more than 150 million euros (net of the outlays
earmarked for Y2K solutions) in Intranet infrastructures.
These facilities include dedicate websites designed to help
Fiat Group employees garner detailed information about their
professional specialization, consult documents, access
services and receive interactive online training.
MANAGERIAL CULTURE AND LEADERSHIP
The course of profound change upon which the Fiat Group
has embarked in pursuit of competitive excellence requires
the deployment of strong individual leadership throughout
the organization, encouraging people to mobilize their energy