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Chrysler's Conundrum: A Case Study in Crisis Management

2/15/2010 --

With bankruptcy now in its rear view, Chrysler maps out future products, operating strategy, and financial goals, all while managing multiple new stakeholders.

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Ann Arbor, Mich. — The near-collapse of U.S. automobile manufacturers General Motors and Chrysler caused some of the biggest aftershocks of the 2008 financial crisis. It took Chapter 11 filings, government intervention and, in Chrysler's case, Italian automaker Fiat SpA's ownership and managerial involvement, to stabilize the two companies. Even though the short-term crisis is past, both automakers still face an uncertain future. For Ross Adjunct Professor of Strategy William K. Hall, Chryslerís conundrum provided the perfect backdrop to a real-time lesson in managing multiple stakeholders in a crisis. Hall's friendship with Chrysler Chairman C. Robert Kidder allowed MBA students in his Strategy 677 class to present their analysis directly to the senior executive during the fall term of 2009. Hall's case study Chrysler: From Bankruptcy To Rebirth is typical of the kind of action-based learning embraced at Ross. The case is available on the William Davidson Institute's GlobaLens site.

How did you go about using this case as a teaching tool?

Hall: This was the capstone case study we developed last fall for an MBA elective course on business intervention. The course is designed to force students to deal with multiple perspectives in a complex, uncertain world — multiple disciplines, multiple constituencies, or multiple functions — weaving them together to come up with a holistic solution that makes sense. The Chrysler case specifically deals with multiple constituents. We broke student study groups into assigned roles in preparing the case. One group played the United Auto Workers union, one group the role of Fiat, one group the role of the U.S. Treasury, and one group the role of Chrysler management. Each of these groups was assigned to make recommendations from their perspective only. Other student study groups were assigned to answer the integrative question, "What should the board of directors do?" As a bonus, Bob Kidder, the chairman of the board of Chrysler, attended the class. He heard our student's ideas as to what he should do to blend these constituents in a way that makes sense, and he commented on their presentations and analysis.

Why did you choose Chrysler?

Hall: Obviously, one reason was that Bob Kidder was willing to come to Ross for the case discussion. But also it's a very timely and complex situation involving public and private policy. And the ultimate outcomes will have a huge impact on southeast Michigan and the country.

What do you hope was a student's main takeaway from the course and the case?

Hall: The class attempts to develop general management skills and tools for prioritization and decision-making in complex, uncertain situations, requiring the analysis of multiple functions, multiple constituents, and multiple time periods. In the end, it forces students to stand up and decide, "This is what I will do at eight in the morning as I face this set of facts and unknowns." And the resulting class discussions force students to defend and refine their thinking on general management issues that they will face when they leave Ross.

It seems what's going on with Chrysler right now is tailor-made for this kind of case.

Hall: It's sort of perfect. But over the past five years we've developed a large portfolio of case studies at Ross exclusively for this class. Last fall, the CEOs of Allstate Insurance and two biotechnology startups also came into the the classroom when students debated case studies on current situations they were facing. The case assignments we give are always the same: "What would you do if you were the senior executive facing this set of facts and why?" Sometimes the students say it's unfair because they donít have all the information they want in a case, but over time, they learn that's the way it is. Then they spend more time deciding how to take value-added actions in the face of incomplete information, talking to each other, and pooling the wisdom of their classmates.

—Terry Kosdrosky



For more information, contact:
Bernie DeGroat, (734) 936-1015 or 647-1847, bernied@umich.edu