Chrysler Rebirth of an Automaker

Babson Professor John W. Altman, Case Director

Dianne St. Jean, Case Writer

Arthur M. Blank Center for Entrepreneurship

© Babson College, 2000.

Abstract

Chrysler was Forbes magazine's "Company of the Year" in 1997. Eighteen years earlier, however, a loan guarantee by the Federal government was necessary to prevent the nation's third largest automaker from succumbing to bankruptcy. President Lee Iacocca turned the company around by thinning the ranks of top management, closing plants, persuading labor unions to accept layoffs and by introducing the highly successful K-cars. Chrysler repaid off its loans in 1983-- seven years ahead of schedule.

Chrysler experienced another major downturn in the late 1980's and early 1990's. This time Iacocca himself was placed on the retirement rolls and replaced by the spectacular management team of CEO Bob Eaton and President Bob Lutz. Both executives were known as "car guys" by industry aficionados, and they proved to be worthy of the moniker as they changed the corporate culture, teamed with suppliers, and dramatically reduced the design to production cycle.

Location of the company: Michigan

Years spanned by the case: 1979 to 1997

Industry segment: Automotive

Stage of the company: Mature

Age of the entrepreneur: N/A

Key Words: Corporate culture, autos, bailout, turnaround, entrepreneur, extended enterprise

DVD

A 54-minute DVD is available for this case. Please place orders through ecch.

Teaching Notes

A three page case teaching package, written by John Altman, is available for this case. The teaching package includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into a course.