<p align="justify">Fiat Chrysler Automobiles is an American-Italian multinational automobile manufacturer. It is the eighth-largest in the world (Flak, 2014). It was formed in 2014 after the merger of Chrysler and Fiat. The head office of the company is in Amsterdam, Netherland. The company manufactures vehicles under various brand names such as Dodge, Chrysler, Fiat, and Jeep. The company made a revenue of 110.41 million Euros in 2018 (FCA, 2019). It has more than 198000 employees across its production units in the US and Europe. The company has plans to merge with other automobile manufacturers.<br />
Following is a detailed Porter Five Forces Model Analysis of Fiat Chrysler Automobiles:</p>
<h2 align="justify">Competitive Rivalry – High</h2>
<p align="justify">The automobile industry is well-established with a few players dominating the market. The fixed costs of doing business are high. Establishing a manufacturing unit and distribution network has costs in millions of dollars. The products the various automobile companies offer differ from each other. Also, they are positioned differently in the market. Automobile companies have long-term commitments in the form of financial obligations and product deliveries making it difficult to exit the industry. Products of various manufacturers differ slightly in price making it easy to switch for the buyers. Products are complex and require details and interaction with the buyer before a sale is made. Thus, Fiat Chrysler faces intense competitive pressure from Ford, GM, Honda, Toyota, and many others.</p>
<h2 align="justify">The Threat of New Entrants – Low</h2>
<p align="justify">Fiat Chrysler has established cost and performance advantage in the industry over the years. Also, the products of the company are patented and proprietary limiting the technology it develops to its use. Also, it has established itself as a brand through extensive marketing and quality assurance systems. The switching costs are also low. The main issue for new entrants in the automobile industry is establishing a production unit. Also, the procurement of raw material and components needed to manufacture an automobile are costly. This amounts to millions of dollars of investment from the start. Also, developing distribution and supplier networks is not easy for a new entrant (FFU, 2019). Thus, the threat of a new entrant to the industry is low.</p>
<h2 align="justify">Bargaining Power of Suppliers – Low</h2>
<p align="justify">The raw materials used in the manufacture of automobiles are procured through suppliers and are standardized rather than differentiated. Also, since there are extensive contracts with suppliers, the suppliers cannot force the company to increase prices. Thus, the cost of switching to another supplier is low. Also, a new supplier cannot easily enter the industry as existing suppliers have developed relationships with their companies making it difficult for new suppliers to win contracts. There are already numerous suppliers in the industry. Since the company offers the suppliers with extensive business regularly, it holds importance for them. This reduces their bargaining power.</p>
<h2 align="justify">Bargaining Power of Buyers – High</h2>
<p align="justify">The number of buyers in the automobile industry is large as compared to the number of firms in the industry. Also, the purchases each customer makes are in thousands of dollars and many of them make long-term purchases. Also, the cost of switching to another seller is low. They can easily buy a vehicle of another brand every few years. The customer can easily gain information about the various products the company offers through various websites and word of mouth (FFU, 2019). Also, a buyer does extensive research before finalizing a vehicle to buy for their needs. The customers are price-sensitive as well as the costs are in thousands and payment plans are long-term. Also, the products the company offers are unique and branded. As a result, the bargaining power of buyers is high.</p>
<h2 align="justify">The Threat of Substitutes – Low</h2>
<p align="justify">There are a few substitutes to vehicles such as using public transport, bicycling, motorbikes, or walking. However, all of these substitutes have performance limitations. They do not offer the same speed and time saving as vehicles do. Also, switching to a substitute has a cost in the form of tickets for the rides. All of the substitutes do not offer the same level of comfort as a personal vehicle does making them less attractive for a buyer. However, buyers may choose to utilize these substitutes once in a while rather than regularly using them. This makes the threat of substitutes low.</p>
<h2 align="justify">References</h2>
<p>FCA, 2019. 2018 ANNUAL REPORT. [Online] Available at: <a href="https://www.fcagroup.com/en-US/investors/financial_regulatory/financial_reports/files/FCA_NV_2018_Annual_Report.pdf">https://www.fcagroup.com/en-US/investors/financial_regulatory/financial_reports/files/FCA_NV_2018_Annual_Report.pdf</a> [Accessed 09 Dec. 2019].<br />
FFU, 2019. Fiat Chrysler Automobiles N.V. Porter Five Forces Analysis. [Online] Available at: <a href="http://fernfortuniversity.com/term-papers/porter5/analysis/652-fiat-chrysler-automobiles-n-v-.php">http://fernfortuniversity.com/term-papers/porter5/analysis/652-fiat-chrysler-automobiles-n-v-.php</a> [Accessed 09 Dec. 2019].<br />
Flak, A., 2014. Fiat Chrysler to spin off Ferrari, issue $2.5 billion convertible bond. [Online] Available at: <a href="https://www.reuters.com/article/us-fiatchrysler-ferrari-divestiture/fiat-chrysler-to-spin-off-ferrari-issue-2-5-billion-convertible-bond-idUSKBN0II1DB20141029">https://www.reuters.com/article/us-fiatchrysler-ferrari-divestiture/fiat-chrysler-to-spin-off-ferrari-issue-2-5-billion-convertible-bond-idUSKBN0II1DB20141029</a> [Accessed 09 Dec. 2019].</p>