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13 H 031

Merging AMC into Chrysler Case Study

M.H.R.D.M

1. How does the purchase of AMC help Chrysler to manage its environment?
After purchasing AMC, Chrysler managed its environment by using the following technologies.
a. Cost cutting.
Chrysler closed down AMCs 86 year old Kenosha, Wisconsin plant which eliminated 5500
jobs and total capacity of 2, 30,000 vehicles.
Reducing steel inventories and stamping plants by 80% and eliminating duplication in the
production of parts.
b. Close monitoring.
Iacocca kept every minute count during the six months after purchase of AMC, for example to
boost jeep production fast at AMCs well known Toledo plant.
c. Increasing production by paying overtime.
Iacocca got workers to work overtime on Saturdays in return for a promise to keep the factory
running through 1992.

2. If you had been Iacocca in August 1987, what actions would you have taken to reduce
resistance among AMC personnel to changes caused by Chryslers acquisition?

If I would have been in place of Iacocca in August 1987, I would had taken following

a.

steps to reduce resistance amongst AMC personnel.


Train Employees so that the adjust with new culture
b. Increase Salary of employees so that they are happy with the new
c.

management. It wont affect Iacocca as he has closed few plants.


Set strict rules and regulations so employees dont waste time and work

efficiently and effectively.


d. Give new and more responsibility to the performing employee and set an
example to other employees by giving him promotions and increment with few
authorities and responsibility.
3. At the time of Chryslers purchase of AMC, was Chrysler a growing, stagnant or
declining organisation? How about AMC?
At the time of Chryslers purchase of AMC
a. Chrysler was a declining organisation
Chrysler line of cars had slid 16 percent.
Chryslers pre - tax profit margin was going down to 8.3% from 10.2% in 1986.
b. AMC was a stagnant organisation.
AMC regularly held fourth place among the so called Big four U.S. automobile
manufacturers behind General Motors, Ford, and Chrysler.
4. Are management efforts to increase efficiency through reductions in staff indicative of
an organisation in decline? Discuss?

J. B. I. M. S.

Organisational Structure Theories and Design

Page 1

13 H 031

Merging AMC into Chrysler Case Study

M.H.R.D.M

No, it does not indicate an organisation in decline. Chrysler and AMC had merged
and since it was overstaffed there was reduction in labour to increase efficiency.

5. How is the acquisition of AMC likely to change Chryslers organisation structure?


Change in Organisational Structure after acquisition and merger of AMC and Chrysler
is explained in the below diagram.

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AMCs Organisational Structure.

J. B. I. M. S.

Organisational Structure Theories and Design

Page 2

13 H 031

Merging AMC into Chrysler Case Study

M.H.R.D.M

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Chryslers Organisational Structure

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Organisational Structure of Chrysler and AMC after Acquisition and Merger

J. B. I. M. S.

Organisational Structure Theories and Design

Page 3