August 3, 2018 in Business

When Lee Iacocca joined Chrysler, the company was in a very bad shape: its losses were worse than ever. In his autobiographical book Iacocca describes his first day at Chrysler. First, he noticed a plenty of insignificant, at the first glance, things. Thus, he noticed chaotic movement the Chrysler employees within the office building. Furthermore, Iacocca discovered that the secretary of one of the executives spent too much time on personal phone calls. These insignificant details made Iacocca realize that the company needs an order and discipline. Thus, he already knew that organizational changes were necessary. Then Iacocca discovered that Chrysler had no a system of financial control. Moreover, Chrysler had never employed any financial analysts to evaluate financial situation. Finally, Iacocca found out that instead of concentrating on the product quality, Chrysler expanded overseas.

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The Iacocca’s strategies implied fundamental changes in the company’s organization. However, it was extremely difficult to make managers refuse from the way of doing things as before. Managers were reluctant to change their management styles. Iacocca also sought to eliminate Chrysler’s dependence on the sales bank. However, he also faced resistance, since Chrysler people had become accustomed to the sales bank. In addition, Chrysler experienced a bad publicity. Finally, there was the oil crisis triggered by the events in Iran, which followed by recession.

At a certain point Iacocca realized that Chrysler needed a help from the government. He was not happy with going to the government, but he also realized that he had not another choice. So he went to the government to ask for federally guaranteed loans and he was successful. He presented strong arguments: he cited precedents, when American companies obtained federally guaranteed loans. Also Iacocca persuaded officials that Chrysler is important for transportation infrastructure.

I think Iacocca did a great job in getting Chrysler out of the distress. It is normal that his ideas faced resistance within the company: people do not like changes. I also admire the way Iacocca approached the government. This case shows that he has excellent persuasion skills.


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