Babson Case Number: 059-C00AB | Length: x Pages

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.