Introduction In 2002 Fiat recorded one of the largest annual losses in the history of the Italian corporate world. Its pre-tax loss for the year was a whopping €429 million and this marked the start of a difficult decade for the car company. The loss was the conclusion of an ambitious diversification that Fiat had pursued with determination since the late 1990s. The company was expanding its operations and at the same time buying other related and even unrelated companies, investing hundreds of millions of euros in these ventures. Some of the initiatives were not as successful as the company expected, and the company's financial situation worsened, leading management to undertake cost-cutting measures that included layoffs (Jennings, 2007). Layoffs as a cost-cutting measure obviously worked. don't get along with company employees. Labor problems soon emerged between the company's employees and management, eventually attracting the government's attention. The government would then intervene and complicate the situation even further. This entire crisis has brought three main issues to the forefront. These problems include poor management, political intervention, and internal conflicts (Szczesny, 2009). Fiat has long enjoyed success as a respectable automotive company, successfully competing against automotive giants such as Renault, Mercedes, VW and Toyota. Greater liberalization within the European automotive industry has seen companies such as Toyota and GM aggressively enter the dominant market, rapidly eroding Fiat's market share. Faced with competition from companies that had invested billions of euros in advancing their brands as well as introducing numerous other models, Fiat pinned its hopes on a new vehicle model...... middle of paper..... .a of Japan. Fiat competes globally, and simply being one step ahead of its European competitors does not mean that the company will ultimately regain its previous success due to the fact that there are other competitors to watch out for. If it wants to succeed, the company will therefore have to demonstrate its competitive advantage in the global market. Works cited Fiat Auto (2011). "Fiat increases its interest in Chrysler", Retrieved from: fiatspa.com. May 25, 2011.Jennings, B. (2007). "Fiat centenary something to admire", retrieved from www.drive.com.auPieper J. (2002). “Fiat Auto: the Italian giant in difficulty”, The Independent. Simpson, I. (2010). “Fiat Shareholders Approve Corporate Split,” Reuters, September 16, 2010. Szczesny, R. (2009). “Here Come the Fiats: Vrooom”, The Times, 7 May 2009. Fiat Auto website: www.fiat.comwww.wikipedia.com