Strategic Alliance

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RENAULT-NISSAN BV
SRI SATHYA SAI INSTITUTE OF HIGHER LEARNING

• A STRATEGIC ALLIANCE

MERGERS ACQUISITIONS
SUBMITTED BY 16641 SUBMITTD TO Prof.Ch.Radha
Kumari
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FLOW OF PRESENTATION

• Introduction of the company
• Industry Dynamics
• Alliance objectives and goals
• Current business model
• Current performance of company

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INTRODUCTION TO THE COMPANIES
RENAULT (French)
NISSAN (Japanese)

• By 1999, the competitive environment of car
  manufacturers has become super competitive
• globalization driven by market internationalizatio
  n,
• need for Renault and Nissan to reach critical
  size,
• saturation of certain geographic areas for
  production and distribution.
• Opportunities for survival- 4 million vehicles
  new areas ( Asia, Latin America)
• Address market saturation in Europe,
• Cope with Asian leader Toyota.

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INDUSTRY DYNAMICS

• PORTERS FIVE FORCES INDUSTRY LIFE CYCLE -MATURE

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STRATEGIC ALLIANCE

• Agreement for cooperation among two or more
  independent firms to work together towards common
  objectives
• Companies in a strategic alliance do not form a
  new identity to reach their aims but cooperate
  while remaining apart and distinct
• The alliance between Renault and Nissan was
  signed on 27th of March, 1999

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NISSANS PROBLEMS BEFORE THE ALLIANCE

• company was falling apart
• 20 billion in debt
• The reasons of the problems

1. Recession in early 90s in Japan
2. There was complacency
3. There was no cross- functional and cross-regional
   communication
4. The design of the cars was out of touch with the
   market
5. A high degree of bureaucracy
6. There was an emphasis on engineering culture
   rather than managerial culture and promotions
7. Sticking in the Keiretsu model

 (interlocking business relationships
and shareholdings.)
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RENAULTS PROBLEMS BEFORE THE ALLIANCE

• Main source of revenue- small to medium size cars
  in Europe
• 85 of sales in Western Europe -gt GO
  international

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PRE ALLAINCE
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SIMILARITY
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DIFFERNCES
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AIM OF THE ALLIANCE

• Two principles
• Developing all potential synergies by combining
  the strengths of both companies through a
  constructive approach to deliver Win Win results
• Preserving each companys autonomy and respecting
  their own corporate and brand identities
• Three Objectives
• Quality and value of products and services in
  each region and market segment
• Key technologies in engines, electronics and the
  environment
• Operating profit

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THE OBJECTIVES OF THE ALLIANCE
RENAULT NISSAN
RESPECTIVE OBJECTIVES RESPECTIVE OBJECTIVES
Improving quality internationally Reduce costs reduce debts
COMMON OBJECTIVES COMMON OBJECTIVES
Economy of Scale Technological Know-How Leader in quality and attractiveness of products and services Economy of Scale Technological Know-How Leader in quality and attractiveness of products and services
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KEY SUCCESS FACTORS OF THE ALLIANCE

1. Quality between the relationships among the
   managers and engineers of Renault and Nissan
2. Business experience
3. Technical skills

• Core values
• Balanced relations between the two companies and
  
• the development of strong identities for each of
  the brands
• Other factors
• Alliance charter
• Capital contributions and equity participations
• Management structure and exchange of personnel

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GOALS ACHIEVED BY THE ALLIANCE

• The third largest global automaker (based on
  sales for the year 2008)
• Global market share of 9 ( by volume)
• Significant presence in major world markets
  (United States, Europe, Japan, China, India,
  Russia)

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CORPORATE STRUCTURE OF THE ALLIANCE
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MANAGEMENT STRUCTURE OF THE ALLIANCE
43.4
RENAULT
NISSAN
THE ALLAINCE BOARD
STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
JOINT CO. RNPO/RNIS
COORDINATION BUREAU
STEERING COMMITTEE
CROSS-CO TEAMS
FUNCTIONAL TASK TEAMS
TASK TEAMS
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RENAULT (Strengths) NISSAN (Weakness)
Cost control debt Recurring losses
Innovation creativity Lack of creativity renewal of products
Excellent management and production capacity Poor management capacity
Privileged relationship with suppliers Supplier relationship mismatch with globalization strategy
INTERNAL
ANAL YS I S
NISSAN (Strengths) RENAULT (Weakness)
Quality products Too small to compete on the world stage
Wide distribution network across US as well as home grounds Presence only in European market
High technological acumen Fragmented technology
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AFTER NEGOTIATION AGREEMENT
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CURRENT BUSINESS MODEL
POST MERGER STRATEGY

• Common platform with Nissan for small cars
• Joint research projects and exchange of
  components (standardization of products)
• Decision to return to Mexican market using
  Nissans industrial and commercial presence
• Further expansion and growth in Europe Asia
• Draw on strengths of complementary expertise in
  sales and technology
• Reduce costs and enhance performance

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CURRENT PERFORMANCE OF THE COMPANY
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THANK YOU

• ALL IS WELL THAT ENDS WELL