PPT NISSAN

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Renault Nissans Strategic Alliance model
Leading to High Performance
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Agenda

• Introduction of the company
• Industry dynamics
• The Alliance of Nissan and Renault Objectives
  and Goals
• Current business model
• Turnaround strategy
• Leadership of Carlos Ghosn
• Current Performance of the company

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Introduction of the companies
Renault
Nissan

• By 1999, the 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 anddistribution.
• 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

• HHI - competitiveness in an industry -
  Automotive Vehicles 2754.0
• Porters five forces
• Industry life cycle Mature

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Strategic Alliance

• Definition
• Agreement for cooperation among two or more
  independen 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

• Nissans problems before the alliance
• company was falling apart
• 20 billion in debt
• The reasons of the problems
• Recession in early 90s in Japan
• There was complacency and a lack of urgency in
  the culture
• There was no cross-functional and cross-regional
  communication
• The design of the cars was out of touch with the
  market
• A high degree of bureaucracy
• There was an emphasis on engineering culture
  rather than managerial culture and promotions
• Sticking in the Keiretsu model

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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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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 Internationalize Reduce Costs Reduce Debt
Common objectives Common objectives
Economy of scale Technological Know-How Leader for the quality and attractiveness of products services Economy of scale Technological Know-How Leader for the quality and attractiveness of products services
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Key success factors of the alliance

• Quality between the relationships among the
  managers and engineers of Renault and Nissan
• Business experience
• 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

• 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
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Levels of Corporate Culture
Observable Symbols Ceremonies, Stories,
Slogans, Behaviors, Dress, Physical Settings
Underlying Values, Assumptions, Beliefs,
Attitudes, Feelings
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New Strategies

• Profitable growth worldwide

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An Open System
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Renault Nissan Group a Global Player
01/07/02
31/12/95
Renault
44,4
Renault
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Nissan
AB Volvo
100
92,7
Renault VI / Mack
Dacia
Renault VI / Mack VI
70
Samsung
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Current Business Model Post Merger Strategy

• Common platform with Nissan for small cars
• Joint research projects and exchange of
  components (leading to standardization of these
  products)
• The decision to return to the Mexican market,
  using Nissans powerful industrial and commercial
  presence

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Current Business Model
Post Merger Strategy

• Further expansion in Europe and growth in Asia
• To draw on the strengths of complementary
  expertise in sales and technology, and to reduce
  costs and enhance performance.

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Restructuring

• The aim of this restructuring was to be
  profitable and competitive
• Sales Marketing, Distribution, Human Resource
  were the key areas where restructuring
  initiatives have taken place.
• The first important step taken by Renault was to
  broaden the notion of service to its customers.
  That led to the creation of two new entities the
  Service department and the Distribution Project
  department.

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New Orientation Partnership

• Trust, addition of value to both sides, high
  commitment
• Equity, fair dealing, both profit
• Electronic linkages to share key information,
  problem feedback and discussion
• Mechanisms for close coordination, people on-site
• Involvement in partners product design and
  production, shared resources
• Long-term contracts
• Business assistance beyond the contract

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Transnational Model of RENAULT-NISSAN

• Assets and resources are dispersed worldwide into
  highly specialized operations that are linked
  together through interdependent relationships.
• Structures are flexible and ever-changing.
• Subsidiary managers initiate strategies and
  innovations that become strategy for the
  corporation as a whole.
• Unification and coordination are achieved
  primarily through corporate culture, shared
  visions and values, and management style rather
  than through formal structures and systems

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Contingency FactorsAffecting Organization Design
Technology
RENAULT-NISSAN Organizational Structure and
Design
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Who is Carlos Ghosn?

• Born on 9th March, 1954, in Porto Bello, Brazil
• Moved to Lebanon with his parents in 1960 for
  primary education in a Jesuit School
• Throughout his life he lived and worked all over
  the world and gained wide cultural awareness
• Spent 18 years with Michelin in Brazil and North
  America
• Joined Renault in 1996 as Executive Vice
  President of Advanced RD, Manufacturing and
  Purchasing
• Appointed as COO of Renault in 1998.
• Joined Nissan Motor as Chief Operating Officer in
  June 1999 and was named Chief Executive Officer
  in June 2001.
• President of Renault since May 2005
• Remains President and CEO of Nissan
• Carlos Ghosn is also a director of Alcoa and
  AvtoVAZ.
• He is appointed President and CEO of Renault on
  May 6, 2009.

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Fiedlers Contingency Theory
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Fiedlers Contingency Theory
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Turnaround strategy

• Lewins model

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SWOT External Analysis

• Automakers face legislation increasingly
  restrictively on the fuel consumption
• Market has become hyper-competitive
• Heavy investment in RD
• Strategy of cost becomes the major issue

The opportunities in Asia
Country China Malaysia Singapore Hong Kong Japan
Qualification of workplace
Cost of labor
PIB per person
Politic Stability
Taxes
Unemployment
Very Favorable Favorable unfavorable
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SWOT External Analysis Contd

• To stay competitive Renault must diversify
  geographically by integrating a company that
  already has strong position in Asia, particularly
  in the regions identified - Nissan meets these
  criteria geography.
• However, the settlements are a necessary but not
  sufficient in the choice of partner

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SWOT - Internal Analysis
Strengths Renault Weakness Nissan
Cost Control Debt Recurring Losses
Innovation, creativity, imagination Lack of creativity and renewal of itsProducts
Overall management and strategic platformsproduction and supply Poor management capacity
Privileged relationship with suppliers Supplier relationships (vertical Keiretsu) inmismatch with a globalization strategy
Capacity Management Management slow conformist
Strengths Nissan Weakness Renault
Quality Products of poor quality Timeliness of Filing Delay in production time
37 of the total distribution in the U.S. and 28Japan Lack of notoriety in Japan USA (0 of the distribution)
18.5 of cars with engines up torange on all of their production Opportunities insufficient to justify the developmentand production of top-end engines (4.5)

• The majority of the weaknesses are strength for
  Nissan Renault and vice versa we can say that
  they are complementary in many respects.
  Moreover, we note that Nissan weaknesses are
  only due to a bad optimization from their
  resources and skills.

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The benefits of alliance with respect to other
strategies

• In the market for car manufacturers, the only
  appropriate strategy is that allows the rapid
  acquisition of new skills.
• Strategy of horizontal diversification.
• Merger
• Acquisition
• Alliance
• Complementarities between the strengths and
  weaknesses of both companies
• Distinctive resources and competencies
• Learning major challenge - little degree of
  synergy would cause a high cost of restructuring
• Advantages of the alliance before merger and
  acquisition

economies of scale, geographically
diversification, the reputation, the bargaining
power
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Thank you for your attention!
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