Ghosn's Nissan Strategy Implementation

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EVALUATION OF USE OF STRUCTURE AND SYSTEMS IN IMPLEMENTING STRATEGY OF NISSAN

LIST OF CONTENTS

1. Introduction4
2. Structure 4
2.1Organisational architecture framework4
2.2Mintzberg’s Six Basic Parts of an Organisation5 2.3Integrated Strategic framework of organizational design and structure6
3. Systems6
1. Organisational architecture framework6
2. Simple rules7
3.3Simon’s four levers of control7

Appendices:
A: Mintzberg’s Six Basic Parts of the organization16
B: Integrated Strategic framework of organizational design and structure17

List of References 21

1.Introduction
In 1999 Carlos Ghosn was elected as the Chief Operating Officer (COO) of Nissan, which had recently formed an alliance with Renault, another large global motor company (Yoshino and Egawa, 2003). It was evident that the organization was experiencing financial, strategic and operational difficulties attributed to a lack of profit orientation, cross-functional coordination and cooperation, customer focus, a sense of urgency, a shared vision and strategy. Ghosn and his team later proposed and implemented the Nissan Renewal Plan (NRP) aimed at a wholistic transformation of the organization, focussed primarily on implementing necessary improvements whilst maintaining the corporate identity of the organisation.

The ensuing discussion will consider the tangible aspects, being the structure and systems in the implementation of Nissan’s strategy, utilised in the NRP to institute change.

2.Structure
Ghosn asserts that “if the company did poorly, it was always someone else’s fault…one of the root causes of this problem was the fact that managers did not have well-defined areas of responsibility” (Yoshino and Egawa, 2003: 1). Consequently, there was no proper organizational structure within Nissan. Ghosn sought to transform the organization from that of a bureaucratic hierarchy to one based on cross-functional integration in which working within ‘rigid functional silos’ was abolished.

The COO stressed the need to align the structure to reduce costs and to optimize growth and competitiveness, being the strategic direction of the organization (Yoshino and Egawa, 2003). Although much debate exists regarding whether structure informs strategy or vice versa, it is notable that the formation of cross-functional teams (CFT’s) provided a foundation on which to restructure the organization and thereby implement the new strategy for Nissan. The case study fails to mention actual structural changes made however, one may deduce this from intentions outlined, primarily that the NRP aimed at transforming Nissan into a world-class auto company.

2.1Organisational architecture framework
The organizational architecture framework of Lee et al cited in Venter (2006) emphasizes the relationships between the fundamental factors, including structure/systems. However, as the framework is not specific to organizational structure, Mintzberg’s framework on the six basic parts of an organization cited in Boojihawon (2006) will be used as a basis for further analysis of Nissan’s structure. .

2.2Mintzberg’s Six Basic Parts of an Organisation
Mintzberg cited in Boojihawon (2006) identifies six ideal structural types. The existing or proposed structure of Nissan cannot singularly be related to any one of these types. The organization may, however, be perceived as moving from a machine bureaucracy to a professional bureaucracy or divisionalised form with the key part being the operating core or middle line management in regions, respectively. If one is limited to this model, one may relate the transformation of Nissan from focusing on the technostructure to the operating core or the middle line as per Appendix ‘A’. This is restrictive as the NRP focused upon transforming the organization in its entirety....
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