In 1999, the Nissan was suffering under a decade of decline and un-profitability, in fact the company was on the verge of bankruptcy, with continuous loses for the past eight years resulting in debts of approx.$22billion.
Lack of market knowledge, innovation, customer needs, quality management and competition consideration as well the devaluation of Yen against the US dollar have dramatically impacted Nissan performance. Also both formal and informal internal procedural Nissan norms, as well as Japanese cultural norms were holding the company back. Through keiretsu investments Nissan management believed would foster loyalty and cooperation between members of the value chain, hence they invested in real estate and suppliers’ companies.
When French auto manufacturer Renault acquired Nissan, president Hanawa of Nissan requested Carlos Ghosn to engineer the failing company's turnaround. The Brazilian-born, French-educated son of Lebanese parents, Ghosn first learned the management principles and practices while rising through the ranks at Michelin and Renault. His globalized background designated him as an appropriate choice to lead the turnaround of the Japanese company.
Upon his arrival at Nissan, Ghosn began his new position by embarking on a three-month intensive examination of every aspect of the business Although Nissan had technologically superior products, Ghosn found there was a distinct absence of vision and leadership. Ghosn organized cross-functional teams to develop a new corporate culture using the best elements of the Japanese national culture. By October 1999 Ghosn was ready to announce his strategy to turn the company around with the Nissan Revival Plan (NRP). The NRP become a highly successful cultural intersection that created the most dramatic turnaround in automotive history. It was...