Key Issue: The key issue that lies within this case is ultimately the management style and structure of Nissan and its quality manufacturing issues combined with the fact that he CEO of Nissan will soon be the CEO of two operation giants in a foreign market with different variables and structures within them. In addition to the quality issues that Nissan has had in the production of several of its vehicles, Nissans support structure for the upper management isn’t clearly defined and leads one to believe that the tools and outcomes of success are driven by the one top guy the CEO. This leads it to the fact that having the same leader in two different but common goal companies, both with room to expand and grow into the international markets within be to spread thin.
Background: The background in this case is fairly simplistic, Carlos Ghosn, CEO for Nissan Motor Co. had a thin line fast paced production goals have lead to several quality issues amongst the launches of 3 new product lines which had potential to be a huge driver for Nissan’s future. Nissan has dropped 5 spaces in annual quality surveys conducted by J.D. Power and associates and have seen slow progress in sales making it near impossible to reach sales goals for the models respectively. In Canton alone, there are several quality issues that happened due to severe cost cutting measures throughout the company which helped the defects to go unnoticed along the assembly line.
The year after Nissan suffered through a 19 billion dollar debt number, Nissan reported profits of nearly 5 billion dollars on almost 70 billion dollars in revenue, an 8 percent gain, becoming second in the industry for in the Japan market. There are holes in the model lineup that makes up Nissan having no vehicle in the sub 15,000 dollar range.
Renault, is the top-selling brand in brand in Europe but too has some true quality issues on hand in its production of vehicles. Renault has acquired a large share of Nissan and has integrated certain production structures and make decisions to benefit both brands such as 70% of car parts are shared between both giants.
• Cost cuts and intense production moved Nissan into second in sales in Japan
• Combined Nissan and Renault sold a combined 5.4 million vehicles and control 9.3% of the global market
• Supply costs are down due to 70% of parts are jointly purchased for both manufacturers
• Bold leadership: Ghosn is a no nonsense guy who cuts costs and trims necessary fat in order to achieve high sales and profit and maximize production in a short time period.
• Management structure: there is no clear cut structure in place to eliminate production errors and manufacturing process defects
• No sub-compact car in the $15,000 range : I see this as a weakness due to the competition having this type of vehicle available for consumers
• Not aggressive enough in incentives to spur car sales versus industry
• Too aggressive in cost cutting led to quality issues which hurt gains for the company
• Quality issues – new assembly line workers cause some defects such as paint damage by dress code infractions
• Quality issues go un-noticed due to cost cutting measures : lack of focus causes decline in customer satisfaction and sales goal decline
• No sub-compact car in the $15,000 range
• Competition offering sub-compact vehicle in $15,000 range
• Honda: #1 company in international sales
1. Merge both companies and structures in order to maximize productions and shareholder equity making them the 4th largest auto maker. The negatives to this action would be that the merging of the two companies could result in a slight decrease in sales, profit and output due to different qualities coming together until all issues are ironed out.