Renaultnissan: the Making of a Global Alliance

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Renault / Nissan

The Making of a Global Alliance

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Abstract

On March 27, 1999, Nissan and Renault signed a comprehensive global alliance. The alliance brought together two companies vastly different in terms of skills, history, and culture. The case study describes the process of alliance formation from Renault’s and from Nissan's point of view. Starting from June, 1998, when contacts between the two companies were initiated, flashing back to briefly recount the history of the firms, and following through to March, 1999, the case looks at the internal developments that preceded and led to the alliance agreement.

Notes

The cases were written by :

Renault’s point of view : Olivier Masclef, Doctoral Student; EM Lyon. Nissan’s point of view : LBS MBA students Naoko Hida and Ashok Krishnan (FT-2000), under the joint supervision of Professor Asakawa of Keio Business School, Professor Gomez of Lyon Business School and Professor Korine of London Business School. The financial support of the Strategic Leadership Research Programme at LBS, the ‘Rodolphe Mérieux’ Foundation for Research in Venturing at EM Lyon, and overseas case development fund at Keio Business School are gratefully acknowledged.

The cases are based on interviews conducted in Paris and Tokyo during the Spring of 2000 with the following executives:

Renault’s point of view : MM. Dassas VP, finance De Andria VP, corporate planning, Douin EVP, Alliance coordinator Husson VP, legal Levy EVP, finance Schweitzer Chairman and CEO. Nissan’s point of view : MM. Anraku, managing director in charge of finance and accounting Shiga, Sugino, Suzuki, Nissan Corporate Planning, Hanawa Chairman and CEO.

Renault / Nissan
The Making of a Global Alliance

Renault’s point of view
Geneva, March 3, 1999. International Motor Show

As a traditional get-together for the leading automobile manufacturers, the Geneva International Motor Show provides an opportunity to unveil new prototypes and gauge market trends. This year, however, conversations in the main hall of the exhibition focused as much on the strategic movements of international companies as on products. For since the start of the year, major manœuvres had been under way to form an alliance with Nissan, Japan's second-biggest manufacturer, and they had to be finalised before March 30, which marks the end of the tax year in Japan.

Two candidates were in the ring. In one corner, the French group Renault, the world's ninth-largest manufacturer with 4.3% of the market, which had been negotiating with Nissan for more than 10 months; in the other, German-American giant DaimlerChrysler, the fifth-largest manufacturer with 8.4% of the world market, which began taking an interest in December 1998.

For Renault, it was a difficult bout. For a start, DaimlerChrysler's financial clout made it the favourite. Second, Renault's previous attempt to form such an alliance, with Swedish manufacturer Volvo six years earlier, had ended in a resounding defeat after years of negotiations. Daimler and Chrysler, on the other hand, had just rocked the automobile sector by pulling off a spectacular merger less than a year earlier. And an alliance with an Asian partner seemed a vital part of DaimlerChrysler's international strategy to complete the consolidation of a company with a strong presence in all three of the world's major economic centres.

Tension mounted with the arrival in Geneva of Jürgen Schremp, Co-Chairman of Daimler-Chrysler, and Louis Schweitzer, Chairman and C.E.O. of the Renault Group. Everyone was certain that the future of Nissan would be decided in the days to come. Most economic observers were expecting to see a new giant formed: Daimler-Chrysler-Nissan.

But Renault's bosses were convinced that the struggle was not yet over. Looking beyond superficial reasoning, they felt that the potential...
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