Executive Summary: Renault-Nissan Is No Longer Able to Rely on Their Previous Strengths. Nine Years After the 1999 Alliance We Are Once Again Being Met with a Transforming Automotive Industry. in Order to Ensure Our

Topics: Automotive industry, Renault, Ford Motor Company Pages: 7 (2130 words) Published: June 22, 2013
MEMO
To: From: Re: Date: Carlos Ghosn, Chief Operating Officer, Renault-Nissan Joseph Klein, Senior Consultant, Klein Consulting Bolstering Renault-Nissan April 30, 2012

Executive Summary: Renault-Nissan is no longer able to rely on their previous strengths. Nine years after the 1999 alliance we are once again being met with a transforming automotive industry. In order to ensure our place as a future industry leader we must take immediate action. Major trends seem to be concentrating on safety, environmental impact and technological integrations. Renault-Nissan must incorporate another company in order to be successful. But instead of seeking resources within our industry we must search for another channel. As technology, safety, and environmental concerns become major influences in the automotive industry it is essential that Renault-Nissan look for a partner that will allow efficiencies to be achieved in this changing industry.

Competitive Landscape: Renault-Nissan is in the midst of a globalized transformation of the automotive industry. As consumer preferences change and strategic synergies between companies become more common it is becoming increasingly difficult to forecast major trends. Renault has lost its former profitability. They are struggling to stop their decline while Nissan is searching for an avenue for continued sustainable growth. These companies have formed an alliance that allows them to function independently while leveraging common synergies. This alliance has provided a much-needed opportunity for these companies to become major competitors in the global automotive industry. As the industry is transforming, Renault-Nissan must be careful to alter their strategy so it focuses on innovation and advancement. Renault-Nissan is not the only company seeking to leverage synergies. Largely, Toyota’s recent merger with Citroën should be a main focus, especially for Renault as they rely on the European segment for 72% of their revenues. As seen in Exhibit 1, Toyota has been increasing their R&D significantly and has reached nearly $12 billion this year up 7.6% from 2007 (TMC – Annual Report 2008). Toyota’s history has given them a reputation of being a technological leader. Their partnership with Citroën will align them as a major competitor in Europe as they already have a strong foothold in France. Citroën’s French manufacturing and distribution facilities along with Toyota’s technological competencies will make them a powerful force in Renault’s core market. Conversely, Nissan has been doing increasingly well. However, this growth is projected to stall in the near future. The competition in their industry is shifting their strategies. Governments and consumers are driving manufacturers to design and build

safer more efficient vehicles. Safety and environmental benefits are major selling points in which Nissan-Renault should definitely invest. In the United States and many other countries, subsidies have been created which allow consumers to receive significant discounts on electric/hybrid vehicles. It seems to be clear that the automotive industry is being forced to find alternative means to fossil fuels and governments are easing this transition (Hanley). Technological partnerships among automobile manufacturers are becoming more prevalent. Major car manufacturers are finding that innovative technological integrations are becoming key drivers in their value chain. Namely, Ford and Microsoft’s 2007 partnership has revolutionized the relationship between automobile manufacturers and their consumers. Their development of the Ford Sync system has undoubtedly redefined their position in the industry. Now consumers are interested in peripheral integration and hands free communication. This trend will continue to increase, pushing users to put further consideration into a manufacturer’s technological signature (SYNC). Technology integration is crossing many borders; no longer are car owners merely...

References: 1. "Ford SYNC." FORD.com. Ford Motor Company. Web. 21 Apr. 2012. . 2. Hanley, Michael, and Jeff Henning. "Mega Trends in the Light Vehicle Industry." Global Automotive Industry. Ernst and Young. Web. 25 Apr. 2012. . 3. Mergent Online Database. 4. "OICA 2008 Statistics." OICA.com. The International Organization of Motor Vehicle Manufacturers. Web. 28 Apr. 2012. . 5. Ramaswamy, Kannan. "Renault-Nissan: The Challenge of Sustaining Strategic Change." Thunberbird - School of Global Management. Web. 6. TMC Annual Report 2008. Toyota Motor Company, 2008. PDF.
Exhibit 1: `
TMC – Annual Report 2008
Exhibit 2:
Data from Mergent Online/Graphed by Thomas Craig
Exhibit 3: PEST Analysis
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