Nissan Case

Topics: Carlos Ghosn, Renault, Nissan Motors Pages: 62 (12195 words) Published: February 19, 2015
For exclusive use at ESADE, 2014

MAY 9, 2003


The Renault-Nissan Alliance
We are not merging, we are creating a binational company.
— Louis Schweitzer, chairman and CEO of Renault SA1
We are managing the apparent contradiction between synergy and identity. — Carlos Ghosn, president and CEO of Nissan Motors2

On Wednesday, May 29, 2002, the board of directors of Renault-Nissan BV (RNBV) met for the first time to discuss the state of the alliance between Renault SA and Nissan Motors—two of the world’s largest automakers. RNBV was a 50/50 joint venture company established in March of that year to oversee the strategy of the alliance and all activities undertaken jointly by Renault and Nissan.3 The new company would “steer alliance strategy and supervise common activities on a global level, while respecting the identity and culture of each company and not interfering in operations.”4 Louis Schweitzer, Renault’s chairman and CEO, held the position of president of the RNBV board; while Nissan CEO Carlos Ghosn held the position of vice president (see Exhibit 1). Renault and Nissan would continue to run their operations under their respective management teams.

“The creation of RNBV is the next natural step in the evolution of the [a]lliance,” declared Yoshikazu Hanawa, Nissan’s chairman. “It demonstrates that a Japanese and a French company, deeply rooted in their own culture and identity, have been able to cooperate successfully, without losing their uniqueness.”5

In 1999 Renault had invested $5.4 billion in Nissan—for 36.8% of the company—at a time when Nissan was a struggling automaker rumored to be days away from bankruptcy. The investment was a bold bid by Renault to gain additional scale and global reach, and marked the largest ever investment by foreigners in a Japanese industrial company. Shortly before the RNBV board meeting, 1 David Gauthier-Villars, “Car Making: What Makes Carlos Ghosn Tick?” Far Eastern Economic Review, September 14, 2000, p. 60.

2 As quoted in “Halfway down a long road,” The Economist, August 18, 2001. 3 The companies established a foundation in the Netherlands, which would hold options on preferred stock issued by Renault-

Nissan BV. This structure was intended to protect the two companies from potential takeover bids. 4 Source: Renault-Nissan joint press release, October 30, 2001. 5 Ibid.

________________________________________________________________________________________________________________ Professor Michael Y. Yoshino and Senior Research Associate Perry L. Fagan prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.

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This document is authorized for use only in Corporate Strategy (DR) by Dimo Ringov, at ESADE from December 2014 to April 2015.

For exclusive use at ESADE, 2014

The Renault-Nissan Alliance

Renault and Nissan had executed a cross-shareholding agreement wherein Renault raised its stake in Nissan to 44.4%, and Nissan acquired a 15% stake in Renault for roughly 2.2 billion euros.6 The transaction, which had been written into the original alliance agreement, took place a year earlier than expected.7

Executives at both companies believed much had been accomplished in the first three years of the alliance. Nissan, under Ghosn’s leadership, had...
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