Global Strategy of the Renault-Nissan alliance
Subject: Joint analysis on the Renault-Nissan alliance addressed to the CEO of Mitsubishi (group project)
From: Group 22 Michael Sutherland Nicolas Murcia Saebong Cheon Yu Ri Na Jeong To: Professor Jan Jörgensen Due date: November 22, 2006
To M. Takashi Nishioka, Chairman of the Board of Mitsubishi Motors,
Nowadays, Renault-Nissan is the fourth worldwide automaker with sales of 6,129,254 units in 2005, up 5.9% over 2004 (http://www.nissan-global.com/). Considering the traditional position of Mitsubishi in the actual market, the analysis of the Renault-Nissan alliance case would provide you with valuable elements on how to approach the growing and competitive auto manufacturing global market.
As such, the success of Carlos Ghosn is correlated to his extensive vision of synergies between the Renault and Nissan, thus, he believes that the transfer of knowledge between foreign engineering teams would only occur within a framework of equality. The reason he didn’t merge Renault and Nissan rely on the advantage of mutual challenge that push both firms to seek new cost reductions, economies of scale and scope opportunities. Consequently, Renault and Nissan both managed to reach their goal by remaining profitable.
Table of Content:
The advantages and disadvantages of the alliance between Nissan and Renault………………1 Reasons for an alliance instead of a merger and the benefit from synergies…………………...4 Importance of Corporate Culture……………………………………………………………….6 The possibility of GM entering the alliance……………………………………………………8 Evaluation of Nissan before and after the alliance……………………………………………..9 Worldwide Domestic Conditions affecting Nissan-Renault…………………………………..12 The collapse of the Keiretsu helps Nissan to remain globally competitive…………………...13
The advantages and disadvantages of the alliance between Nissan and Renault The “Alliance” between Renault and Nissan has made possible many joint projects such as the gasoline tank, the steering-wheel stabilization system, and also led to the creation of institutional entities for “strategic command and operational coordination” (Segrestin, 2003). Since Renault and Nissan have successfully become partners in a new equity joint venture by combining their knowledge, they have reinforced their position as a worldwide leader automaker. For instance, common structures called Renault-Nissan Information Services (RNIS) and Renault-Nissan Purchasing Organization (RNPO) (www.renault.com) have finally changed their mutual expectations, the scope of their partnership, and the meaning of their union. Research demonstrated that the development of a joint platform is a means of setting up common organizational routines and synchronization mechanisms that make possible the effective transfer of knowledge (Segrestin, 2003).
One of the most significant advantages was the joint platform. Nissan planned two small cars with in depth studies and Renault three potential cars. However, their schedule wasn’t as intense as that of the Nissan vehicles, but were rather stretched and targeted for a higher level of performance in comparison with their Japanese counterparts. According to the functional task team (FTT;www.renault.com), the wheel base which Nissan was building was not suitable to Renault’s level of expectations, probably because of their approach of different markets. Yet, additional research and development costs would have increased risk of failure of the joint project and weakened the alliance, so Renault’s small and medium wheel base design was adopted instead (Segrestin, 2003). Of course, project managers should allow both firms to innovate and come to a common decision rather than relying on the authority of the main
shareholder, Renault. Nevertheless, the delay in the first phase might have been deadly to Nissan. Within the organization, work was to be coordinated among distant teams,...
Bibliography: Key articles: Susini, J.P. (2003). The determinants of Alliance performance: Case study of Renault & Nissan Alliance. Econ. J. of Hokkaido University. Vol. 33. pp.233-262. Article found from http://eprints.lib.hokudai.ac.jp/dspace/bitstream/2115/5398/3/EJHU_v33_p232-262.pdf Nakae, K. (2005). Cultural change: a comparative study of the change efforts of Douglas MacArthur and Carlos Ghosn in Japan. Sloan School of Management. https://dspace.mit.edu/bitstream/1721.1/32114/1/63201635.pdf Segrestin, B. (2003). Organisation productive - relation salariale - financiarisation : les spécificités de l 'industrie automobile. Article retrieved from http://184.108.40.206/search?q=cache:huFYIKQDCwJ:crem.univrennes1.fr/site_francais/actualites/textes_actu_exterieures/ Other articles: Griffin, RW. & Pustay, MW. (2005). International Business. 4th Edition. Pearson-Prentice Hall. Pooley, R. (2005) The Model Alliance of Renault and Nissan, Human Resource Management International. Bradford Vol 13, Iss.2, pp29. Clerc, P. (2000) Managing the Cultural Issue of Merger and Acquisition: The Renault-Nissan Case. Göteborg University. Harney, A. (1999, November 2nd). Restructuring gives Japan’s workers culture shock: […]. Financial Times. London, pp 14. The Renault-Nissan Alliance. (2004). Article retrieved on November 11th, 2006, from http://facweb.furman.edu/~dstanford/ibnotes/39cases04/casequestions.html Nancy DuVergne Smith (2004) Nissan-Renault alliance faces down a few challenges. CTPID Communications Director. Article found from http://web.mit.edu/newsoffice/2004/ghosn.html http://xtra.emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/EmeraldFullTex tArticle/Articles/040170503.html Bungsche, H. & Heyder, T. (2003) After the loss of Japanese autonomy; the merger of Nissan/Renault and Mazda/Ford in comparison. TREIZIEME RENCONTRE INTERNATIONALE DU GERPISA. Ministère de la Recherche Paris, France. Treece, J. (2006, October 2nd). Ghosn to GM : Automotive News Europe. Vol 11. Iss 20. Ghosn, C. (2002). Saving the Business Without Losing the Company. Harvard Business Review.
Exhibit I: Sales according to the number of vehicles sold Worldwide Sales 2005 Renault Group - Renaul - Renault Samsung Motors - Dacia Nissan Group - Nissan - Infiniti Renault-Nissan Alliance Sales in Japan 2005 Renault Nissan Renault-Nissan Alliance 3,520 866,157 869,677 2004 3,253 826,822 830,075 Change 2005/2004 +8.2% +4.8% +4.8% 2,531,506 2,248,756 119,027 164,406 3,597,748 3,448,637 149,111 6,129,254 2004 2,490,337 2,308,972 85,046 96,319 3,295,830 3,157,002 138,828 5,786,167 Change 2005/2004 +1.7% -2.6% +40% +70.7% +9.2% 9.2% 7.4% +5.9%
Exhibit II : Important graphics revealing positive performance
Consolidated Operating Profit Margins for Nissan since alliance
Global Sales Volume
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