Renault nissan case study
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Transcript of Renault nissan case study
Renault – Nissan’s External Audit
Group Members• Ulusyar Tareen • Shehreyar Khan• Yuze Yao• Hua Meng• Li Li
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Leading to High Performance
Agenda
Introduction of the company { Yao} Leadership of Carlos Ghosn Industry dynamics {Claire} The Alliance of Nissan and Renault – Objectives
and Goals with SWOT and PESTEL Analysis by { Shehreyar Khan}
Current business model and previous Models Value Chain Model and Porters 5 Forces Analysis
by { Ulusyar Tareen} Current Performance of the company
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Who is Carlos Ghosn?
Born on 9th March, 1954, in Porto Bello, Brazil Throughout his life he lived and worked all over the world and gained wide
cultural awareness Spent 18 years with Michelin in Brazil and North America Joined Renault in 1996 as Executive Vice President of Advanced R&D,
Manufacturing and Purchasing Appointed as COO of Renault in 1998. Joined Nissan Motor as Chief Operating Officer in June 1999 and was named
Chief Executive Officer in June 2001. President of Renault since May 2005 Remains President and CEO of Nissan Carlos Ghosn is also a director of Alcoa and AvtoVAZ. He is appointed President and CEO of Renault on May 6, 2009.
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Introduction of the companies
By 1999, the environment of car manufacturers has become super competitive: globalization driven by market internationalization need for Renault and Nissan to reach critical size saturation of certain geographic areas for production and
distribution.
Opportunities for survival - 4 million vehicles; new areas (Asia, Latin America)
Address market saturation in Europe Cope with Asian leader Toyota
Founded 1898
Cooperation with Volvo 1990
Alliance with Nissan 1999
Founded 1911
Financial distress 1990
Alliance with Renault 1999
Renault
Nissan
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Strategic Alliance
Definition Agreement for cooperation among two or more
independen firms to work together towards common objectives
Companies in a strategic alliance do not form a new identity to reach their aims but cooperate while remaining apart and distinct
The alliance between Renault and Nissan was signed on 27th of March, 1999
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Nissan’s problems before the alliance Nissans problems before the alliance
$ 20 billion in debt The reasons of the problems
Recession in early 90’s in Japan There was complacency and a lack of urgency in the culture There was no cross-functional and cross-regional
communication The design of the cars was out of touch with the market A high degree of bureaucracy There was an emphasis on engineering culture rather than
managerial culture and promotions.
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The objectives of the alliance
Renault Nissan
Respective objectives
Improving qualityInternationalize
Reduce CostsReduce Debt
Common objectives
Economy of scaleTechnological Know-How
Leader for the quality and attractiveness of products & services
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Aim of the alliance Two principles
Developing all potential synergies by combining the strengths of both companies through a constructive approach to deliver Win-Win results
Preserving each company’s autonomy and respecting their own corporate and brand identities
Three objectives Quality and value of products and services in each region and
market segment Key technologies in engines, electronics and the environment Operating profit.
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Corporate Structure of the Alliance
Renault-Nissan BVstrategic management company
Alliance Board of DirectorsCarlos Ghosn
Renault-Nissan Purchasing Organization
Renault-Nissan Information Services
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Observable SymbolsCeremonies, Stories, Slogans,
Behaviors, Dress, Physical Settings
Underlying Values,
Assumptions,Beliefs, Attitudes,
Feelings
Levels of Corporate Culture
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Industry dynamics
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Rivalry among
competitors - High
Buyer power - High
Supplier power - Medium
Threat of new entrants
Low
Threat of substitutes -
Medium
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HHI - competitiveness in an industry - Automotive Vehicles 2754.0 Porter’s five forces Industry life cycle – Mature
Common platform with Nissan for small cars
Joint research projects and exchange of components (leading to standardization of these products)
The decision to return to the Mexican market, using Nissan’s powerful industrial and commercial presence
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Current Business Model Post Merger Strategy
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Further expansion in Europe and growth in Asia
To draw on the strengths of complementary expertise in sales and technology, and to reduce costs and enhance performance.
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Current Business Model Post Merger Strategy
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Restructuring
The aim of this restructuring was to be profitable and competitive
Sales & Marketing, Distribution, Human Resource were the key areas where restructuring initiatives have taken place.
The first important step taken by Renault was to broaden the notion of service to its customers. That led to the creation of two new entities: the Service department and the Distribution Project department.
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Trust, addition of value to both sides, high commitment
Equity, fair dealing, both profit
Electronic linkages to share key information, problem feedback and discussion
Mechanisms for close coordination, people on-site Involvement in partner’s product design and production, shared
resources
Long-term contracts
Business assistance beyond the contract
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New Orientation Partnership
Transnational Model of RENAULT-NISSAN
Assets and resources are dispersed worldwide into highly specialized operations that are linked together through interdependent relationships.
Structures are flexible and ever-changing.
Subsidiary managers initiate strategies and innovations that become strategy for the corporation as a whole.
Unification and coordination are achieved primarily through corporate culture, shared visions and values, and management style rather than through formal structures and systems
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Contingency FactorsAffecting Organization Design
Strategy
Environment
Size/Life Cycle Culture
Technolog
y
RENAULT-NISSANOrganizational Structure and
Design
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Pestel for renault
357 million market size UK france germany italy spain ireland swededn
Austria, Denmark, Finland 12 countries Competitors Volvo(niche) Psa wagon BMW
Mercedes(German) fiat ford Psa Reno fiat high volume European cars and
market is Europe only & try to keep Japanese out of market
Pressure to elt Japanese companies get in Companies asked for VRA (voluntary restraint
agreement)
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VRA = limit the no Japanese cars that are sold in the European market for a limited period
They did this to make them self super competitive so they can fight the Japanese cars or leave their market and start globalization
VRA lasted 7 years and Japanese cars were limited to 16%
Japanese agreed cause they had a low political influence so that Europeans will be more supportive
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Real drivers were political and legal change with economical and environmental change
Renault used this to become tougher and restricted company and acquired Nissan during that time
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Value Chain Analysis Nissan-Renault
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INFRASTRUCTURE: Main Head office Backup & Administration offices Internationally
HRM: Mainly Nissan, Executive Exchanges Across the Board
Technology: Faster Product Development, Joint product development & Economies Of Scale
Procurement: Coordinated Procurement & Improvement in Nissans Supply chain
DistributionUse of
common Distribution
channel
ProductionDecrease Number of Plants to save Extra
Overheads
MarketingSeparate
Brand Names MAR
GIN
Value Chain Analysis Nissan & Renault
Renault NissanHuman Resource Management Human Resource Management
Individuality Group
Technology Technology
Good Sleek Designs Reliable, Lacked Design
Procurement Procurement
Suitable Supply chain resulting reduced cost’s
Needs Good Strategies to cut cost’s
Production Production
Mass Production (Economies of Scale) Mass Production (Economies of scale)
Distribution Distribution
Good Channel in Europe only. Good System In Asia & U.S.
Marketing Marketing
Performance, Value for Money Quality, Value for Money
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SWOT – External Analysis
Hyper-competitive Market Heavy investment in R&D Strategy of cost becomes the major issue
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Country China Malaysia Singapore Hong Kong Japan
Qualification of workplace
Cost of labor
Politic Stability
Taxes
Unemployment
Highly Favorable Moderate Unfavorable
Opportunities in Asia :
SWOT – Internal Analysis
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Strengths Renault Weakness Nissan
Good cost control's for its debts
Recurring Losses
Innovative & Creative Lack of Creativity Product Renewal Needed
Privileged relationship with suppliers
Mismatch between suppliers and its
globalization strategy
Strong Management Weak Management
Strengths Nissan Weakness Renault
Quality Products Lack of Technology
37% of the total in U.S. & 28% Japan
No Recognition in U.S. & Japan
Huge Production Setup Small production Setup
SWOT Analysis Cont’d
Strengths for Nissan are weaknesses for Renault & vice versa
Complementary in many respects Nissan weaknesses are mainly due to
mismanagement of their resources To stay competitive Renault needed to diversify
geographically in Asia & U.S. – Nissan meets this criteria
Technological & Design exchange between Nissan & Renault gave Renault & Nissan strength Respectively
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Thank you for your attention!
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