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Renault- Nissan Strategic Alliance
1. Renault – Nissan’s Strategic Alliance model Leading to High Performance 19 May 2010 1 Renault-Nissan
2. Agenda Introduction of the company Industry dynamics The Alliance of Nissan and Renault – Objectives and Goals Current business model Turnaround strategy Leadership of Carlos Ghosn Current Performance of the company Renault-Nissan 2 3 June 2010 19 May 2010 2 Renault-Nissan
3. Introduction of the companies Renault Nissan 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 anddistribution. Opportunities for survival - 4 million vehicles; new areas (Asia, Latin America) Address market saturation in Europe Cope with Asian leader Toyota 19 May 2010 3 Renault-Nissan
6. Industry life cycle – Mature Renault-Nissan 4 3 June 2010 19 May 2010 4 Renault-Nissan
7. 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 19 May 2010 5 Renault-Nissan
8. Nissan’s problems before the alliance Nissans problems before the alliance company was falling apart $ 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 Sticking in the Keiretsu model Renault-Nissan 6 3 June 2010 19 May 2010 6 Renault-Nissan
9. Main source of revenue - small to medium size cars in Europe 85 % of sales in Western Europe -> go international Renault’s problems before the alliance 19 May 2010 7 Renault-Nissan
10. 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 19 May 2010 8 Renault-Nissan
12. Key success factors of the alliance Quality between the relationships among the managers and engineers of Renault and Nissan Business experience Technical skills Core values: Balanced relations between the two companies and the development of strong identities for each of the brands Other factors: Alliance charter Capital contributions and equity participations Management structure and exchange of personnel 19 May 2010 10 Renault-Nissan
13. Goals Achieved by the Alliance Third largest global automaker (based on sales for the year 2008) Global market share of 9% (by volume) Significant presence in major world markets (United States, Europe, Japan, China, India, Russia) 19 May 2010 11 Renault-Nissan
19. Renault Nissan Group – a Global Player 01/07/02 31/12/95 Renault 44,4% Renault 20% Nissan AB Volvo 100% 92,7% Renault VI / Mack Dacia Renault VI / Mack VI 70% Samsung 19 May 2010 17 Renault-Nissan
20. 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 19 May 2010 18 Current Business Model Post Merger Strategy Renault-Nissan
21. 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. 19 May 2010 19 Current Business Model Post Merger Strategy Renault-Nissan
22. 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. 19 May 2010 20 Renault-Nissan
23. 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 19 May 2010 21 Renault-Nissan New Orientation Partnership
24. 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 19 May 2010 22 Renault-Nissan
25. Strategy Culture Size/ Life Cycle Environment Contingency FactorsAffecting Organization Design Technology RENAULT-NISSAN Organizational Structure and Design 19 May 2010 23 Renault-Nissan
26. Who is Carlos Ghosn? Born on 9th March, 1954, in Porto Bello, Brazil Moved to Lebanon with his parents in 1960 for primary education in a Jesuit School 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. 19 May 2010 24 Renault-Nissan
30. SWOT – ExternalAnalysis Automakers face legislation increasingly restrictively on the fuel consumption Market has become hyper-competitive Heavy investment in R&D Strategy of cost becomes the major issue The opportunities in Asia : 19 May 2010 28 Renault-Nissan
31. SWOT ExternalAnalysisCont’d To stay competitive Renault must diversify geographically by integrating a company that already has strong position in Asia, particularly in the regions identified - Nissan meets these criteria geography. However, the settlements are a necessary but not sufficient in the choice of partner 19 May 2010 29 Renault-Nissan
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33. The benefits of alliance with respect to other strategies In the market for car manufacturers, the only appropriate strategy is that allows the rapid acquisition of new skills. Strategy of horizontal diversification. Merger Acquisition Alliance Complementarities between the strengths and weaknesses of both companies Distinctive resources and competencies Learning: major challenge - little degree of synergy would cause a high cost of restructuring Advantages of the alliance before merger and acquisition economies of scale, geographically diversification, the reputation, the bargaining power 19 May 2010 31 Renault-Nissan
34. Thank you for your attention! Renault-Nissan 32 3 June 2010 19 May 2010 32 Renault-Nissan
