Pudelko dij041012
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Pudelko dij041012 Pudelko dij041012 Presentation Transcript

  • The Automobile Industry in Japan and GermanyStrategic Challenges and New Perspectives in the Age of Globalization Symposium, Tokyo 12 October 2004 Renault-Nissan and DaimlerChrysler What are the Lessons to be Learned? Markus Pudelko University of Edinburgh Management School
  • Expectations and Outcome Expectations OutcomeDaimler + -ChryslerRenault - +Nissan
  • Differences in Strategies I Strategy DaimlerChrysler Renault-NissanProduct Daimler luxury producer, Both mass market producers, Chrysler mass market producer; competing in same segments; no overlap preventing threat of cannibalization, but cannibalization, but limiting cost allowing for common platforms reduction potential; aim: (10 instead of 34), allowing for complementary engineering huge economies of scale without sharing platformsGeographic Each strong where other is weak; Renault strong in Europe, Nissan Daimler in Europe, Chrysler in strong in Asia and US; product America; both weak in Asia overlap offset by geographic complementTechnical Chrysler low-cost innovator with Renault’s strengths in RD and flair fast product development cycle, for design; Nissan’s known for but limited R&D capabilities; bland but reliable models and Daimler strong R&D, but will strong engineering skills benefit from higher volumeSourcing Chrysler is an effective Nissan’s can reduce number of purchaser from which Daimler suppliers by 50% to match can lean Renault’s cheaper streamlined supply chain; purchasing to be fully coordinated
  • Differences in Strategies II Strategy DaimlerChrysler Renault-NissanManu- Both manufacture in completely Each can produce where the otherfacturing different ways; Daimler has plant and spare capacity, produces tailored vehicles on a especially important for Nissan pull system, whereas Chrysler which struggles with overcapacity pushes out mass produced cars on a lean low-cost basis; scope for mutual learningOrgani- Daimler was a conglomerate; Both purely automotivezation Chrysler was purely an manufacturers automotive manufacturerCorporate Daimler very bureaucratic; Both bureaucratic and highlyCulture Chrysler freewheeling hierarchical with an historic lifelong employment systemSales & No intention of combining sales Geographic fit allows for each toDistribution operations, but scope to benefit benefit from the other’s from shared distribution distribution network through common hubsFinance Daimler’s limited scope for Renault provided the cash for growth but big financial Nissan to survive resources, Chrysler the opposite
  • Strategic Overlays?Opportunities DaimlerChrysler Renault-NissanPeople Yes. Daimler can benefit from Yes. Transfer of Carlos Ghosn was marketing expertise and a major boost to Nissan. Nissan Chrysler can benefit from can also benefit from design engineering and quality expertise and Renault from management reliability expertiseProducts Yes. Daimler‘s growth was No. The two companies were limited in maturing markets generally involved in the same segmentsProcesses Yes. R&D transfer very Limited as both produce largely in important for Chrysler; the same way Daimler can learn from quick product development and purchasing skillsMarkets Yes YesCustomers Yes. Customers have different No, as largely sold in the same demographics and segments psychographics
  • BenefitsDaimlerChrysler emerged as primarily arevenue-enhancing merger for long-termgrowth.Renault-Nissan’s core benefit is fromcost reduction through duplicatedactivities.
  • TimingThe timing of the DaimlerChryslermerger was poor, in that Daimler boughtChrysler at the top of the market and paida 28% premium for the honour.The Renault-Nissan timing was perfect,with Nissan at the bottom of an eight-year dip in profits.
  • NegotiationsRenault who intended to enter into along-term relationship, did not exploit itsshort-term bargaining advantage.With DaimlerChrysler both parties weredeceived. Daimler tricked Chrysler into atakeover, but paid a premium that was notdeserved.
  • Deal StructureThe DaimlerChrysler deal had to come form afriendly approach and resulted in a ‘merger ofequals’. As a result, expectations and thepotential for disappointment were high. Daimlerwas not able to dominate the integration processfully from the start as it would have liked. Thisled to delays, uncertainty and confrontation ininitial integration.Renault dominated in early stages as Nissanneeded money and managers to transform itsoperations. This insured compliance.
  • IntegrationDaimlerChrysler’s integration can be seen as atwo-stage process. The initial phase followingimmediately the merger was operated withprecision and speed, but did little to integratethe companies. The second phase emerged asChrysler was about to go under.It is the second phase which can be likened toRenault-Nissan’s integration under the NissanRevival Plan. Chrysler, like Nissan had becomethe weaker partner and had no choice but tocomply.
  • Skill transferDaimler and Chrysler had no commonalities intheir value chains (‘marriage of opposites’).Skill transfer was difficult and proved onlypossible once one party clearly dominated.Skill transfer in the Renault-Nissan alliance hasbeen easier as their value chains operate alongsimilar lines as their products are alike.
  • Sharing activitiesDaimlerChrysler’s determination to keep theirbrands separate has a substantial impact onintegration. Potential for cost savings hasconstantly to be weighted against the risk todelude Mercedes’ image.The similarity of value chains in the Renault-Nissan combination allows cost savings andrevenue benefits to occur relatively quickly.
  • Value chains DAIMLER-BENZ CHRYSLER Firm Infrastructure Firm InfrastructureHierarchical Freewheeling HRM HRMNot much pay differences Huge differences in pay Technology TechnologyEngineering oriented, slow product Design oriented, quick productdevelopment for luxury cars development for mass market Procurement ProcurementEngineers design every ‘nut and bolt’, Efficient, sources most componentspreserving the uniquenesss of the brand from outside Production ProductionPull system for tailored vehicles Lean, low-cost mass production Distribution DistributionWorldwide (incl. the US) Mainly US, exports elsewhere Marketing Marketing‘Sober gentlemen’ Funky streetwise
  • Value chains RENAULT NISSAN Firm Infrastructure Firm InfrastructureBureaucratic Bureaucratic HRM HRMIndividuality Group Technology TechnologyKnown for good design for the mass Known for reliability, but lackingmarket good design for the mass market Procurement ProcurementRecently reorganised supply chain to cut Need to reorganise supply chain tocosts cut costs Production ProductionMass production Mass production Distribution DistributionGood system in Europe, less so elsewhere Good system in Asia and the US Marketing MarketingPerformance, value for money Quality, value for money
  • Value chain DaimlerChrysler Firm InfrastructureFinance and PR first departments to be fully integrated, but clash in PR HRMConcerted efforts to harmonize very different pay systems; global HRMstrategy implemented in 2001 TechnologyDaimler engineers initially accused to refuse to share technology, haschanged; Daimler has adopted Chrysler’s product development technology ProcurementInitial problems in deciding how to share components without damagingDaimler’s brand image start to get resolved ProductionNow starting to develop common processes and best practices DistributionSome integration MarketingChrysler’s international sales operations were melded into Daimler’s
  • Value chain Renault-Nissan Firm InfrastructureIntegration of back office and administrative functions around the world HRMEffect on HRM changes has been more marked with Nissan; executiveexchanges across the board TechnologyDeveloping common platforms is key to the progress in economies of scaleand faster product development; move towards joint product development ProcurementOne third of cost savings coming from coordinated procurement andimprovement of Nissan’s costly supply chain ProductionDecrease of number of platforms in order to generate substantial cost savings DistributionUse of common hubs MarketingSeparate brands will be maintained
  • LeadershipChrysler suffered after the merger from adramatic loss of leadership.Nissan benefited from the immediateleadership of Carlos Ghosn, who hasbecome a national icon in Japan.
  • Corporate and National CultureGermany and the USA have comparativelyless distinct cultures, but this effect seemsto have been superseded by differentcorporate cultures of Daimler andChrysler.France and Japan are culturally ratherdistinct, but similarities in the corporatecultures between Renault and Nissan seemto have helped the integration process.
  • CircumstancesAt DaimlerChrysler, the merger of equalsnotion was instrumental in the clash tocome.Nissan’s desperation played an importantpart for a successful integration process.
  • OutlookDaimlerChrysler clearly fits the‘symbiosis’ approach to integration. Thisapproach is considered to have the bestlong-run rewards, albeit with the greatestshort-term complexity.Renault-Nissan appears to be movingtowards absorption in the long run, butthe result of the integration process is stillunclear.