NISSAN’S TURNAROUND STORY BY RAMESH.C AMIT KUMAR.M
NISSAN BACKGROUND <ul><li>1933 – Started as Jidosha Seizo Co. Ltd </li></ul><ul><li>1934 – Changed to Nissan Motor Co. Ltd...
DECLINE OF NISSAN
PROFITS COMMUNICATION H R MARKETING PRODUCTS INVESTMENTS PRODUCTION
<ul><li>PRODUCTION </li></ul><ul><li>High Costs </li></ul><ul><li>Production Lag </li></ul><ul><li>Over Capacity </li></ul...
<ul><li>INVESTMENT </li></ul><ul><li>Unrelated Investment </li></ul><ul><li>Deep Debts </li></ul><ul><li>High Interests </...
<ul><li>MARKETING </li></ul><ul><li>Poor Marketing </li></ul><ul><li>Poor Brand Perception </li></ul><ul><li>Dealers </li>...
<ul><li>COMMUNICATIONS </li></ul><ul><li>Between Branches </li></ul><ul><li>Between Departments </li></ul><ul><li>Between ...
WHAT NISSAN DID? <ul><li>GBRP – Global Business Reform Plan </li></ul><ul><li>New Products </li></ul><ul><li>Higher Margin...
WHY NISSAN FAILED? <ul><li>Concentration on Profits – Not on Volumes </li></ul><ul><li>Lack of Funds </li></ul><ul><li>Sto...
NISSAN JAPAN MARKET SHARE
GLOBAL MARKET SHARE DECLINE
TURN AROUND
THE TURN AROUND PROCESS NADIR INDETERMINATE FAILURE SUCCESS STAGE 4 OUTCOME STAGE 3 TRNSITION STAGE 2 RESPONSE INTIATION S...
TURNAROUND - DECLINE <ul><li>K-extinction </li></ul><ul><li>Macro & external factors responsible. </li></ul><ul><li>R-exti...
TURNAROUND – RESPONSE INITIATION <ul><li>Strategic response </li></ul><ul><li>Changing or adjusting businesses firm is cur...
TURNAROUND - TRANSITION <ul><li>Time taken for the results of the turnaround strategies to be seen. </li></ul>TURNAROUND -...
 
RENAULT – NISSAN ALLIANCE <ul><li>$ 5.4 bn for 36.8% stake </li></ul><ul><li>Option for Renault – 44% </li></ul><ul><li>Op...
HIGHLIGHTS OF THE ALLIANCE <ul><li>Three Renault executives were appointed to the Nissan board </li></ul><ul><li>Yoshikazu...
CARLOS GHOSN
MISSING ELEMENTS <ul><li>Clear profit orientation </li></ul><ul><li>Focus on customers </li></ul><ul><li>Sense of urgency ...
NRP OVERVIEW <ul><li>Reducing operating costs by  ¥1trillion. </li></ul><ul><li>Reducing number of suppliers. </li></ul><u...
NRP-OPERATING COSTS <ul><li>REDUCING PURCHASING COSTS BY 20% </li></ul><ul><li>Centralizing the purchase activity. </li></...
NRP-FINANCIAL COSTS <ul><li>REDUCING FINANCIAL COSTS. </li></ul><ul><li>Centralize financial operations. </li></ul><ul><li...
NRP-S,G&A COSTS <ul><li>REDUCE S,G&A COSTS BY 20% </li></ul><ul><li>Cut down sales incentives. </li></ul><ul><li>Streamlin...
NRP-PRODUCTS <ul><li>INTRODUCE 22 NEW PRODUCTS & IMPROVE BRAND IMAGE. </li></ul><ul><li>Centralizing the designer’s . </li...
NRP-MANUFACTURING <ul><li>ATTAINING THE MANUFACTURING EFFECIENCY. </li></ul><ul><li>Reduction in over capacity. </li></ul>...
NRP-HUMAN RESOURCES <ul><li>TO REDUCE EMPLOYEES BY 21000. </li></ul><ul><li>Centralized hr function. </li></ul><ul><li>Lay...
RETURN TO TRACK <ul><li>Announced profits in FY 2001. </li></ul><ul><li>profits - $ 3.92 Bn, operating margin – 7.9% </li>...
WHAT LIES AHEAD? <ul><li>NISSAN 180 </li></ul><ul><li>To sell 1 Mn additional units. </li></ul><ul><li>Achieve op margins ...
THANK YOU
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N I S S A N T U R N A R O U N D

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THE FAMOUS TURNAROUND STRATEGY & ITS IMPLEMENTATION

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N I S S A N T U R N A R O U N D

  1. 1. NISSAN’S TURNAROUND STORY BY RAMESH.C AMIT KUMAR.M
  2. 2. NISSAN BACKGROUND <ul><li>1933 – Started as Jidosha Seizo Co. Ltd </li></ul><ul><li>1934 – Changed to Nissan Motor Co. Ltd. </li></ul><ul><li>1944 – Headquarters Shifted to Tokyo </li></ul><ul><li>1950 – Acquired Stake in Minsei Diesel Motors Co. Ltd. </li></ul><ul><li>1952 – Technological Cooperation with Austin Motors </li></ul><ul><li>1958 – Exports to USA </li></ul><ul><li>1959 – First overseas factory at Taiwan </li></ul><ul><li>1966 – Merged with Prince Motors Ltd. </li></ul><ul><li>1980 – Garner the worlds biggest auto market </li></ul><ul><li>1990 – Nissan’s decline started </li></ul>
  3. 3. DECLINE OF NISSAN
  4. 4. PROFITS COMMUNICATION H R MARKETING PRODUCTS INVESTMENTS PRODUCTION
  5. 5. <ul><li>PRODUCTION </li></ul><ul><li>High Costs </li></ul><ul><li>Production Lag </li></ul><ul><li>Over Capacity </li></ul><ul><li>Outdated Product Line </li></ul><ul><li>Keiretsu System </li></ul><ul><li>PRODUCT </li></ul><ul><li>Outdated Models </li></ul><ul><li>No New Designs </li></ul>
  6. 6. <ul><li>INVESTMENT </li></ul><ul><li>Unrelated Investment </li></ul><ul><li>Deep Debts </li></ul><ul><li>High Interests </li></ul><ul><li>PROFIT </li></ul><ul><li>Low Margin </li></ul><ul><li>High Fixed Cost </li></ul>
  7. 7. <ul><li>MARKETING </li></ul><ul><li>Poor Marketing </li></ul><ul><li>Poor Brand Perception </li></ul><ul><li>Dealers </li></ul><ul><li>HR </li></ul><ul><li>Labour Problems </li></ul><ul><li>Culture </li></ul>
  8. 8. <ul><li>COMMUNICATIONS </li></ul><ul><li>Between Branches </li></ul><ul><li>Between Departments </li></ul><ul><li>Between Global Divisions </li></ul>
  9. 9. WHAT NISSAN DID? <ul><li>GBRP – Global Business Reform Plan </li></ul><ul><li>New Products </li></ul><ul><li>Higher Margins </li></ul><ul><li>Reduction of Over Capacity </li></ul><ul><li>Disposal of Assets at Throw away Prices </li></ul>
  10. 10. WHY NISSAN FAILED? <ul><li>Concentration on Profits – Not on Volumes </li></ul><ul><li>Lack of Funds </li></ul><ul><li>Stocks Declared as Junk </li></ul><ul><li>No Reduction in Employee </li></ul>
  11. 11. NISSAN JAPAN MARKET SHARE
  12. 12. GLOBAL MARKET SHARE DECLINE
  13. 13. TURN AROUND
  14. 14. THE TURN AROUND PROCESS NADIR INDETERMINATE FAILURE SUCCESS STAGE 4 OUTCOME STAGE 3 TRNSITION STAGE 2 RESPONSE INTIATION STAGE 1 DECLINE
  15. 15. TURNAROUND - DECLINE <ul><li>K-extinction </li></ul><ul><li>Macro & external factors responsible. </li></ul><ul><li>R-extinction </li></ul><ul><li>Internal factors </li></ul><ul><li>Sources of intervention triggers decline. </li></ul>
  16. 16. TURNAROUND – RESPONSE INITIATION <ul><li>Strategic response </li></ul><ul><li>Changing or adjusting businesses firm is currently involved in. </li></ul><ul><li>Operating response </li></ul><ul><li>Way the business is being conducted, cost cutting and revenue generation. </li></ul>
  17. 17. TURNAROUND - TRANSITION <ul><li>Time taken for the results of the turnaround strategies to be seen. </li></ul>TURNAROUND - OUTCOME <ul><li>Whether turnaround is accomplished or not </li></ul><ul><li>Determined using performance measures. </li></ul>
  18. 19. RENAULT – NISSAN ALLIANCE <ul><li>$ 5.4 bn for 36.8% stake </li></ul><ul><li>Option for Renault – 44% </li></ul><ul><li>Option for Nissan – 15% </li></ul><ul><li>Renault bought out Nissan's European subsidiaries for $ 320 Mn </li></ul>
  19. 20. HIGHLIGHTS OF THE ALLIANCE <ul><li>Three Renault executives were appointed to the Nissan board </li></ul><ul><li>Yoshikazu Hanawa, President and CEO, Nissan was nominated for Renault board </li></ul><ul><li>Formation of transnational organization </li></ul><ul><li>Cross company teams </li></ul>
  20. 21. CARLOS GHOSN
  21. 22. MISSING ELEMENTS <ul><li>Clear profit orientation </li></ul><ul><li>Focus on customers </li></ul><ul><li>Sense of urgency </li></ul><ul><li>Proper communication (internal and external) </li></ul><ul><li>Employee empowerment </li></ul>
  22. 23. NRP OVERVIEW <ul><li>Reducing operating costs by ¥1trillion. </li></ul><ul><li>Reducing number of suppliers. </li></ul><ul><li>Reducing new debt from ¥1.3trillion to ¥700billion by FY 2002. </li></ul><ul><li>Introduction of around 22 new products by 2002. </li></ul><ul><li>Reducing employees by 21000. </li></ul><ul><li>Reducing the assembly plants from 7 to 4 in Japan. </li></ul><ul><li>Reducing manufacturing platforms from 24 to 15 in Japan. </li></ul>
  23. 24. NRP-OPERATING COSTS <ul><li>REDUCING PURCHASING COSTS BY 20% </li></ul><ul><li>Centralizing the purchase activity. </li></ul><ul><li>Decreasing the number of suppliers. </li></ul><ul><li>Including services in global purchasing strategy. </li></ul>600 1612 SUPPLIERS 2002 1999 YEAR
  24. 25. NRP-FINANCIAL COSTS <ul><li>REDUCING FINANCIAL COSTS. </li></ul><ul><li>Centralize financial operations. </li></ul><ul><li>Disposing off land, securities and un related investments. </li></ul><ul><li>Reducing sales inventory by 30% </li></ul>¥24BN ¥90BN FIN COSTS 15 200 BANKS 2000 1999 YEAR
  25. 26. NRP-S,G&A COSTS <ul><li>REDUCE S,G&A COSTS BY 20% </li></ul><ul><li>Cut down sales incentives. </li></ul><ul><li>Streamlining dealer network. </li></ul><ul><li>Centralizing the advertisement function. </li></ul>REDUCTION IN DEALERS 10% Rest of the world 20% Japan
  26. 27. NRP-PRODUCTS <ul><li>INTRODUCE 22 NEW PRODUCTS & IMPROVE BRAND IMAGE. </li></ul><ul><li>Centralizing the designer’s . </li></ul><ul><li>Integration with engineering, sales & marketing team. </li></ul><ul><li>Global brand identity strategy. </li></ul>
  27. 28. NRP-MANUFACTURING <ul><li>ATTAINING THE MANUFACTURING EFFECIENCY. </li></ul><ul><li>Reduction in over capacity. </li></ul><ul><li>Establishing new plants, where necessary. </li></ul>4 15 ASSEMBLY PLANTS 7 24 PLATFORMS 2000 1999 YEAR
  28. 29. NRP-HUMAN RESOURCES <ul><li>TO REDUCE EMPLOYEES BY 21000. </li></ul><ul><li>Centralized hr function. </li></ul><ul><li>Laying off, closing down plants, compensation strategies. </li></ul><ul><li>Introduced performance based payments. </li></ul><ul><li>Tie bonus with successful implementation of NRP. </li></ul>
  29. 30. RETURN TO TRACK <ul><li>Announced profits in FY 2001. </li></ul><ul><li>profits - $ 3.92 Bn, operating margin – 7.9% </li></ul><ul><li>Debt reduced to $ 3.48 Bn. </li></ul><ul><li>Market shares started increasing. </li></ul><ul><li>Won car of the year award 2002. </li></ul>
  30. 31. WHAT LIES AHEAD? <ul><li>NISSAN 180 </li></ul><ul><li>To sell 1 Mn additional units. </li></ul><ul><li>Achieve op margins of 8% </li></ul><ul><li>Zero net automotive debt. </li></ul>
  31. 32. THANK YOU
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