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Renault nissan case study


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Renault nissan case study

  1. 1. Renault – Nissan’s ExternalAuditGroup Members• Ulusyar Tareen• Shehreyar Khan• Yuze Yao• Hua Meng• Li Li Renault-Nissan 1Leading to High Performance
  2. 2. AgendaIntroduction of the company { Yao}Leadership of Carlos GhosnIndustry dynamics {Claire}The Alliance of Nissan and Renault – Objectivesand Goals with SWOT and PESTEL Analysis by{ Shehreyar Khan}Current business model and previous ModelsValue Chain Model and Porters 5 Forces Analysisby { Ulusyar Tareen}Current Performance of the companyRenault-Nissan 22Renault-Nissan
  3. 3. 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 widecultural 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 namedChief 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, 2009.3Renault-Nissan
  4. 4. Introduction of the companies By 1999, the environment of car manufacturers has become supercompetitive: 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, LatinAmerica) Address market saturation in Europe Cope with Asian leader ToyotaFounded 1898Cooperation withVolvo 1990Alliance with Nissan1999Founded 1911Financial distress1990Alliance with Renault1999RenaultNissan4Renault-Nissan
  5. 5. Strategic Alliance DefinitionAgreement for cooperation among two or moreindependen firms to work together towards commonobjectivesCompanies in a strategic alliance do not form a newidentity to reach their aims but cooperate whileremaining apart and distinct The alliance between Renault and Nissan wassigned on 27th of March, 19995Renault-Nissan
  6. 6. 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-regionalcommunication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 thanmanagerial culture and promotions.Renault-Nissan 66Renault-Nissan
  7. 7. The objectives of the allianceRenault NissanRespective objectivesImproving qualityInternationalizeReduce CostsReduce DebtCommon objectivesEconomy of scaleTechnological Know-HowLeader for the quality and attractiveness of products &services7Renault-Nissan
  8. 8. Aim of the alliance Two principlesDeveloping all potential synergies by combining the strengthsof both companies through a constructive approach to deliver Win-Win resultsPreserving each company’s autonomy and respecting their owncorporate and brand identitiesThree objectivesQuality and value of products and services in each region andmarket segmentKey technologies in engines, electronics and the environmentOperating profit.8Renault-Nissan
  9. 9. Corporate Structure of the AllianceRenault-Nissan BVstrategic management companyAlliance Board of DirectorsCarlos GhosnRenault-NissanPurchasing OrganizationRenault-NissanInformation Services9Renault-Nissan
  10. 10. Observable SymbolsCeremonies, Stories, Slogans,Behaviors, Dress,Physical SettingsUnderlyingValues,Assumptions,Beliefs, Attitudes,FeelingsLevels of Corporate Culture10Renault-Nissan
  11. 11. Industry dynamicsRenault-Nissan 11Rivalryamongcompetitors- HighBuyer power- HighSupplierpower -MediumThreat ofnew entrantsLowThreat ofsubstitutes -Medium11Renault-Nissan HHI - competitiveness in an industry - Automotive Vehicles 2754.0 Porter’s five forcesIndustry life cycle – Mature
  12. 12. Common platform with Nissan for small carsJoint research projects and exchange ofcomponents (leading to standardization of theseproducts)The decision to return to the Mexican market,using Nissan’s powerful industrial and commercialpresence12Current Business ModelPost Merger StrategyRenault-Nissan
  13. 13. Further expansion in Europeand growth in Asia To draw on the strengths ofcomplementary expertise insales and technology, and toreduce costs and enhanceperformance.13Current Business ModelPost Merger StrategyRenault-Nissan
  14. 14. RestructuringThe aim of this restructuring was to be profitable andcompetitiveSales & Marketing, Distribution, Human Resource were thekey areas where restructuring initiatives have taken place.The first important step taken by Renault was to broadenthe notion of service to its customers. That led to thecreation of two new entities: the Service department andthe Distribution Project department.14Renault-Nissan
  15. 15.  Trust, addition of value to both sides, high commitment Equity, fair dealing, both profit Electronic linkages to share key information, problem feedback anddiscussion Mechanisms for close coordination, people on-site Involvement in partner’s product design and production, sharedresources Long-term contracts Business assistance beyond the contract15Renault-NissanNew Orientation Partnership
  16. 16. Transnational Model of RENAULT-NISSANAssets and resources are dispersed worldwide into highlyspecialized operations that are linked together throughinterdependent relationships.Structures are flexible and ever-changing.Subsidiary managers initiate strategies and innovationsthat become strategy for the corporation as a whole.Unification and coordination are achieved primarilythrough corporate culture, shared visions and values, andmanagement style rather than through formal structuresand systems16Renault-Nissan
  17. 17. Contingency FactorsAffecting Organization DesignRENAULT-NISSANOrganizational Structure and Design17Renault-Nissan
  18. 18. Pestel for renault357 million market sizeUK france germany italy spain ireland swedednAustria, Denmark, Finland 12 countriesCompetitors Volvo(niche) Psa wagon BMWMercedes(German) fiat fordPsa Reno fiat high volume European cars andmarket is Europe only & try to keep Japanese outof marketPressure to elt Japanese companies get inCompanies asked for VRA (voluntary restraintagreement)Renault-Nissan 18
  19. 19. VRA = limit the no Japanese cars that are sold inthe European market for a limited periodThey did this to make them self super competitiveso they can fight the Japanese cars or leave theirmarket and start globalizationVRA lasted 7 years and Japanese cars were limitedto 16%Japanese agreed cause they had a low politicalinfluence so that Europeans will be moresupportiveRenault-Nissan 19
  20. 20. Real drivers were political and legal change witheconomical and environmental changeRenault used this to become tougher andrestricted company and acquired Nissan duringthat timeRenault-Nissan 20
  21. 21. Value Chain Analysis Nissan-RenaultRenault-Nissan 21INFRASTRUCTURE: Main Head office Backup & Administration offices InternationallyHRM: Mainly Nissan, Executive Exchanges Across the BoardTechnology: Faster Product Development, Joint product development & Economies OfScaleProcurement: Coordinated Procurement & Improvement in Nissans Supply chainDistributionUse ofcommonDistributionchannelProductionDecrease Number ofPlants to save ExtraOverheadsMarketingSeparateBrand NamesMARGIN
  22. 22. Value Chain Analysis Nissan &RenaultRenault NissanHuman Resource Management Human Resource ManagementIndividuality GroupTechnology TechnologyGood Sleek Designs Reliable, Lacked DesignProcurement ProcurementSuitable Supply chain resulting reducedcost’sNeeds Good Strategies to cut cost’sProduction ProductionMass Production (Economies of Scale) Mass Production (Economies of scale)Distribution DistributionGood Channel in Europe only. Good System In Asia & U.S.Marketing MarketingPerformance, Value for Money Quality, Value for MoneyRenault-Nissan 22
  23. 23. SWOT – External Analysis Hyper-competitive Market Heavy investment in R&D Strategy of cost becomes the major issueRenault-Nissan 23Country China Malaysia Singapore Hong Kong JapanQualification ofworkplaceCost of laborPolitic StabilityTaxesUnemploymentHighly Favorable Moderate UnfavorableOpportunities in Asia :
  24. 24. SWOT – Internal AnalysisRenault-Nissan 24Strengths Renault Weakness NissanGood cost controls for itsdebtsRecurring LossesInnovative & Creative Lack of Creativity ProductRenewal NeededPrivileged relationship withsuppliersMismatch between suppliersand its globalization strategyStrong Management Weak ManagementStrengths Nissan Weakness RenaultQuality Products Lack of Technology37% of the total in U.S. &28% JapanNo Recognition in U.S. & JapanHuge Production Setup Small production Setup
  25. 25. SWOT Analysis Cont’dStrengths for Nissan are weaknesses for Renault &vice versaComplementary in many respectsNissan weaknesses are mainly due tomismanagement of their resourcesTo stay competitive Renault needed to diversifygeographically in Asia & U.S. – Nissan meets thiscriteriaTechnological & Design exchange between Nissan& Renault gave Renault & Nissan strengthRespectivelyRenault-Nissan 25
  26. 26. Renault-Nissan 26Thank you for your attention!26Renault-Nissan