Cultural differences should be considered as a main strategic issue when forming and managing international strategic alliances, especially for the alliances that are formed of members who have huge cultural differences like Renault-Nissan alliance. This paper focuses on studying the cultural impacts on the international strategic alliances through analyzing Renault-Nissan case; whereby trying to prove that the cultural differences are not obstacles in front of the international strategic alliances if well managed. On contrast, the cultural differences may provide new opportunities by combining the best of the different cultures and come up with new best practices like what Renault and Nissan has done. The first part of this paper provides an introduction about international strategic alliance, its definition and characteristics based on the Organization for Economic Co-operation and Development (OECD), and the main benefits companies aim from strategic alliances in general. The second part provides an overview of Renault-Nissan alliance and a brief description about Nissan revival plan which was developed by Carlos Ghosn, in addition to the synergies of the alliance. The third part provides a description of the new cultural environment of the alliance and compares the main cultural differences or challenges that should be considered in managing this alliance like individualism vs collectivism, power distance, masculinity vs femininity, uncertainty avoidance, time perception, truth vs virtue, decision making, language and enterprise loyalty. The fourth part provides details and figures that show the alliance success and the benefits it has gained for both Renault and Nissan as their alliance became the fourth car manufacturer on the global level. The fifth part as being the conclusion confirms that Renault-Nissan alliance success is evidence that the huge cultural differences between the allied companies are not obstacles for international strategic alliances.

1. Cultural Impacts on international strategic alliances
Analysis of Renault-Nissan case
Course: International Business Course
Prepared by Team No 6: Mahmoud Abu Farha, Hazem Tirhi
To: Prof. Aysar Sussan
Date: 13/06/2015

2. Outline
Abstract1
Introduction about strategic alliances2
Renault-Nissan alliance3
Major Cultural Differences and challenges
between Renault and Nissan
4
The success of Renault-Nissan alliance5
Conclusion6

3. Abstract
Cultural differences should be considered as a main strategic
issue when forming and managing international strategic
alliances, especially for the alliances that are formed of members
who have huge cultural differences like Renault-Nissan alliance.
The paper focuses on studying the cultural impacts on the
international strategic alliances through analyzing Renault-
Nissan case; whereby trying to prove that the cultural
differences are not obstacles in front of the international
strategic alliances if well managed. On contrast, the cultural
differences may provide new opportunities by combining the
best of the different cultures and come up with new best
practices like what Renault and Nissan has done.

4. 2.Shared risks
Introduction about strategic alliances
Benefits of the Strategic Alliances
The core of strategic alliance is the co-operative relationship that improves effectiveness of
the competitive strategies of its members (OECD)
1.Easier and more cost effective
market entry and expansion
3.Get access to the others
knowledge and expertise
4.Synergy and competitive
advantage
Main forms of strategic alliances
Joint ventures, equity swaps, minority equity investments, joint
R&D, joint marketing, joint manufacturing, long-term sourcing
agreements, shared distribution, shared provision of services and
standards-setting

5. 4.Human Resources
common human resource processes, unified “talent management”
1.Purchasing (RNPO)
Renault-Nissan alliance
2.Manufacturing and Logistics
improvement plant performance, optimize capital expenditures
through standardization, better capacity utilization
Synergies of the alliance
3.Research and Development
exchange powertrains, common powertrains, cost saving strategies
around the world which include Logistics, Customs & Trade,
information systems infrastructure, and Sales and Marketing
The alliance enabled the two
companies to outperform
some of their historic
regional rivals and it elevated
both Nissan and Renault into
the elite level

6. Major Cultural Differences and challenges between
Renault and Nissan
Main cultural differences between the Japanese and the
French cultures based on the Hofstede center website

7. Major Cultural Differences and challenges between
Renault and Nissan
After the alliance, Renault has started in implementing
changes within Nissan organization. The main goal for
those changes was to take Nissan back to profitability
after the difficulties that Nissan has faced in 1990s. In
order to achieve its goals Renault worked and is still
working to change some parts of Nissan culture which
they find inefficient like keiretsu, life time employment,
Masculinity, collectivism, decision making, Time
perception, Uncertainty Avoidance and many others

8. Major Cultural Differences and challenges between
Renault and Nissan
Individualism Vs Collectivism1
Nissan Renault
Based on the concept of collectivism. The
group as the most efficient instrument,
decisions are taken by consensus
more individualistic culture
• The new reward system that assesses managers according to their results and
promotes them based on objectives achievement, this change in Nissan aims to
increase individualism in a way that facilitates finding new talents.
• decision making process changed in a way that allows individuals to take decisions
quickly instead of taking decisions based on group consensus.
• The new management system in Nissan now encourages individual initiatives and
advancements in contrary to the former system

9. Major Cultural Differences and challenges between
Renault and Nissan
Nissan Renault
Strong, lower than Renault, hierarchy is
strong.
What determines the hierarchy is the
time spent in the company.
Traditions forbid the commandment of
managers by someone younger
Strong, hierarchy is strong
new system of promotion that is based on performance was implemented.
To minimize the high risks of conflicts Carlos Ghosn had established a double
hierarchy system.
Power Distance2

10. Major Cultural Differences and challenges between
Renault and Nissan
Nissan Renault
Japanese society is one of the most
masculine societies in the world
French culture tends to support equality
between males and females
Renault is sending women managers to Nissan as part of their collaboration
Masculinity Vs Femininity3

11. Major Cultural Differences and challenges between
Renault and Nissan
Nissan Renault
Japanese language French language
English is the official language, higher risks of misunderstanding in communication
Language4

12. Major Cultural Differences and challenges between
Renault and Nissan
Nissan Renault
Being more conservative
long term planning
Taking risks
Board members reduced from 37 to 10
Decision making process now don’t need consensus
Uncertainty Avoidance5

13. Major Cultural Differences and challenges between
Renault and Nissan
Nissan Renault
cyclical perception of time
More long term oriented
linear perception of time, Time is money
More short term oriented
Time orientation in Nissan had to be changed, Carlos Ghosn set the survival plan to
make Nissan able to recover as soon as possible by focus on regaining short term
profit
Time Perception6

14. Major Cultural Differences and challenges between
Renault and Nissan
Nissan Renault
make compromises and choose the best
in the different choices which is time
consuming
take decisions fast and pursue its logic till
the end
The new promotion system that is based on performance encourage taking decisions
fast
Truth Vs Virtue7

15. Major Cultural Differences and challenges between
Renault and Nissan
Nissan Renault
Making decisions take much longer time
because general consensus
They make decisions quickly
Number of Nissan's board members reduced from 37 before the alliance with Renault
to 10
Decision-making8

16. Major Cultural Differences and challenges between
Renault and Nissan
Nissan Renault
employees are very loyal because of the
concept of lifetime employment
Employees are be less loyal because of
the individualistic culture
Carlos Ghosn eliminates this principle “lifetime employment” mentioning that
Japanese cannot stuck with this old principle, and they had to adapt to current
management systems in order to keep their powerful in the auto industry
Enterprise Loyalty9

17. The success of Renault-Nissan strategic alliance
The strategic alliance between Renault and Nissan has created a successful
giant car producer in the global Auto Industry market, ranked No. 4
8.3 million cars of sales in 2013, about 10% of cars manufactured all over the
world, expectation for 2016 is to sell 10 million cars
Combining the best practices coming from the two companies
Constant synergy between the two companies and common goal vision
After 15 years of the alliance, the two companies still seeking more
convergence (strategic alliance is a constant process of re-shaping and good
practicing )

18. Conclusion
The distinctive success of Renault-Nissan alliance can
be considered as an evidence that proves that the huge
cultural differences are not obstacles in front of
international strategic alliances if well managed. On
contrast; combining the best practices from both
Renault and Nissan produced more effective best
practices for both of them, made them stronger and a
main player in auto industry on the global level, and
improved their future opportunities

19. Thank You
Questions