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Renault – Nissan’s External
Audit
Group Members
• Ulusyar Tareen
• Shehreyar Khan
• Yuze Yao
• Hua Meng
• Li Li Renault-Nissan 1
Leading to High Performance
Agenda
Introduction of the company { Yao}
Leadership of Carlos Ghosn
Industry dynamics {Claire}
The Alliance of Nissan and Renault – Objectives
and Goals with SWOT and PESTEL Analysis by
{ Shehreyar Khan}
Current business model and previous Models
Value Chain Model and Porters 5 Forces Analysis
by { Ulusyar Tareen}
Current Performance of the company
Renault-Nissan 22Renault-Nissan
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 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.
3Renault-Nissan
Introduction of the companies
 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 and
distribution.
 Opportunities for survival - 4 million vehicles; new areas (Asia, Latin
America)
 Address market saturation in Europe
 Cope with Asian leader Toyota
Founded 1898
Cooperation with
Volvo 1990
Alliance with Nissan
1999
Founded 1911
Financial distress
1990
Alliance with Renault
1999
Renault
Nissan
4Renault-Nissan
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
5Renault-Nissan
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-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.
Renault-Nissan 66Renault-Nissan
The objectives of the alliance
Renault Nissan
Respective objectives
Improving quality
Internationalize
Reduce Costs
Reduce Debt
Common objectives
Economy of scale
Technological Know-How
Leader for the quality and attractiveness of products &
services
7Renault-Nissan
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.
8Renault-Nissan
Corporate Structure of the Alliance
Renault-Nissan BV
strategic management company
Alliance Board of Directors
Carlos Ghosn
Renault-Nissan
Purchasing Organization
Renault-Nissan
Information Services
9Renault-Nissan
Observable Symbols
Ceremonies, Stories, Slogans,
Behaviors, Dress,
Physical Settings
Underlying
Values,
Assumptions,
Beliefs, Attitudes,
Feelings
Levels of Corporate Culture
10Renault-Nissan
Industry dynamics
Renault-Nissan 11
Rivalry
among
competitors
- High
Buyer power
- High
Supplier
power -
Medium
Threat of
new entrants
Low
Threat of
substitutes -
Medium
11Renault-Nissan
 HHI - competitiveness in an industry - Automotive Vehicles 2754.0
 Porter’s five forces
Industry life cycle – Mature
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
12
Current Business Model
Post Merger Strategy
Renault-Nissan
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.
13
Current Business Model
Post Merger Strategy
Renault-Nissan
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.
14Renault-Nissan
 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
15Renault-Nissan
New Orientation Partnership
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
16Renault-Nissan
Contingency Factors
Affecting Organization Design
RENAULT-NISSAN
Organizational Structure and Design
17Renault-Nissan
Pestel for renault
357 million market size
UK france germany italy spain ireland swededn
Austria, Denmark, Finland 12 countries
Competitors Volvo(niche) Psa wagon BMW
Mercedes(German) fiat ford
Psa Reno fiat high volume European cars and
market is Europe only & try to keep Japanese out
of market
Pressure to elt Japanese companies get in
Companies asked for VRA (voluntary restraint
agreement)
Renault-Nissan 18
VRA = limit the no Japanese cars that are sold in
the European market for a limited period
They did this to make them self super competitive
so they can fight the Japanese cars or leave their
market and start globalization
VRA lasted 7 years and Japanese cars were limited
to 16%
Japanese agreed cause they had a low political
influence so that Europeans will be more
supportive
Renault-Nissan 19
Real drivers were political and legal change with
economical and environmental change
Renault used this to become tougher and
restricted company and acquired Nissan during
that time
Renault-Nissan 20
Value Chain Analysis Nissan-
Renault
Renault-Nissan 21
INFRASTRUCTURE: Main Head office Backup & Administration offices Internationally
HRM: Mainly Nissan, Executive Exchanges Across the Board
Technology: Faster Product Development, Joint product development & Economies Of
Scale
Procurement: Coordinated Procurement & Improvement in Nissans Supply chain
Distribution
Use of
common
Distribution
channel
Production
Decrease Number of
Plants to save Extra
Overheads
Marketing
Separate
Brand Names
MARGIN
Value Chain Analysis Nissan &
Renault
Renault Nissan
Human Resource Management Human Resource Management
Individuality Group
Technology Technology
Good Sleek Designs Reliable, Lacked Design
Procurement Procurement
Suitable Supply chain resulting reduced
cost’s
Needs Good Strategies to cut cost’s
Production Production
Mass Production (Economies of Scale) Mass Production (Economies of scale)
Distribution Distribution
Good Channel in Europe only. Good System In Asia & U.S.
Marketing Marketing
Performance, Value for Money Quality, Value for Money
Renault-Nissan 22
SWOT – External Analysis
 Hyper-competitive Market
 Heavy investment in R&D
 Strategy of cost becomes the major issue
Renault-Nissan 23
Country China Malaysia Singapore Hong Kong Japan
Qualification of
workplace
Cost of labor
Politic Stability
Taxes
Unemployment
Highly Favorable Moderate Unfavorable
Opportunities in Asia :
SWOT – Internal Analysis
Renault-Nissan 24
Strengths Renault Weakness Nissan
Good cost control's for its
debts
Recurring Losses
Innovative & Creative Lack of Creativity Product
Renewal Needed
Privileged relationship with
suppliers
Mismatch between suppliers
and its globalization strategy
Strong Management Weak Management
Strengths Nissan Weakness Renault
Quality Products Lack of Technology
37% of the total in U.S. &
28% Japan
No Recognition in U.S. & Japan
Huge Production Setup Small production Setup
SWOT Analysis Cont’d
Strengths for Nissan are weaknesses for Renault &
vice versa
Complementary in many respects
Nissan weaknesses are mainly due to
mismanagement of their resources
To stay competitive Renault needed to diversify
geographically in Asia & U.S. – Nissan meets this
criteria
Technological & Design exchange between Nissan
& Renault gave Renault & Nissan strength
Respectively
Renault-Nissan 25
Renault-Nissan 26
Thank you for your attention!
26Renault-Nissan

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Renault nissan case study

  • 1. Renault – Nissan’s External Audit Group Members • Ulusyar Tareen • Shehreyar Khan • Yuze Yao • Hua Meng • Li Li Renault-Nissan 1 Leading to High Performance
  • 2. Agenda Introduction of the company { Yao} Leadership of Carlos Ghosn Industry dynamics {Claire} The Alliance of Nissan and Renault – Objectives and Goals with SWOT and PESTEL Analysis by { Shehreyar Khan} Current business model and previous Models Value Chain Model and Porters 5 Forces Analysis by { Ulusyar Tareen} Current Performance of the company Renault-Nissan 22Renault-Nissan
  • 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 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. 3Renault-Nissan
  • 4. Introduction of the companies  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 and distribution.  Opportunities for survival - 4 million vehicles; new areas (Asia, Latin America)  Address market saturation in Europe  Cope with Asian leader Toyota Founded 1898 Cooperation with Volvo 1990 Alliance with Nissan 1999 Founded 1911 Financial distress 1990 Alliance with Renault 1999 Renault Nissan 4Renault-Nissan
  • 5. 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 5Renault-Nissan
  • 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-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. Renault-Nissan 66Renault-Nissan
  • 7. The objectives of the alliance Renault Nissan Respective objectives Improving quality Internationalize Reduce Costs Reduce Debt Common objectives Economy of scale Technological Know-How Leader for the quality and attractiveness of products & services 7Renault-Nissan
  • 8. 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. 8Renault-Nissan
  • 9. Corporate Structure of the Alliance Renault-Nissan BV strategic management company Alliance Board of Directors Carlos Ghosn Renault-Nissan Purchasing Organization Renault-Nissan Information Services 9Renault-Nissan
  • 10. Observable Symbols Ceremonies, Stories, Slogans, Behaviors, Dress, Physical Settings Underlying Values, Assumptions, Beliefs, Attitudes, Feelings Levels of Corporate Culture 10Renault-Nissan
  • 11. Industry dynamics Renault-Nissan 11 Rivalry among competitors - High Buyer power - High Supplier power - Medium Threat of new entrants Low Threat of substitutes - Medium 11Renault-Nissan  HHI - competitiveness in an industry - Automotive Vehicles 2754.0  Porter’s five forces Industry life cycle – Mature
  • 12. 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 12 Current Business Model Post Merger Strategy Renault-Nissan
  • 13. 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. 13 Current Business Model Post Merger Strategy Renault-Nissan
  • 14. 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. 14Renault-Nissan
  • 15.  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 15Renault-Nissan New Orientation Partnership
  • 16. 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 16Renault-Nissan
  • 17. Contingency Factors Affecting Organization Design RENAULT-NISSAN Organizational Structure and Design 17Renault-Nissan
  • 18. Pestel for renault 357 million market size UK france germany italy spain ireland swededn Austria, Denmark, Finland 12 countries Competitors Volvo(niche) Psa wagon BMW Mercedes(German) fiat ford Psa Reno fiat high volume European cars and market is Europe only & try to keep Japanese out of market Pressure to elt Japanese companies get in Companies asked for VRA (voluntary restraint agreement) Renault-Nissan 18
  • 19. VRA = limit the no Japanese cars that are sold in the European market for a limited period They did this to make them self super competitive so they can fight the Japanese cars or leave their market and start globalization VRA lasted 7 years and Japanese cars were limited to 16% Japanese agreed cause they had a low political influence so that Europeans will be more supportive Renault-Nissan 19
  • 20. Real drivers were political and legal change with economical and environmental change Renault used this to become tougher and restricted company and acquired Nissan during that time Renault-Nissan 20
  • 21. Value Chain Analysis Nissan- Renault Renault-Nissan 21 INFRASTRUCTURE: Main Head office Backup & Administration offices Internationally HRM: Mainly Nissan, Executive Exchanges Across the Board Technology: Faster Product Development, Joint product development & Economies Of Scale Procurement: Coordinated Procurement & Improvement in Nissans Supply chain Distribution Use of common Distribution channel Production Decrease Number of Plants to save Extra Overheads Marketing Separate Brand Names MARGIN
  • 22. Value Chain Analysis Nissan & Renault Renault Nissan Human Resource Management Human Resource Management Individuality Group Technology Technology Good Sleek Designs Reliable, Lacked Design Procurement Procurement Suitable Supply chain resulting reduced cost’s Needs Good Strategies to cut cost’s Production Production Mass Production (Economies of Scale) Mass Production (Economies of scale) Distribution Distribution Good Channel in Europe only. Good System In Asia & U.S. Marketing Marketing Performance, Value for Money Quality, Value for Money Renault-Nissan 22
  • 23. SWOT – External Analysis  Hyper-competitive Market  Heavy investment in R&D  Strategy of cost becomes the major issue Renault-Nissan 23 Country China Malaysia Singapore Hong Kong Japan Qualification of workplace Cost of labor Politic Stability Taxes Unemployment Highly Favorable Moderate Unfavorable Opportunities in Asia :
  • 24. SWOT – Internal Analysis Renault-Nissan 24 Strengths Renault Weakness Nissan Good cost control's for its debts Recurring Losses Innovative & Creative Lack of Creativity Product Renewal Needed Privileged relationship with suppliers Mismatch between suppliers and its globalization strategy Strong Management Weak Management Strengths Nissan Weakness Renault Quality Products Lack of Technology 37% of the total in U.S. & 28% Japan No Recognition in U.S. & Japan Huge Production Setup Small production Setup
  • 25. SWOT Analysis Cont’d Strengths for Nissan are weaknesses for Renault & vice versa Complementary in many respects Nissan weaknesses are mainly due to mismanagement of their resources To stay competitive Renault needed to diversify geographically in Asia & U.S. – Nissan meets this criteria Technological & Design exchange between Nissan & Renault gave Renault & Nissan strength Respectively Renault-Nissan 25
  • 26. Renault-Nissan 26 Thank you for your attention! 26Renault-Nissan