Renault and Nissan has been a very successful merger over the years. It happened in 1999. Renault specializes in sales and marketing while Nissan professes in production and technology. This set of distinct characteristics enabled the two corporations to synergize and exploit each other's prowess in distinct business activities.
This report aims at providing a critical analysis of Renault-Nissan alliance and the recommendations on lessons that Nissan can learn from this partnership.
a. Nissan Crisis- Nissan had made losses in six out of seven years prior to 1999. Keiretsu relations posed as an overextended dealer and supplier base for Nissan in a time of recession. Factory Utilization had fallen to 53 percent. Japanese culture promises its employees of life long employment schemes. When Renault took over, the management shook up the Maslow's pyramid in Nissan. There were layoffs and promises of life long employment were broken. Nissan were set out to cut 21,000 jobs (Collinson et. al. 2016 pg-611). This put employees on their toes to secure their employment and also feel a sense of pride after the catastrophic failure of Nissan. The keiretsu relations of Nissan with fellow suppliers and distributors went through tough times. Cost killing in Nissan led to cost cutting in other firms further reinforcing the strain on cultural fabric. Friendships broke in the firms and among the firms.
b. Hofstede Comparison- According to Hofstede comparisons, the two countries share cultures that are not very different from each other. In fact, out of the 6 parameters measured, only Individualism and Masculinity have a major deviation on comparing the two countries (Hofstede Insights, 2018). Japan was an ideal country to choose to do business with. Due to high level of masculinity, people of Japan tend to be less emotional when taking decisions and concentrate, for the most part, on goals. Since Nissan scenario was an admission of failure on Japanese part, employees were open to changes in the organization internally as well as externally. However, Japanese needed an outsider to this part since, friendships and relations among stakeholders of the company were the very foundation of Japanese way of doing business and no Japanese local wanted to be the bearer/cause of these changes.
c. Company Footprint- Nissan manufactures just over 50 percent of its vehicles in Japan with most of the rest spread equally over Mexico, United States and UK. It has factory operations in 20 countries. On the contrary, Renault manufactures in 17 countries however, they produce 55 percent of their cars in France and most of the rest in Europe. The two companies have developed shared production facilities in Mexico, Brazil and Spain. Renault-Nissan alliance are increasingly sharing engineering platforms for parts, engines and transmission. They have also integrated IT, communications and information systems. As a result, both the companies have been able to exploit new markets and provide better products and customer services in existing markets. Furthermore, the two companies are less prone to the effects of the economic slowdown in a market since they operate and manufacture in a large number of countries.
d. Synergy- Renault's Competencies in design, finance and marketing complemented Nissan's proficiency in engineering and manufacturing processes. The two firms enhanced their synergies through the exchange of personnel. About 50 employees from Renault originally joined departments such as supplier relations, product strategy, sales and marketing, and finance in Nissan. Similarly, 50 employees from Nissan switched to Renault's departments in Engineering, manufacturing and quality control. Besides, 250 executives from both the firms were assigned to permanent alliance structures and a further 250 employees from Nissan became part of the restructured European sales and marketing divisions of Renault.
e. Management Beliefs- Be different. Both the companies need to have separate identities. Ghosn, C. (2010) The two companies provided healthy competition to each other. Can't make one team out of two teams. Each team needs to have an identity (Japanese or French) and belong somewhere in order to have motivation. Furthermore, admission of failure on Japanese part in context of Nissan, motivated the employees to prove themselves show to the French how good Japanese actually are. This merger was just like a marriage, where two people come together to make the other person a better version of themselves. Similarly, Nissan and Renault shared each other's strength and rode the tough times together. Two sticks together are stronger than a single stick.
Nissan was basically resurrected by Renault. The gamble proved to be good business for both the carmakers. In the analysis above, we discovered the changes this merger brought about in both the firms and also, the effects these changes caused. All the changes and effects are tested using the appropriate cultural theories.
1. Nissan and Renault have formed a successful partnership over the years. Major reason for that is that both the companies have kept their identities separate and employees as well as buyers of the company can associate themselves to common mission. For instance, zero emission cars. People would like to be a part of such a cause. Ghosn, C. (2010)
2. Both the companies should keep doing employee exchange programs and seminars to build respect and team work among two different cultures
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