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Renault – Nissan’s Strategic Alliance model Leading to High Performance 19 May 2010 1 Renault-Nissan
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74359811 Renault Nissan Merger Ppt

Nov 30, 2015

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Renault Nissans Strategic Alliance model Leading to High Performance

19 May 20101Renault-NissanAgendaIntroduction of the companyIndustry dynamics The Alliance of Nissan and Renault Objectives and GoalsCurrent business modelTurnaround strategy Leadership of Carlos GhosnCurrent Performance of the company3 June 2010Renault-Nissan219 May 20102Renault-NissanIntroduction of the companiesBy 1999, the environment of car manufacturers has become super competitive:globalization driven by market internationalizationneed for Renault and Nissan to reach critical sizesaturation of certain geographic areas for production anddistribution.Opportunities for survival - 4 million vehicles; new areas (Asia, Latin America) Address market saturation in Europe Cope with Asian leader Toyota RenaultNissan19 May 20103Renault-NissanIndustry dynamics3 June 2010Renault-Nissan419 May 20104Renault-Nissan HHI - competitiveness in an industry - Automotive Vehicles 2754.0 Porters five forcesIndustry life cycle Mature Strategic Alliance Definition Agreement for cooperation among two or more independen firms to work together towards common objectivesCompanies 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, 199919 May 20105Renault-NissanNissans problems before the alliance Nissans problems before the alliance company was falling apart $ 20 billion in debt The reasons of the problemsRecession in early 90s in JapanThere was complacency and a lack of urgency in the cultureThere was no cross-functional and cross-regional communicationThe design of the cars was out of touch with the marketA high degree of bureaucracyThere was an emphasis on engineering culture rather than managerial culture and promotions Sticking in the Keiretsu model3 June 2010Renault-Nissan619 May 20106Renault-Nissan Main source of revenue - small to medium size cars in Europe 85 % of sales in Western Europe -> go internationalRenaults problems before the alliance19 May 20107Renault-NissanAim of the alliance Two principlesDeveloping all potential synergies by combining the strengths of both companies through a constructive approach to deliver Win-Win resultsPreserving each companys autonomy and respecting their own corporate and brand identitiesThree objectivesQuality and value of products and services in each region and market segment Key technologies in engines, electronics and the environmentOperating profit19 May 20108Renault-NissanThe objectives of the allianceRenaultNissanRespective objectivesImproving qualityInternationalizeReduce CostsReduce DebtCommon objectivesEconomy of scaleTechnological Know-HowLeader for the quality and attractiveness of products & services19 May 20109Renault-Nissan9Key success factors of the allianceQuality between the relationships among the managers and engineers of Renault and NissanBusiness experienceTechnical skillsCore values: Balanced relations between the two companies and the development of strong identities for each of the brandsOther factors:Alliance charterCapital contributions and equity participationsManagement structure and exchange of personnel

19 May 201010Renault-NissanGoals Achieved by the AllianceThird largest global automaker (based on sales for the year 2008) Global market share of 9% (by volume) Significant presence in major world markets (United States, Europe, Japan, China, India, Russia)19 May 201011Renault-NissanCorporate Structure of the Alliance19 May 201012Renault-Nissan

Management Structure of the Alliance19 May 201013Renault-NissanObservable SymbolsCeremonies, Stories, Slogans,Behaviors, Dress, Physical SettingsUnderlying Values,Assumptions,Beliefs, Attitudes, FeelingsLevels of Corporate Culture19 May 201014Renault-Nissan

Profitable growth worldwide

New Strategies 19 May 201015Renault-NissanAn Open System19 May 201016Renault-Nissan31/12/95

RenaultRenault VI / Mack VI

RenaultNissan44,4%Dacia92,7%Samsung70%AB Volvo100%Renault VI / Mack20%01/07/02

Renault Nissan Group a Global Player19 May 201017Renault-NissanCommon 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 Nissans powerful industrial and commercial presence

19 May 201018Current Business Model Post Merger StrategyRenault-NissanFurther 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.

19 May 201019Current Business Model Post Merger StrategyRenault-NissanRestructuringThe 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.

19 May 201020Renault-NissanTrust, 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 partners product design and production, shared resources

Long-term contracts

Business assistance beyond the contract19 May 201021Renault-NissanNew Orientation PartnershipTransnational Model of RENAULT-NISSANAssets 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 systems19 May 201022Renault-NissanContingency FactorsAffecting Organization DesignStrategyEnvironmentSize/Life CycleCultureTechnologyRENAULT-NISSANOrganizational Structure and Design

19 May 201023Renault-NissanWho is Carlos Ghosn?Born on 9th March, 1954, in Porto Bello, Brazil Moved to Lebanon with his parents in 1960 for primary education in a Jesuit SchoolThroughout his life he lived and worked all over the world and gained wide cultural awarenessSpent 18 years with Michelin in Brazil and North America Joined Renault in 1996 as Executive Vice President of Advanced R&D, Manufacturing and PurchasingAppointed 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 2005Remains President and CEO of NissanCarlos Ghosn is also a director of Alcoa and AvtoVAZ.He is appointed President and CEO of Renault on May 6,2009.19 May 201024Renault-Nissan

Fiedler`s Contingency Theory

19 May 201025Renault-NissanFiedler`s Contingency Theory

19 May 201026Renault-NissanTurnaround strategyLewins model3 June 2010Renault-Nissan2719 May 201027Renault-Nissan27SWOT External AnalysisAutomakers face legislation increasingly restrictively on the fuel consumptionMarket has become hyper-competitiveHeavy investment in R&DStrategy of cost becomes the major issueThe opportunities in Asia :CountryChinaMalaysiaSingaporeHong KongJapanQualification of workplaceCost of laborPIB per personPolitic StabilityTaxesUnemploymentVery FavorableFavorableunfavorable19 May 201028Renault-Nissan28SWOT External Analysis ContdTo stay competitive Renault must diversify geographically by integrating a company that already has strong position in Asia, particularly in the regions identified - Nissan meets these criteria geography. However, the settlements are a necessary but not sufficient in the choice of partner19 May 201029Renault-Nissan29SWOT - Internal AnalysisStrengths RenaultWeakness NissanCost Control DebtRecurring LossesInnovation, creativity, imaginationLack of creativity and renewal of itsProductsOverall management and strategic platformsproduction and supplyPoor management capacityPrivileged relationship with suppliersSupplier relationships (vertical Keiretsu) inmismatch with a globalization strategyCapacity ManagementManagement & slow conformistStrengths NissanWeakness RenaultQuality Products of poor qualityTimeliness of Filing Delay in production time37% of the total distribution in the U.S. and 28%JapanLack of notoriety in Japan & USA (0% of the distribution)18.5% of cars with engines up torange on all of their productionOpportunities insufficient to justify the developmentand production of top-end engines (4.5%) The majority of the weaknesses are strength for Nissan Renault and vice versa: we can say that they are complementary in many respects. Moreover, we note that Nissan weaknesses are only due to a bad optimization from their resources and skills.

19 May 201030Renault-Nissan30The benefits of alliance with respect to other strategiesIn the market for car manufacturers, the only appropriate strategy is that allows the rapid acquisition of new skills.Strategy of horizontal diversification.MergerAcquisition AllianceComplementarities between the strengths and weaknesses of both companiesDistinctive resources and competenciesLearning: major challenge - little degree of synergy would cause a high cost of restructuringAdvantages of the alliance before merger and acquisition economies of scale, geographically diversification, the reputation, the bargaining power19 May 201031Renault-Nissan313 June 2010Renault-Nissan32Thank you for your attention!19 May 201032Renault-Nissan

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