Nissan’s success story

E L G U N S E Y I D O V

B U S I N E S S A D M I N I S T R A T I O N

NISSAN’S SUCCESS STORY

BEGINNING OF NISSAN

• Masujiro Hashimoto founded

the Kwaishinsha Motor Car Works in

1911. In 1914, the company

produced its first car, called DAT

FOUNDING NISSAN MOTOR

• In 1934, Yoshisuke Aikawa separated the expanded

automobile parts division of Tobata Casting and

incorporated it as a new subsidiary, which he

named Nissan Motor Co., Ltd.

• In 1935, construction of its Yokohama plant was

completed. 44 Datsuns were shipped to Asia, Central

and South America.

FOREIGN EXPANSION

• They first showed cars at the 1958 Los Angeles Auto Show

• In 1960s, Nissan continued to improve their sedans with

the latest technological advancements and chic

Italianate styling

• By 1970, Nissan had become one of the world's largest exporters of automobiles

OIL CRISIS

• In the wake of the 1973 oil crisis, consumers worldwide

(especially in the lucrative U.S. market) began turning to

high-quality small economy cars. To meet the growing

demand, the company built new factories in Mexico,

Australia, New Zealand, Taiwan and South Africa.

RENAULT-NISSAN ALLIANCE

• In 1999, with Nissan facing severe financial difficulties, Nissan

entered an alliance with Renault of France.

THE SITUATION

• Nissans problems before the alliance

• Company was falling apart

• $ 23 billion euros in debt

• Inability to establish a purchasing policy or a system of relations with suppliers

• They were in case of loosing their identity

• Increasing debt

• Declining market share

• High cost of production

• Japanese recession

THE SITUATION

• 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

• Sticking in the Keiretsu model

CARLOS GHOSN

• Born on 9th March, 1954, in Porto Bello, Brazil

• Joined Renault in 1996 as Executive Vice President of Advanced R&D, Manufacturing and Purchasing

• Appointed as COO of Renault in 1998

• In June 2001, Carlos Ghosn was named Chief Executive Officer of Nissan.

• In May 2005, Ghosn was named President of Renault. He was appointed President and CEO of Renault on 6 May 2009.

• Under CEO Ghosn's "Nissan Revival Plan" (NRP), the company reached to record profits and a dramatic revitalization of its models

• He is also a director of Alcoa and AvtoVAZ.

SWOT – EXTERNAL ANALYSIS

• Automakers face legislation increasingly restrictively on the fuel consumption

• Market has become hyper-competitive

• Heavy investment in R&D

• Strategy of cost becomes the major issue

SWOT – INTERNAL ANALYSIS

Nissan’s weaknesses are only due to a bad optimization

from their resources and skills

THE GOALS

• Combine and utilize the resources to achieve

economies of scale

• Using each other’s complementary strengths to

improve the efficiency

• Provide distinct brand name

PHASES OF AGREEMENT

First phase

• In 1999, Renault took a

36,8% stake in Nissan for

about 4.4 euros.

• 3 executive directors was

from Renault joined Nissan,

and Carlos Ghosn was

appointed as COO.

Second phase

• On May 2002, Nissan took

15% stake in Renault, but

they didn’t have any voting rights.

• Renault-Nissan B.V. was

formed.

CARLOS GHOSN STRATEGY

• The biggest challenge- cultural differences between

companies

• Individual approach

• Closed 5 manufacturing factories

• Layoff 20000 employees

• Reduce Nissan’s own purchase costs and turn it global suppliers

• Making English as a common “work language”

• “Nissan Revival Plan”

CARLOS GHOSN

• “You have to be careful that at the end of the day, by trying

to do more in the short-term you don't end up destroying

what had been delivering so much result on the mid-term

and long-term”

(Carlos Ghosn)

T H E E N D