Renault nissan new

Renault-Nissan

The Challenge of Sustaining

Strategic Change

Presented By:

Abhishek Rajvanshi

Chitranshu Shukla

14.12.2017 Strategy Implementation & Control

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Introduction to Nissan Renault


Introduction to Renault Nissan

1999 Strategic alliance

with Renault

Nissan Timeline

Renault Timeline

1933

Nissan

was

founded

1950s to 1970s Rapid growth

1980sOperating

loss & severe

competition

1992Started

restructur-ing plan

2001

Successful turnaround

1898Renault

was founded

1999 Obtained

44% shares of Nissan

Carlos Ghosn

1983-1988Suffered from loss

1990-1993Attempt to

merger and

acquire


Renault Nissan

Respective objectives

Improving quality

Internationalize its business (Asian &

North-American)

Technological know-how

Reduce cost

Reduce debt

Expand market in Europe & Latin

America

Design & Marketing

Common objectives

Leader for the quality and attractiveness of products and services

Objectives of the Alliance


Japanese Culture


Japanese Culture

CollectivismHigh power

distance

Masculinity High context


Collectivism culture: value harmony, fitting in and politeness,

“saving face”

Decision were made by people having similar thoughts

• The “Kereitsu” – affect purchasing in terms of cost and

quality

• Debates and conflicts are not valued or are seen as offense

• Decisions were made by people with similar thoughts

• Stress on consensus and compromise prolonged decision

making process

• Spent too much time apologizing for service failures

Collectivism


Subordinates expect to be consulted in small power distance societies,

versus being told what to do in large power distance societies.

Unthinkable for a small group of middle

managers to come up with a plan for the

company’s future organization

Feedbacks are channeled through a peer

Respect seniority: life-time employment

and senior-based reward

Young employee could not take up senior

positions

High Power Distance


Masculinity: a society in which social gender roles are clearly distinct,

i.e. men are supposed to be assertive, tough, and focused on material

success; women are supposed to be more modest, tender, and concerned

with the quality of life

Males occupied important

positions

Not used to collaborate and

communicate with females

Male employees not appreciate

to be supervised and managed

by female

Masculinity


High-context communication tends to be more indirect and more

formal. Flowery language, humility, and elaborate apologies are

typical.

Functional requirements and

specifications were not clear.

‘If people don’t act, it doesn’t

mean that they don’t agree

with you, it means that they

don’t understand’

The “Blaming culture”

High Context


Turnaround by Carlos Ghosn14.12.2017 Strategy Implementation & Control

• Born in Brazil

• Lebanese parents

• Studied in Engineering in France

• Spent 18 years in Michelin in Braziland North America

• Joined Renault in 1996 as EVP ofAdvanced R&D, Manufacturing andPurchasing

• Appointed as COO of Renault in1998

• Appointed as COO of Nissan in June1999 and as CEO in June 2001

Who is Carlos Ghosn?!


• On October 18, 1999, Nissanintroduced a three-year plan torevive the company.

• The Nissan Revival Plan (NRP)is a bold, sweeping programwith a goal of nothing less thanrecreating the organization.

• NRP sets the stage for thecreation of lasting, profitablegrowth.

Nissan Revival Plan (NRP)


1. Nissan will return to netprofitability in fiscal year 2000

2. Nissan will achieve a minimumoperating income to salesmargin of 4.5 percent by fiscalyear 2002

3. Nissan will reduce consolidatednet automotive debt to less than$6.3 billion by fiscal year 2002

4. If any of these are not met, theexecutive committee haspromised to resign.

Nissan Revival Plan (NRP)


NRP: Meeting the Revival Commitments

Main goals Results , 1998 Planned results, 2002

(according to NRP)

1 Minimum operating income

to sales margin

1.7 % 4.5%

2 Suppliers and purchasing

costs

Too many suppliers-

3000 and very high

purchasing cost

Cut the purchasing costs

by 20%, reduce the

number of its suppliers

3 Platforms and assembly

plants

24 platforms spread

between 7 plants

15 platforms spread

between 4 plants


Main goals Results , 1998 Planned results, 2002

(according to NRP)

4 New products 4 out 43 models are

profitable

Introduce 22 new

vehicles with high

potential demand

5 New technologies Some of models have

not attractive design

and are more than 5

years in the market

Vehicles are more

enjoyable, safer and

ecologically friendly

6 Investments in R&D 3,7 % of sales 5% of sales

7 Number of employees 131 000 Reduce to 127 000

NRP: Meeting the Revival Commitments


Measures taken by Carlos Ghosn

• Business Process

• Corporate culture


1. Language policy: All top-level meetings were held in English, intensive language courses for all Nissan employees

2. Dictionary of essential terms which includes clear definitions

3. Thoughts, words and action are the same

4. Demanded the best quality of the job, strong control of every numbers

5. Cross-cultural training – having over 1500 employees from Renault learn about the Japanese business culture and 400 Nissan employees study the French culture

Corporate Culture Measures


1. 5% of time to establish a plan, 95% to execute

2. Encouraged open debate and open disagreement

3. A performance-oriented compensation, 35% of salary is performance-related

4. Promotions are based on performance, not on seniority

5. The use of e-mail is encouraged

6. Cross functional teams (CFT) creation

7. Cut jobs through early retirement, job transfer

8. Terminate the relationships with most Keiretsu suppliers

Business Process Measures


Purpose of CFT: to generate ideas and recommendations for change

Critical areas: purchasing, engineering and R&D

Every CFT consists of 10 people:

1 leader (middle manager), 1 former Renault manager

2 sponsors (senior executives),and other employees

Sub-teams of 10 people to investigate particular issues.

Total number is 500 people

Business Process Measures and CFT


The Role of Leadership in Successful

International Merger & Acquisitions

14.12.2017STRATEGY IMPLEMENTATION & CONTROL

Leadership in Mergers & Acquisitions

• Successful post-M&A integration depends on a sound

leadership style that enables organizational and cultural

adaptation.

• During the period M&A integration, if employees believe that

their leaders care about them, they develop a positive attitude

toward the change and commit to greater involvement in the

integration.

•Transformational and Transactional leadership styles can

improve employee engagement.

Types of Leaderships Styles

Transactional Leadership

Transformational Leadership

There are two types of Leaderships styles

Transactional Leadership

• It is a style of leadership in which the leader promotes

compliance of his followers through both rewards and

punishments.

• Also known as managerial leadership, focuses on the role

of supervision, organization, and group performance.

• Leaders using the transactional approach are not looking to

change the future, they are looking to merely keep things

the same

Transformational Style

•A transformational leader is a person who inspires

(transform) followers to achieve extraordinary outcomes.

• Able to arouse, excite and inspire followers to put out extra

effort to achieve group goals.

•Pay attention to the concern and developmental needs of

individual followers

•Change followers’ awareness of issues by helping them to

look at old problems in a new way.

Factors of Success in M&A

Main factors that should be implemented by leaders &

affects the success or failure the M&A of Companies:

4. Aligning

Culture

3. Talent

Management

2. Strategic

drivers &

planning

1.Due

Diligence

5. Evaluation

Process

Due Diligence

• Due diligence is the series of exploratory activities used

in evaluating a company prior to finalization of the M&A.

• The traditional approach to due diligence focuses on

several key areas: financial, legal and regulatory, and

accounting and tax.

• When everything in the examination process checks out

from a financial, legal, and regulatory standpoint, the

merger partners typically move forward.

Strategic Drivers

• It means defining strategic drivers or reasons why a

company wants to go through M&A process.

• Most of the companies can go through M&A for either:

- Organizational growth

- Increasing market share

- Gaining entrée into new markets

- Obtaining products

- Keeping pace with change

• Successful M&As should focus on post the M&A on

rationale and objectives and then managing the tactical

and functional activities to achieve those.

Aligning Culture

Defining corporate culture is based on viewing it on three levels:

• Culture is an Iceberg, the visible part, such as how the office is structured,

formal or informal, what lies beneath the surface such as the nature of

people, time, economics, business success.

• The real task for leaders to align culture of two companies is based on a

thoughtful and thorough analysis of the people If leaders want them to

change the people, they should make sure they are malleable.

• Leaders also should make the people part of their vision based on the

people's culture

Political Culture:

As the distribution of

power throughout the

organization.

Emotional Culture:

As influenced by the

personal feelings that

employees hold toward

the company, its

policies.

Structural Culture:

Such as company size,

industry, and other

readily identifiable

characteristics

Talent Management

• When organizations go through M&A, they need to determine whether or not there is a need for a retention incentive plan.

• If so, they have to decide who should participate, how people will awarded, the timing and structure of the plan and finally how much the overall plan cost

•Team of Renault engineer & production employee visited Nisaan and vice versa to share their expertise.

•Nissan design team was relocated from engineering group to marketing group.

•Top executives were stationed in major markets.

•A global marketing team was created to coordinate Nissan’s activities across globe.

•By 2002,30% of all purchasing was jointly done.Global structure were establish, along with GSAM.

Initiative taken by Mr. Carlos Ghosn.

To select the alternatives and then evaluate the bestone as the company have limited choices andconstraints.

•Improve profitability•Increase sales, market share, return on investment•Customer satisfaction•Brand image•Corporate mission, vision and strategy•Resources and capabilities

Selection Of Alternatives For Renault Nissan

Strength & Weakness Analysis-Internal

Strength Renault Weakness Nissan

Good cost control for its debts Recurring losses

Innovative & creative Lack of Creativity

Privileged relationship with

suppliers

Mismatch between suppliers

and its strategy

Strong Management Weak Management

Strength Nissan Weakness Renault

Quality products Lack of technology

37% of the total in US &

28% in Japan

No recognition in US & Japan

Huge production setup Small production setup

Porter Five Forces

Supplier Power

Medium

Threat of New Entrants

Low

Buyer Power

High

Threat of Substitutes

Medium

Rivalry among competitors

High

VRIO ANALYSIS

VALUABLE

•Cross company teams (CCTs)

•Cross Functional Teams (CFTs)

•Feedback from workers on the shop floor

•Global Marketing Team.

RARE

•Global Supplier account Managers( GSAMs)

•Nomination Advisory Committee

•Joint Distribution Platform

VRIO ANALYSIS

COSTLY TO IMITATE

Global Engineering team.

Global Supplier

Global structure were established for managing

finance, manufacturing, IT and R&D functions.

ORGANIZED TO CAPTURE VALUE

Resources, itself, cannot provide advantages to

organization until it is organized and exploit to do so.

Renault Nissan organize its management systems,

processes, policies and strategies to fully utilize the

resource’s potential to be valuable, rare and costly to

imitate.

• Leadership plays a vital role in the success of M&A

• Understanding the multicultural aspects help to integrate both two cultures and companies smoothly in order to achieve the business success

• No “right” or “wrong” culture

• The success of the M&A depends on the deep analysis of the market and company, followed by a concrete implementation plan for business processes.

Insights & Conclusion

Carlos Ghosn: “If you have to work

and do something significant in a

country it is much easier if you

connected with the country and the

culture.


Thank You For Patience
