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Page 1: Renault nissan case study

Renault – Nissan’s External Audit

Group Members• Ulusyar Tareen • Shehreyar Khan• Yuze Yao• Hua Meng• Li Li

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Leading to High Performance

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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

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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.

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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

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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

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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.

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The objectives of the alliance

Renault Nissan

Respective objectives

Improving qualityInternationalize

Reduce CostsReduce Debt

Common objectives

Economy of scaleTechnological Know-How

Leader for the quality and attractiveness of products & services

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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.

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Corporate Structure of the Alliance

Renault-Nissan BVstrategic management company

Alliance Board of DirectorsCarlos Ghosn

Renault-Nissan Purchasing Organization

Renault-Nissan Information Services

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Observable SymbolsCeremonies, Stories, Slogans,

Behaviors, Dress, Physical Settings

Underlying Values,

Assumptions,Beliefs, Attitudes,

Feelings

Levels of Corporate Culture

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Industry dynamics

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Rivalry among

competitors - High

Buyer power - High

Supplier power - Medium

Threat of new entrants

Low

Threat of substitutes -

Medium

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HHI - competitiveness in an industry - Automotive Vehicles 2754.0 Porter’s five forces Industry life cycle – Mature

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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

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Current Business Model Post Merger Strategy

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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.

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Current Business Model Post Merger Strategy

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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.

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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

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New Orientation Partnership

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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

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Contingency FactorsAffecting Organization Design

Strategy

Environment

Size/Life Cycle Culture

Technolog

y

RENAULT-NISSANOrganizational Structure and

Design

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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)

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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

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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

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Value Chain Analysis Nissan-Renault

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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

DistributionUse of

common Distribution

channel

ProductionDecrease Number of Plants to save Extra

Overheads

MarketingSeparate

Brand Names MAR

GIN

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Value Chain Analysis Nissan & Renault

Renault NissanHuman 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

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SWOT – External Analysis

Hyper-competitive Market Heavy investment in R&D Strategy of cost becomes the major issue

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Country China Malaysia Singapore Hong Kong Japan

Qualification of workplace

Cost of labor

Politic Stability

Taxes

Unemployment

Highly Favorable Moderate Unfavorable

Opportunities in Asia :

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SWOT – Internal Analysis

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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

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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

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Thank you for your attention!

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