Introduction

The
purpose of this case study is to focus on the common goals that
Renault and Nissan had before cooperating with each other., and
the strategic plans both companies mentioned before signing the
agreement in 1999. Additionally the problems that both companies had
prior to the partnership and how they solved these problems. Renault
and Nissan also
had
faced
a
lot of challenges before and after the alliance but the main
focus
will be on the challenges that had been
taken
place after the alliance. When the questions are answered, I will
provide
my recommendations
that contains my views on the purpose of the Renault
and Nissan alliance cooperation and challenges.

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Background

In
1999, Renault bought a 36% percent stake in the Japanese company
Nissan for 5 billion dollars to create a partnership between the two
companies that were almost in a bankruptcy situation. This business
alliance which was impossible by several CEO of car manufactures and
consultants due to the big cultural differences between France and
Japan. Experience has shown that a lot of the partnerships between
companies tend to fail, so additionally the fact that Renault and
Nissan had not a stable financial situation, and those companies were
not large companies in the auto mobile industry, made a huge
insecurity on the outcome of that argumentative alliance. Some
relevant aspects about Renault is that in prior years the company had
failures and this situation started to go back in 1998, it had a
failed try of partnership with Volvo, Big part of the company was
owned by the French government, and it was not seen as global
corporate in order to the low international sales outside the French
market in places like the Japan and United states, which made them be
very limited.

About
Nissan, everyone noticed the problems that this company´s financial
situation was and how serious and bad it was. Any help or engagement
was requested to rescue the company from a fall in bankruptcy. This
position was the outcomes of actions that started in 1991 then
Nissan started losing market share making its production to be
reduced and production systems to be used at less than 50% of
ability. Nissan at that time had a very strict traditional Japanese
company following some business duties original from Japanese
government like the keiretsu that made the company keep a lot of
partners and this made the operation weak. When the both companies
were analysed together, it noticed that they would make a great match
because their features complemented each other For example, Nissan
was pioneer within the technology and engineering while Renault was
good for its design quality and marketing strategies. Regarding the
market position power in certain markets, Nissan was popular in Asia
and North America while Renault had a strong presence in Latin
America and Europe.

After
the agreement between the companies, Carlos Ghosn was the man who had
the responsibility to design the new strategy for the companies. He
created a team of Renault managers for going to Japan and evaluate
Nissan current situation and make strategies for overcoming all of
the issues. With regard to that the Japanese culture is very
nationalistic and proud, it is very tough for them to imagine where
some foreign companies can come to Japan and take over one of the
most symbolic Japanese companies

Questions

1-
Describe the relational objectives of the RNA
2-Describe
the challenges that the RNA has faced

1.1
Strategic alliance

Renault

The alliance between Renault & Nissan, as
shown by the outcomes in 2004, was an incredible movement of a
successful alliance around the world. However, before the alliance in
1999, the future of creating an alliance between these two companies
was not such hopeful.

From Renault’s aspect, a lot of factors were
powering the previous opinion. Firstly, Renault was recuperated
during 1996 and 1999 reducing losses of 680 million dollar into
profits of 1.65 Billion dollar. Additionally, the failure to work
with Volvo in 1995 had left its mark on Renault and any further
challenges to a new alliance were confronted suspiciously. Besides,
the fact that both companies were playing a dominant role in the car
industry of their countries was showing that a potential alliance was
going to fall in when it comes to make a decision.

.However, This was a
definitive challenge, which they succeeded to mange by learning to
trust each other, be honest and trustful on the negotiations.
Additionally, by forming common study groups, in order to try their
companies’ capacity to work together, they minimised the cultural
form and put the base for using common synergies. The both companies
completed each other when it comes to product type, geography and
personality that the future was promising. Besides, this process
provided Renault an advantage compared to the competitors such as
Ford and Daimler Chrysler, which concentrated only on getting
synergies on past and present advantages rather than on a prospective
fruitful future.
On this basis, Renault
achieved to gain international structure through the alliance with
Nissan, which made it to deal successfully with the challenges and
changes which were taking place on the world car industry.

Nissan

Nissan is a Japanese car
manufacturer which reaches, throughout the years to gain strong
market position in US and Asia. Excluding for the fact that Nissan
was a strongly symbolic character of Japan’s industrial strength, had
also many strong benefits such as engineering and technological
capacity, and also was good at producing large cars. Ford
and Daimler Chrysler did not accept the idea of a partnership. Nissan
rebuild the strategic alliance with Renault, where the two companies
had obvious concept of what they intended. The alliance was crucial
for both companies as Nissan needed Renault’s money in order to
decrease its debt issue and Renault was focusing on learning from
Nissan’s success in US and Asia which was important for the growth in
its market. Nissan had transformed significantly to rescue its
profitability and competitiveness. First Nissan stopped the
investments in other companies, which which was a Japanese
traditional regulation that forced all the companies in Japan to have
long-term purchasing cooperation, intense relationship and mutual
exchange of technology and experiences between companies and chosen
suppliers.
The personal leadership
also had changed and while Nissan in the past evaluated their
employees based on the time that they were working for the company,
now they changed the level of

Evaluation by focusing on
the implementation of each worker. Additionally they set up similar
language in example English. By the performance of the changes,
Nissan handle to reduce in purchasing cost, to limit suppliers and to
reduce the work force.
By the alliance of Nissan
and Renault, the advantages that emerged were determinant and clear.
Through benchmarking allows two culturally different companies to
utilize theirs best experiences and also the joint platform and
shared purchasing strategy had shown enormous cost of savings.
Noticeable is the fact that in order to keep company identities they
decide to keep as separate brands, separate managements and separate
companies even though any decision was affecting both companies. For
that reason the success of this alliance is also connected with the
synergy between the two companies and the framework of helping each
other and exchanging the knowledge between foreign engineering teams.
In the end, Nissan
successfully reaches to pass from the seventh most valuable
automakers company in the world to the fourth.

Challenges

The challenge in this
alliance can been structured in the intercultural aspect.
Particularly the way contrasting French and Japanese culture could
have it complicated to understand the financial issues of the
alliance and to save Nissan from a bankruptcy. However the
intelligent man Carlos Ghosn who was the COO of Nissan in 1999 could
make it easier to convince Nissan to decrease the traditional model.
Because he was known as foreigner in japan and that why he could
establish his targets much easier. So Nissan developed from a
cooperative organization with general agreement, which is typical for
japan to a more separate one with a decision making process without
general decision. This was implemented among other with the support
of a new reward system evaluating on individual outcomes. the
requested massive dismissal of 21 thousands employees and the closing
of 5 manufacturers as agreed in Nissan revival strategy stood in
highly opposition to their employee´s loyalty to Japanese companies
and the permanent employment plan – this was only possible due to
the person Carlos Ghosn . Besides the requested of 20% saving from
the suppliers during the first three years belonged to the purpose to
reduce the number to use more global suppliers, which were impossible
before in the Keiretsu system, where Nissan was also involved.
English became a common working language and the good exchange of
employees in all departments have assisted to understand each other.

Outcomes

Finally,
the contract of the Nissan Revival- strategy have been achieved one
year ahead of the plan in 2001, but not only the cost lowering above
are responsible for Nissan´s turnaround to gain profitability, but
also in term of the strongly launch of new systems since 1999 which
is based on a common platform strategy and new design for the
company. Nissan had created 180 plan and informed in early 2002
should establish a sustainable growth by selling 1 million vesicles
more globally, knowing 8% operating margin in 2001 and reaching a
zero clear debt in lastly of 2004. Because of Nissan´s turnaround to
profitability it is making a growing contribution to Renault’s
revenue, so in 2002 1.3 billion euro of Renault’s net revenue
resulted from Nissan witch provided a brighter view. Currently the
alliance has a global market position with independently status and
only direct competition in the world.

In
2002 sold 5 000 000 units – 2.7 million from Nissan and 2.3 million
from Renault.

2009
– 1.5 billion Euro with RNBV
2011-
1,7 billion Euro synergies with announcement of New MTPs
2013-
2,8 billion Euro synergies ( estimated)

Recommendations

The success of alliance
between Renault and Nissan shows that alliances can be a going method
to expand globally. because of that I think that there are advises
which could be taken into consideration, by any other automobiles
enterprises thinking to design a successful alliance to establish in
new markets.
When two companies want to
take a decision of establishing an alliance they should be knowing of
differences in languages, mentalities and cultures as well. This can
be found by realizing these variations and focusing more on the
common targets and objectives.
When it comes to
operations, Renault – Nissan can be utilized by other automobiles
companies in many ways. In supply chain management the same
organization like RNPO can be found by other alliances to unite their
purchasing orders and they can lower their cost of orders. In
engineering I hope for future alliances to concentrate on producing
car parts in common instead of making new vehicles completely which
failed in most cases.

By following the previous
strategies, the costs can be reduced and higher production can be
reached by using common resources.
It was clear from the
beginning the effect of the difference in the culture management
which was one of the important factors of success for the alliance.
Therefore, when two different enterprises unite to work with each
other in unusual strategic alliance, providing a platform for
managers and employees to know about each other culture could be
important. Another way for developing company culture in a similar
alliances is setting one formal language for employees to get used
with diversity of spoken language. Additionally, establishing common
values, individual needs, and knowledge is important to bring
opportunities for future alliances. This can be possible by
implementing a social system similar to social initiation system of
Renault-Nissan.