Philippines Business Economy

I. FACTS OF THE CASE

The analyst’ representation of the Renault-Nissan alliance is an illustration of a cultural conundrum. The alliance between the French car manufacturer, Renault, and its Japanese counterpart, Nissan – both were symbols of national pride, were linked by cross shareholding and a common ideal. The Renault-Nissan Alliance is a unique motor industry partnership that ensures separate managements, corporate cultures and brand identities, yet allows both companies unlimited access to benchmarking and provides a rich information flow both ways.

Renault owns 44.3 percent of Nissan, Nissan owns 15 percent of Renault. An Alliance Board, with Carlos Ghosn as president, manages synergies and coordinates global joint activities. Ghosn was remarkably successful in achieving Nissan’s fortunes round after the alliance was form with the Anglo – Saxon model, helping to reduce Nissan’s enormous debt of ¥2,000 billion (then about $15 billion) and excess capacity, cut costs, and return the company profitability by 2001.

II. PROBLEMS OF THE CASE

This study focused on the complimentary cultures and skills result in ‘win-win’ situations for both companies.

Specifically, it answers the following questions:

 What have the Alliance brought the company despite of the remarkable different backgrounds: Renault which had been state owned and during the 1980s had underwent major restructuring for improvement of its performance, and on the other hand, Nissan, which had reached the peak of its international success during the 1980s, and which had produced high-specification vehicles at its highly productive, state-of-the-art factories?

 How did the Alliance worked?

 Is Carlos Ghosn decision to adopt the elements of an Anglo-Saxon approach for turning around Nissan’s fortunes be adopted to success in the modern international business environment?

 Why Nissan and Renault have decided to keep the two companies separate – headquartered in Tokyo and Paris respectively, have separate managements, running their individual operations through their respective executive twelve (12) committees, accountable to their shareholders as well as their board of directors, despite their joint overall management headed by Carlos Ghosn, the president?

III. ALTERNATIVE COURSES OF ACTION

The following alternative courses of action may be drawn:

 The Alliance be treated as a ‘win-win’ situation for the both companies.

Learning from the Japanese manufacturing model was clearly going to be one of the big benefits, for Renault, in an Alliance – knowing that the Japanese had a sizeable advantage over European and American manufacturers in their production systems. Learning from Nissan, Renault

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now develops cars faster and cheaper - and to higher quality levels. About twenty Nissan engineers now work at Renault on long-term assignments; a similar number of Renault engineers reciprocate in Japan.

 The Alliance still be able to assure and motivate its employees through fully clarifying the status of the company as well as their employment.

Renault and Nissan are separate companies, with separate management and separate headquarters. They are independent. Different engineering departments, design departments, manufacturing operations (though shared in some smaller markets) and marketing departments - all autonomous. Only in purchasing, information technology (IT) and, more recently greenfield manufacturing sites, do the two partners share some employees and management. Even here, employees - though servicing both members of the Alliance - continue to be specific Nissan or Renault employees.

 Benchmarking and transparency have led to substantial savings for both Alliance partners – Renault and Nissan, common platforms have been developed. The policy of interchangeable components consists in using the same components or interfaces for several models, in different segments and on different platforms, while retaining the identity of each brand and the features of each vehicle. It is applied for parts that the customer neither sees nor touches, including engines, gearboxes, heating, ventilation and air-conditioning systems, brake systems, seat structures, and wiper motors.

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Sharing of resources also expand to the area of environmental technology. Each partner takes the lead on a specific technology and places it at the disposal of the other. Nissan is working on fuel cells and hybrids. Meanwhile Renault is working on diesels and flex fuel. Both companies are also collaborating on electric vehicles.

 Improving global sales by allowing the strong regional partner to take the lead. Together, Renault and Nissan have complementary global footprints. Nissan is strong in Japan and North America, and through most of Asia. Renault is stronger in Europe, South America and North Africa. The stronger company helps its Alliance partner establish itself in a new region, or increase sales there.

Renault is helping Nissan in Europe, by using Renault's distribution system in many markets and also many of its dealers (though always from separate Nissan showrooms). In Eastern Europe, Renault's strength in Romania - partly through its Dacia affiliate - has helped Nissan enormously. Renault's Brazilian factory now makes Nissan passenger vehicle and light commercial vehicles, and Nissans are now sold by Renault dealers in Brazil. In Argentina, Renault became Nissan's importer.

Conversely, Nissan has helped Renault throughout Asia Pacific; in Australia, for example, Nissan took responsibility for re-establishing Renault. In South Korea, many new Renault Samsung vehicles are derived

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from Nissans, and have Nissan technical input. In the Middle East, Nissan helps Renault.

IV. BEST ALTERNATIVE COURSE OF ACTION

In diversity, there is unity. I'd say the French and Japanese have very different cultures and skills, and they are very complementary. It encourages dialogue and cross company team work, and brings out the best in both cultures. It enables Renault to learn from Nissan, and Nissan from Renault. It encourages an Alliance team spirit. Yet it also respects the fundamental differences between the two independent companies. Add those skills together and you get very great capability. It's a source of great competitive