International development: Renault-Nissan Alliance

Extract

[...]  Positive consequences of the Alliance  Difficulties  How is the Alliance today? [...]

[...] Nissan › Founded in 1933 › Multi-national car manufacturer in Japon › Net income of $ 2.58 billion USD and 183.336 employees 70-80's: Development in the US market Main strength: Technological competence Main competitors: Toyota Eight years of downturn: low margins, high purchasing costs Comparison with Renault: strong presence aboard Renault › French manufacturer, headquartered in Boulogne Billancourt Privatized in 1966 The groups has different brands: Renault, Renault Samsung and Dacia Most successful car: Renault Clio 1980's: Low productivity, no global presence Presence mainly in Europe:57% of the revenues generated are in France › Main strength:  R&D and Design  Good financial situation with a net income of . [...]

[...] Context › Introduction of the two companies › Reasons for the Alliance How is the alliance organized? [...]

[...] and 4.2% was invested in R&D  Good reputation for their innovation and the anticipation of the market trends Alliance signed in March 1999 Unique partnership of two global companies united for their performance Two main principles: › Developing all potential synergies by combining the strengths of both companies › Preserving each company's autonomy and respecting their own corporate and brand identity Advantages of the alliance: Renault: Nissan: Useful to help it to develop its presence aboard Bad financial result Greater know-how of Renault in small passenger car Partnership based on complementary strengths Opportunity to gain from Nissan's know-how Common technology › Rejection by Daimler Chrysler › Common technology plan based on four pillars: Safety Environment-CO2 Life-on-Board Dynamic Performance Results › an output of 4.9 million vehicles and 9.1% market share worldwide in 1999 › 1999, Louis Schweitzer offered to buy 36.8% of Nissan Capital › After Nissan's financial situation improved, Renault increased its stake to 44.3% › Fourth worldwide carmaker The alliance was built in two majors steps › Cross-shareholdings  Renault has 44.3% of the equity stake of Nissan  Nissan owns 15% of Renault's equity stake › Renault-Nissan b.v. [...]

[...]  Built a joint company owned equally by both car makers  Aims at developing synergies and building common structures Governance and management of the alliance  The Alliance Board  The Steering Committees  guides synergies and manage common programs, manage directly the 3 others structures  The Cross Company Teams  look for synergies and opportunities  The Functional Task Teams  facilitate and support the work  The Task Teams  work on the projects and help the ST Own identity and autonomy Acquisition and strategic alliance Form of organization: hybrid Greater image towards the society Financial advantages › Historical record profit for Nissan: 3.6 billion € › Nissan has no more debt since 2003 › 11 billion € brought by Nissan within the Alliance › Reduction of costs of sales and production  RNPO, RNIS and common platforms and components  Increase of their negotiation power › Research and Development common funds and goal Offer diversity › Expansion of their ranges of products  Component and platform sharing › Internationalization of sales Manufacturing advantages › Taking the most of each production system  Increased Renault's productivity by 15% › Creation of the AIMS which will be used in India and Marocco plants › Using plants for both companies Complementary competences › Diesel motors (Renault) / Gaz motors (Nissan) › Renault: financial services and design › Nissan: manufacturing and engineering Cross-cultural Alliance › Better knowledge of different markets › This can also bring many difficulties Nissan Failure: › was witnessing a dramatic failure › huge debts › inefficient supply chain structure › declining market share  Last option : the alliance Renault – Nissan Alliance: $5.4 billion The leader Carlos Ghosn Challenge in less than 3 years Nissan/Renault maintained their individual entities Challenges: – strong business culture – proud automotive heritage Communication hurdles (French vs Japanese): – Official language: English – Employees were given English courses – Ghosn learnt Japanese language for the trust Work-Culture Differences: – European firms = meritocracy – Japanese firms = seniority – Expectations of roles Different Mindsets: › Nissan : poor non-meritocratic work culture › 95% : implementation planning › become receptive to different perspectives › to look at existing problems with different mindsets › to be creative to best leverage the opportunities Forecast: Continued Faith in the Alliance › Challenging times in the face of economic crisis › Ghosn's remains positive on the alliance Alliance financial highlights Renault Nissan Revenues 38 million € 59 million € Net income 571 million € - 1.6 billion € Workforce Alliance combined sales 2008 Renault Nissan Sales sales Crisis consequences on Renault › Sales : - 4.1% › Market share : + 3.6% › Outside Europe sales : + 1.5% ( units) Crisis consequences on Nissan › Sales : + 0.9% › In Japan sales decrease by 5.9% ( units) Crisis consequences on the alliance Net income evolution of Renault and Nissan Combined sales evolution of the alliance Crisis consequences on the alliance › Cost reduction in 2009 1.5 billion €) › A cost killer team  New synergies breaking system)  Cost reduction :  production system, logistic, engineering, research and development and also in the corporation information system  Firing : employees  Reduce managers wages by  Reduce stocks by 20% in concessionaries New projects for the future Development of worldwide electric technologies A partnership with EDF Agreement with Australian Government Agreement with Chinese Government Research of a new partner in the USA To use GM distributors To create synergies To penetrate deeply the U.S. [...]