Renault-Nissan Alliance: Success by Integration
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Case Code: BSTR422 Case Length: 14 Pages Period: 2000-2012 Pub Date: 2013 Teaching Note: Not Available |
Price: Rs.400 Organization: Renault, Nissan Industry: Automotive Countries: Europe; Japan; Global Themes: Implementation, Integration, Strategic Alliances, Globalization |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
About Renault
Renault's origins can be traced to 1898, when Louis Renault started to build the "voiturette," a two-seater vehicle. Louis' factory increased its output from six vehicles in 1898 to 4,200 in 1913. The First World War had a negative impact on France's economy. However, after the War ended, Renault resumed automobile production. Renault diversified into other areas such as locomotives, tractors, and aircraft. In the 1930s, the company continued to manufacture affordable and appealing automobiles...
The Renault-Nissan Alliance
In the mid- to late 1990s, several auto companies either acquired other auto companies or entered into joint ventures with them. This was done for several reasons such as to enter new markets, quicken the rate of expansion, reduce costs, or acquire technology. For instance, in 1998, Daimler Benz, a major German auto maker, acquired Chrysler, a US-based auto company. Similarly, PSA Peugeot Citroen, a French auto maker, entered into an alliance with Ford, the US-based auto company. The Renault-Nissan Alliance came about when Nissan was in a bad shape financially. In the mid-1990s, Nissan incurred huge losses and was in debt...
Nissan Revival Plan
In June 2000, Ghosn was made President of Nissan and later in June 2001, he was appointed CEO as well. Ghosn had launched the Nissan Revival Plan (NRP), a set of reforms that was expected to rescue the debt-ridden company and bring it back to profitability, in October 1999. The implementation of the NRP began in April, 2000. The plan involved slashing jobs, closing down factories, reducing the number of vehicle platforms, dismantling the Keiretsu network , investing in new technology, and setting up an efficient production system...
A Lesson in Integration
The Renault-Nissan Alliance was established with the aim of developing synergies while keeping the identities of the Nissan and Renault brands intact and preserving the corporate culture of the two entities.
The partnership was based on trust and mutual respect. "You can make companies work together even if they are on different continents. One company does not need to take over the other, nor is it crucial for both companies' cultures to meld into one. Preserving distinct styles helps each company's employees identify with their employer and stay motivated," said Ghosn...
Benefits of the Alliance
The capital structure of Renault and Nissan, with Renault holding 43.4% (as of 2012) in Nissan and Nissan holding 15% of Renault , was seen as one of the reasons for the success of the alliance. "This structure has been very solid to help us cement the alliance, create a strong sense of belonging to the alliance, even though people are still fiercely Renault or fiercely Nissan," said Ghosn....
Growing Through Collaboration
The Renault-Nissan Alliance was widely regarded as a success. The unique arrangement allowed the partners to take advantage of synergies, while maintaining separate identities and branding. "From the beginning, the Alliance has been based on the premise of trust and the pursuit of strategies aimed at profitable growth," said Ghosn.
Traditionally, Nissan had been strong in the US and Japan while Renault's performance had been better in Russia, France, and Brazil. However, as sales growth in developed countries was expected to be low in the coming years, both Renault and Nissan announced their intention to strengthen their market shares in emerging markets such as China, India, and Brazil....
Challenges Ahead
Though Renault and Nissan had improved efficiency and reduced costs over the years, the two companies had as of 2012 yet to match the efficiencies of Toyota Motor Corporation or the Volkswagen Group , which were both centrally managed and closely integrated.
Despite the cost advantages, technology sharing, and synergies with Nissan, Renault's market share in Europe had shrunk in 2011. On the other hand, the VW Group was consolidating its position as the number one player in Europe ...
Exhibits
Exhibit I(A): Nissan Versa/Sunny and Renault Scala
Exhibit I(B): Nissan Micra and Renault Pulse
Exhibit II: Financial Information on Nissan
Exhibit III: Financial Information on Renault Group
Exhibit IV: The Alliance Logo
Exhibit V: Nissan's Financials in 1999 and 2003
Exhibit VI: Component Sharing between Renault and Nissan
Exhibit VII: Market Shares of Auto Makers in Europe
Exhibit VIII(A): Top 10 Alliance Markets in 2011
Exhibit VIII(B): Top 10 Renault Group Markets in 2011
Exhibit VIII(C): Top 10 Nissan Markets in 2011
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