Can Makoto Uchida Revive Nissan Motor Co.?
| Case Code: BSTR633
Case Length: 12 Pages
Pub Date: 2022
Teaching Note: Available
Organization : Nissan Motor co.
Industry : Automotive
Countries : Japan
Themes: Turnaround Strategy, Corporate Image & Identity, Restructuring
Abstract Case Intro 1 Case Intro 2 Excerpts
The Corruption Crackdown
In November 2018, Ghosn was arrested in Japan for allegedly under-reporting his compensation and retirement benefits by US$140 million. Ghosn’s financial misdeeds came to light after Nada turned whistleblower and filed complaints with the Tokyo Public Prosecutors Office . Nada revealed Ghosn’s actual compensation to the Nissan board since he got to know about the latter’s plans of merging Renault with Nissan due to increasing pressure from the French government. Nada feared that the merger would give huge power to Renault to control Nissan in which it already had a 43% stake with voting rights. Nissan, on the other hand, had only a 15% stake in Renault, with no voting rights..
Renault-nissan-mitsubishi alliance in trouble?
In November 2018, Renault asked Nissan for details of Ghosn’s misdeeds and announced Thierry Bollore as its interim CEO. Renault also raised concerns over Ghosn’s arrest damaging the reputation and credit ratings of both the companies in the alliance. The French government, which had a stake in Renault, chose to keep quiet about Ghosn. Bruno Le Maire, Minister of Economy and Finance of the French Republic, stated..
Nissan also had to deal with the challenge of excess capacity due to Ghosn’s ambitious expansion plans. To tackle the company’s excess capacity, Nissan had to give huge discounts on its cars. According to one Nissan executive, “It’s like becoming a drug addict. Once you rely on incentives, you will be able to sell more cars, but the profitability keeps on deteriorating.” All this led to the automaker reporting a loss of US$6.2 billion for the FY ended March 2020...
Nissan Next Transformation Plan
To tackle Nissan’s challenges, in May 2020, Uchida announced the company’s new restructuring initiative known as the Nissan NEXT Transformation Plan which aimed to restore profitability by shutting down unprofitable plants and surplus facilities and shifting from the company’s earlier strategy under the Ghosn era, which had focused on huge sales and expansion..
In March 2020, Japan’s government agency and financial regulator, the Financial Services Agency, sought ¥2.42 billion in fines from Nissan for underreporting Ghosn’s compensation..
Exhibit I: Nissan’s Five-Year Consolidated Statements of Income
Exhibit II: Renault-Nissan’s Stock Price
Exhibit III: Nissan Next Transformation Plan
Exhibit IV: Nissan’s Financial Performance (in Billions of ¥)
Exhibit V: Nissan’s Sales Performance
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