The Renault-Nissan Alliance: A Novel Organizational Form

Group 4Yi-Ru Lai, Ian Rich, Clotilde Pinault, Xi Zhang

OutlineContext & Background

Success Factors:- Strategic fit- Cultural fit- Organizational fit- Capabilities fit

Challenges and Recommendations

1

2

3

Context • In 1999, state of the automotive industry: rising of the Asian markets, Daimler and Chrysler M&A in 1998

• Nissan: 9 years of losses

Aim for Nissan: avoid bankruptcy

Aim for Renault:

become a global

automotive player

Aim for the Alliance: become one of the

top three automotive

companies in terms of quality,

technology and profitability

The 2 firms in 1999

• French multinational vehicle manufacturer established in 1899

• Market: Europe and south America

• Aims to expand globally

• Japanese multinational automotive manufacturer established in 1933

• Market: Japan and the US• 9 years of losses• No strategic objectives• No 3-year plan• No road map to the future

The Alliance

The Alliance

Results: • From 1999 to 2006, market cap of both companies tripled,

while total market cap of the global auto industry increased by 27 percent

Firm Infrastructure

Human Resources

Technology

Procurement

Operations

Marketing

4 Phases: Turning “A Marriage of Desperation” into a Successful Alliance

Pursue opportunities for joint projects (electric cars)3

Expansion of the Alliance: adding a third major party4

Renault helps Nissan: management expertise and financial resources1

Identify and exploit synergies and economies of scale2

Performance - Outcome

• Market Capitalisation: compared to the other automakers, Nissan was ranked 10th in 1999 and became 4th in 2006; Renault was ranked 11th in 1999 and became 7th in 2006.

• Sales (2000-2007). Between 2000 and 2007, sales increased by 23% (The Alliance)

• Nissan assets grow: cash and ST investment from $1.8b in 2004 to $4.1b in 2007 (USD)

Partner Analysis

Strategic FitOrganisational

Fit

Cultural FitCapabilities Fit

Success Factors: Strategic Fit

• Strategy for entering new markets: Divide and conquer approach. Renault focuses on Brazil, Russia and India while Nissan focuses on China

• When head-to-head competition is inevitable: Be smart competitors (e.g. collaborate with back office functions)

Success Factors: Strategic Fit

Renault ContributesStyling and design

expertise Experience with manufacturing

platforms

Nissan Contributes

Expanded distributionEngineering technology

Sales experience in Asia & US

Win-win principle

Learn from each other’s mistakes and best practices

Success Factors: Cultural Fit• Mutual respect and trust• Involve employees (foster a sense of personal responsibility)

and create and equal-footing relationship• Key employees loyal to the Alliance• Carlos Ghosn, CEO of Nissan and Renault: a very unique

position. Leads by example: very high involvement of Carlos Ghosn and his team. Split time 50%-50% between companies and spends most of his time outside France and Japan

Ghosn’s Leadership Style

To some extent, Ghosn followsKotter’s 8 steps to lead change successfully

Success Factors: Organisational Fit• An unique organisational form in the market. Two other

forms: industry giants (GM and Toyota) and the failed merger of Daimler-Chrysler.

• Ghosn at the head of Nissan reorganises Nissan from a silo based organisation to one that can operate cross-functionally.

• HR strategy: the appointment of Shiro Nakamura sends a message to employees that performance is the only key to success

• Appoint a new generation of leaders that have worked in both companies and that have loyalty to the Alliance

Cross company teams

Success Factors: Capabilities Fit

Technology

ProductionMarketing

Challenges

How to sustain and

grow the alliance after

Ghosn?

1How to utilise partners fully

for the benefits of all

parties?

4

Finding another alliance partner.

2How to manage

future “eco system”?

3

• Focus on long-term vision rather than short-term gains• Build the alliance mechanism• Continue the culture of mutual respect, trust and loyalty• Reaffirm the win-win principle• To achieve greater integration, the two firms could give ABM

more control

Recommendations

Thank you!!