Renault Corporation And Nissan Motors example essay topic

Paper Topic: Presentation of the successful merge of RENAULT corporation and NISSAN motors! Term Paper due on April 26th, 2001 In 1999, RENAULT, a French midsize automaker company decided to create an alliance with Japan's NISSAN Motors. This operation has transformed the company into a global player, inside the very competitive market of worldwide vehicular distribution. By taking over 36.8% of Nissan's capital, Renault decided to send Carlos Ghosn, as new manager from Nissan, in order for him to install a "Nissan Revival Plan" (NRP). Actually, this plan has been made in order for both corporations to restore profitability, and acquire and increase market shares in Japan. My paper presents and describes the different aspects of this successful merging operation between two cultural opposites way of managing and running business.

In other words, it shows the differences and changes that have been brought by Renault Corporation. First, it presents the major leadership role played by Carlos Ghosn in successfully restoring Nissan's health. Secondly, it introduces the Nissan's Japanese way of running an organization, and the main changes made by Renault organization, a western European firm: showing the huge different gap between the two ways of managing businesses. Carlos Ghosn has been charged to revive Nissan Motor Corporation. After working in turn-around situations at Renault in France and at Michelin's U.S. operations, 46-year-old Brazilian-born Ghosn moved to Nissan Japan in 1999, and has vowed to quit if the auto maker isn't profitable by March, showing his character's determination. His leadership has been one of the main factors of the working of Nissan Revival.

The question is what really makes him a leader? Actually, understanding the different characteristics of his personality really explains why this alliance has been successful, as Carlos Ghosn has been one of the principal actors of the merge between Renault and Nissan. Kenji Watanuki, director of Foreign Investment in Japan Development Corporation (FIND) describes him as the complete opposite of traditional Japanese managers: "he has energy, charisma, and simplicity. He is saying what he is doing, and doing what he is saying". Moreover, the public opinion has been praising the personality of the new Nissan leader: " A 'gaijin' (foreigner) that comes to save Nissan, speaks frankly and has the reputation to work from 7 to 23 seems to appeal Japanese people curiosity... ".

. Nicknamed 'Icebreaker', his skill at ignoring local business practices that stand in the way of making money has really shown Nissan organization his leadership. His behavior defies Japanese business habits and etiquette. For example, his way of managing has appeared to go against the very respectful relation that is supposed to exist between employees and managers inside Asiatic organization: no intermingling between workers at different levels of the company.

Seeing him, a president coming down from the fifteen floors in order to shake hands and greet employees, or congratulate a future mother, has really surprised most of other Japanese top managers. When Carlos Ghosn and his team arrived in Tokyo, aberrations are blindingly obvious. The company has been falling down in the last twenty-six years in the domestic market, and in the last ten years in the global market. The company has one of the biggest debts of the automobile industry, and hasn't realized any profits through the last decade. By identifying Nissan emergencies and dramatizing the company's position, Renault policy was to present an electric and dramatic situation to public opinion, in order to make the stockholders accept their propositions.

On one hand, this second part introduces and talks about the different aspects of Nissan before the arrival of Renault, and on the other hand, shows what are the changes brought by Renault Corporation, a west-European organization. The three main problems of Nissan Motors' organization are a lack of leadership, no long-term vision and a need to centralize some of its aspects. First, Nissan organization was the caricature of a Japanese bureaucratic organization where power sits nowhere. Saw ako Takeuchi, professor at the University of Tokyo, describes that individuals don't express themselves, and the force is in the group. There is in existence of leadership! Secondly, the company hasn't been elaborating any long-term vision for their own guideline.

Toshiyuki Shiga, today senior vice-president, says: " The decisions were taken in a closed process where our excess of confidence were hiding the essential: changes in customers' attitude". Finally, by owning too many offices, representations, and subsidiaries, Nissan must face a need of centralizing its operations. By elaborating 'Cross Functional Teams' (CFT), Renault's goal is to respond rapidly to the bad situation faced by Nissan and revive the ancient glory of the company. First, French managers have enhanced the factor of quickness in managing organization: work fast, then exchange, share and highlight the process of communication. Secondly, they have decided to change the fundaments of the Japanese way of managing an organization: modification of the process of seniority progression, cut down of the hierarchy, introduction of the terms of Bonus and incentives...

Performance has become the principal criteria in managing employees' carriers. Finally, an exchange program has been created in order to send French managers to Japan, and Japanese managers to France. The key is to introduce both groups of executives to different cultures in order to reinforce the relationship between the two companies. It has been two years since Renault and Nissan have signed their alliance.

By installing a French manager at the head of the company, Carlos Ghosn, and changing many aspects of the Nissan management method, Renault wanted to bring leadership in order to boost the sales of the company and bring back success. In 2001, the key accomplishments are an expecting post record profit of $2.3 billion for the year ending Mar. 31 (rebounding from seven years of losses), a cut costs to trim Nissan's debt load from $13 billion to $10 billion, and boost Nissan's stock price by 38% in 2000, to about 11.