The Renault-Nissan Alliance: Analysis
Numerous vehicle corporations either assimilated other car firms or carried out combined undertakings with them in the middle of the late 1990s. The move was undertaken for various reasons, such as entering new markets, hastening the rate of growth, diminishing expenditures, or obtaining an expertise. The Renault-Nissan Alliance materialized when Nissan was in an economically bad state. Nissan suffered massive losses and had limited liability in the mid-1990s. The corporation’s market share in Japan had plummeted. Moreover, its global market share declined as well. Nissan documented a massive working loss and an abridged plant exploitation rate in the year 1999. Regarding Renault, the coalition represented an approach to learn the renowned Japanese industrial systems. The corporation anticipated Nissan to help it to advance its output and technical abilities. In March 1999, Nissan and Renault signed a pact to create an exclusive coalition. The settlement was called the Renault-Nissan Alliance, or just Alliance.
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Overview: The Alliance
The Renault-Nissan Alliance which was introduced in 1999 represented a distinctive pact in the motorized domain. While acquisitions and mergers were mutual, a lasting, multi-faceted coalition between two socially different bodies was ground-breaking. The Alliance comprised joint development, cross-holding, combined manufacture, and allotting best practices, podiums, portions and modules, factories, and powertrains. The Alliance empowered Nissan and Renault to cut budgets and time to market, upsurge competitiveness, and increase lucrativeness (Ghosn, 2005). The Renault-Nissan Treaty was frequently mentioned as an illustration of tactical alliance and incorporation. The Alliance was under the leadership of Carlos Ghosn. The main reason for the formation of the partnership was the desire to benefit from the economies of scale and each other’s expertise. In managing the Alliance, Ghosn experienced various challenges which were culturally inspired. However, perfect leadership style and qualities enabled Ghosn to bring success to the alliance. The move was made after instituting many changes in the cultures and organizational structures of both companies.
Conditions for the Merger with Renault
There exist various reasons that inspired the merger between the two corporations. Nissan was experiencing bad times economically and needed an equal but stable partner to save it from collapse. The corporation had recorded massive losses in the past and had drastically lost its global market share (Ghosn, 2005). Nonetheless, there were also other reasons for creating the alliance. Both corporations were keen on enhancing quality and internationalizing their products. The firms also needed to diminish costs and debt. If the two companies merged, they were in a greater position to enjoy the benefits associated with economies of scale and technological expertise from either side (Kuznetsova, 2016). The alliance was similarly influenced by the need to enhance entire prospective synergies by combining the abilities of both corporations through a useful model to deliver win-win outcomes. Both organizations were equally intent on preserving their independence and respecting their brand and corporate identities. By forming the merger, both companies would be assured of stabilized quality and market share in the domain. Ultimately, the corporations formed an alliance to enjoy operating advantage that would accrue from their union.
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The Driving and Resisting Forces for Change at Nissan in 1999
In comprehending the driving and resisting forces for change at Nissan, it becomes imperative to understand the corporation in general. Being a vehicle manufacturer of Japan descent, Nissan had established a strong market presence in the United States and Asia in early 1933 (Ghosn, 2005). The corporation was famed for its high engineering and technological expertise and capability to manufacture large automobiles. Nonetheless, by 1999, the enterprise was nearly bankrupt and was owed enormous obligations when the alliance was formed. Moreover, Nissan had invested massive amounts of cash in various corporations, which resulted in the firm’s financial inability to invest in itself and its merchandise (Ghosn, 2005). Failure to invest in itself and its products made Nissan’s debt upsurge by several billion, and its local market share also plummeted.
Another resisting force was a significant impact of the recession in the early 1990s in Japan on the corporation. Also, there existed complacency and lack of urgency in the culture, and cross-functional and regional communications were absent. The design of Nissan’s automobiles was obsolete in the market, and the operations of the firm were characterized by an increased degree of bureaucracy. Rather than concentrating on managerial culture and elevations, the corporation placed extra emphasis on engineering culture. Nonetheless, the driving factor of change in Nissan was the potential benefits of alliance. Thus, if the company entered into an alliance with Renault, the agreement would offer an advantage and successful development (Ghosn, 2005). The corporation would also be saved from bankruptcy. At Nissan, cultural challenges also presented a great challenge contributing to poor economic standing and other problems in the firm.
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After the alliance had been formed, Carlos Ghosn was chosen as the CEO of Renault and Nissan. The move was not an easy task as he encountered a lot of challenges. In 2011-2012 fiscal year, Renault’s market share in Europe recorded a slide. Since Ghosn’s tenure was anticipated to end in 2014, the Alliance was faced with grave concerns regarding its future. Ghosn experienced radical cultural dissimilarities between the two corporations. Renault’s culture assumed the French attributes and was more individualistic compared to Nissan’s culture, which was associated with Japan and thus more collectivist. Choices were made by individuals possessing parallel perceptions and having no trust that time is essential in money making. In Japanese culture, Ghosn faced a challenge since a general agreement had to be arrived at to confirm a choice, and this process prolonged decision-making (Ghosn, 2005). Japan’s culture was similarly characterized by increased uncertainty avoidance, where most effort was channeled on planning and little on implementation. Thus, in order to avoid risks, the Japanese aim to study the entire macroeconomic and ecological elements appropriately before making an essential choice.
The management at Nissan tended to possess a long-term centered perception since they opted to undertake massive investments to attain profits in a lasting financial viewpoint. The move posed a challenge to Ghosn who intended to overhaul the entire process. Masculinity represented another challenge at Nissan, where gender functions were distinct. Males occupied important positions, which posed a problem in communication with females and hence limited the diversity of the establishment (Nahavandi, 2014). Finally, high power distance represented another culture challenge as subordinates anticipated to be consulted in small power distance societies regarding being instructed what to undertake to a great power distance cultures. This problem was characterized by an absence of debates between workers and managers as having a disagreement is not cherished and could be viewed as an offense in the Japanese culture. These cultural differences posed a challenge to the newly selected CEO and the future of the Alliance.
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Ghosn’s Steps Towards Nissan’s Profitability
Nissan had experienced challenging times financially and was on the verge of insolvency when the merger was formed. Ghosn planned to dismiss approximately 21,000 employees by March 2003 in an attempt to regain the corporation’s lost glory (Ghosn, 2005). In the subsequent three years, Ghosn closed five plants and severed longtime supplier camaraderie with the Keiretzu. This undertaking was instituted to issue a strong warning to the firm and diminish cost and minimum redundancy.
Motivational and Organizational Behaviors Fundamental to Nissan’s Poor Performance
Nissan’s poor performance is attributed to the organizational and motivational behaviors common before Ghosn took charge. The corporation was divided into functional areas. There lacked cooperation, which was vital for attaining success (Ghosn, 2005). The firm was also characterized by lack of a proper communication channel from the management to the employees. Employees never identified themselves with the corporation and managers failed to champion for responsibility. At the firm, there lacked a standardized promotion scheme. Promotions were biased, which impacted employee motivation significantly. Rather than base promotion on seniority and education, it was influenced by bias. Before Ghosn assumed power, there lacked a shared vision and coordination of tasks. The firm was also characterized by lack of client focus and profit orientation.
Ghosn’s Leadership Style
Most business integrations rely on a sound leadership style that allows for cultural and organizational adaptation. Leadership gets defined as the capability to influence the discerning, insolences, and behavior of individuals toward accomplishment of the set goals (Nahavandi, 2014). Ghosn was a different leader who possessed broad cultural awareness, charisma, self-confidence, integrity, intelligence and determination. Academicians state that Ghosn was a leader who employed transformational leadership styles to enhance workers engagement (Gupta & Wart, 2015). Through this style, Ghosn motivated his followers to accomplish extraordinary results. Ghosn managed to change workers familiarity of issues by helping them to view the culture in a new approach. Ghosn was capable of evoking intellectual stimulation and individual attention. He also employed the Jeffersonian style of leadership. He authorized his teams to select the methods to attain objectives. Additionally, Ghosn utilized the Laissez-Faire Leadership style. He allowed his coworkers to perform their tasks on their own but supervised them watchfully.
Leadership Actions Taken
Ghosn leadership efforts led to the success of the Alliance. Among the guidance undertakings, Ghosn efficiently introduced divisional, cross-functional, and regional teams. The leader also enhanced assertiveness and performance orientation and lessened power distance. As a leader, Ghosn embraced cultural differences and encouraged diversity (Gupta & Wart, 2015). Ghosn distinguished the change, created a vision to cause change through inspiration, and executed transformation in tandem with the employees. The Renault-Nissan leadership gave attention to the social aspect and chose a shared language (English) and a mutual vocabulary for some obscure words with the aim to avoid misinterpretation of actions.
Ghosn’s Leadership Theories
In enhancing profits at the Alliance, besides the mentioned above transformational and Laissez-Faire leadership theories, Ghosn employed different leadership approaches. The primary methods that steered the alliance to success included team building, which was centered on bottom-line performance to address Nissan’s cultural issues, idealized influence, and personal consideration (Ghosn, 2005). In addition, Ghosn employed intellectual simulation to change people’s perception of certain matters.
Ghosn’s Source of Power
Ghosn’s sources of authority were founded on authenticity, decisiveness, focus, personal touch, hard/soft people skills, and communication. All the sources stated above are easily linked with Renault-Nissan Alliance. The first power origin aspect is that Carlos Ghosn offered an authentic vision for the new-fangled alliance instantly and carried out this genuineness to make the main strategic decisions instituted by the firm. Additionally, he represented a role model of the significance and principles through his daily activities. The second source of power was that Ghosn was decisive. Ghosn instantly displayed the capability to select what was appropriate for the coalition and refused from an instance of the past supplier Keiretzu without any hesitation as it was not important to the firm anymore (Ghosn, 2005). Other sources of Ghosn’s power rested in focus, personal touch and hard/soft people skills. For example, Ghosn created entirely new advertising and marketing regulations, which were centered firmly on results and new cross-cultural groups, with the resolve of exploiting everyday interactions and learning from the coming conflict.
Communication was another vital source of Ghosn’s power. He totally transformed the means of employees communication inside Nissan by establishing a completely transparent, open, accurate and practical communication both inside the firm and outside of the media. An ever-forward approach was one more source of power of Ghosn. From the onset of his career, Carlos had always been progressing as an individual, and later, he tried to convey this unique value to the Alliance (Ghosn, 2005). The new liberal way of perception facilitated collaboration, cooperation between teams and sharing of notions, a combination of two cultures and languages and helped employees to avoid cultural shock. Ghosn acquired his power through a tactical leadership approach, which was facilitated by team building, intellectual stimulation, idealized influence, and individualized consideration. Additionally, Ghosn was authorized by the mother corporation to lead and effect changes.
Ghosn and Power
Ghosn certainly was an influential figure for the Alliance. He began utilizing his authority by creating the Nissan Revival Plan (NRP) that immediately provided the association with clear quantitative and qualitative targets, with the goal of accomplishing them in a few years. He enforced a general reorganization, with a real but challenging mission and a shared vision of the return to profit (Ghosn, 2005). Ghosn used his power to combine both cultural peculiarities and leadership quality with the goal of creating the impeccable alliance.
Change Management Practices Used
Before Ghosn assumed leadership at Nissan, a junior worker could not manage a senior coworker owing to the age and the supremacy. In fact, the promotion was associated with the rank of the operative (Ghosn, 2005). However, when Ghosn assumed headship of the establishment, he employed various change management practices. Carlos began by creating wholly new elevation guidelines founded firmly on performance, lacking any association with ages of the worker. In this approach, Ghosn created mutual guidelines between the two firms while motivating young and mature team members to work hard. The transformation was entirely dissimilar to the Japanese culture. Nonetheless, when the Japanese workers understood the advantages of Ghosn’s change management practices, they easily acknowledged them. Additionally, the practices motivated them significantly owing to their egalitarian style. In instituting change, the governance structure was reorganized. The practice ensured the firm became more transparent and communicative.
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Mechanisms Used to Change the Culture
Ghosn employed various mechanisms to modify the culture of the company. The first mechanism was language policy. Ghosn ensured that all the high-level meetings were conducted in English and introduced intensive language lessons for entire Nissan staff. Another mechanism was the creation of a dictionary of relevant terms, which comprised of precise definitions and clarifications (Ghosn, 2005). Ghosn also ensured that in changing the culture, perceptions, undertakings, and words were similar between the two sides. One more mechanism used demanded the utmost value of the task and active management of numbers. Finally, Ghosn employed cross-cultural training. The arrangement involved having a group of Nissan’s employees learning about the French culture, while the workers at Renault had to learn about the Japanese business culture.
In summary, from the case study of Renault-Nissan Alliance, one may learn the importance of effective leadership styles and approaches to business management. Nissan experienced many economic challenges that were attributed to the recession, lack of cooperation, communication issues and lack of a standardized promotion scheme among others. Other problems were culture-related, and they required a leader with the appropriate skills to implement changes that would improve the situation of the company. Ghosn, therefore, combined his transformational leadership style with other leadership qualities to bring normalcy to the alliance. Through efficient use of his power, Ghosn harmonized the cultural challenges and implemented change management practices effectively. As such, it becomes essential for any organization to have a customer-centered approach and acknowledge diversity. Training is also imperative to ensure that employees are fully cognizant.