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Transcript of Renault-Nissan Alliance
PEST Analysis (1999-2004)
Nissan has strong bureaucratic relations in Japan
Establish additional cross-company teams
Increased corporate transparency between employees and management
Retain corporate identity
Losing Japanese market share for 27 years
Profitable once between 1992-1999.
$20 Billion debt
Strong manufacturing practices
Small French car company
Only produced small-medium sized cars
No luxury or utility vehicles
Slim margins, but profitable
85% of sales in Western Europe
Looking to expand global market share
Situation: RNBV Alliance
Porter's Five Forces Analysis of Automotive Industry
"Why is the alliance so successful?" asked Schweitzer. "Because both sides wanted it. Both needed it. This need must be continually felt so that they stay together. People must feel every day that they are better off together."-Louis Schweitzer, Chairman and CEO of Renault
Renault alleviated Nissan's debt, giving $5 million
Sold 5 million cars (Nissan 2.6 mil/Renault 2.4 mil)
9.2% of world market (Renault 4.4% & Nissan 4.8%)
Alliance became one of the World's Top 5 Automakers
$3.3 billions cost savings and synergies
Problem: What happens when the honeymoon phase ends?
Both CEO's are concerned about the looming challenges the alliance will face.
Have the two companies peaked as far as cost savings in manufacturing and additional sales?
Can employees unify across cultures, functions, and geographies?
Can the alliance deepen while still respecting cultural differences?
Research & Respect during merger
SWOT Analysis (External)
Not Nissan’s first partnership choice
Distance of companies
Mexico & Brazil
Vastly improved management for Nissan and engineering for Renault
Two weak companies
Big stakes- failure could cripple companies
Supplier Power (Low):
Low switching costs
Many firms in the industry
Threats of Substitution( High/Medium):
Threats of New Entrants: (Medium)
High labor and material costs
High initial investment
Industry Rivalry (High):
Buyer Power (Low):
Little bargaining power
Consumers are price sensitive
Renault: screwdriver and clothes.
Nissan: attractive designs to the consumer eye, and improved management.
“We arrived at an analysis where we felt that this was a good company with management problems”
Increase market share
Improve overall product quality
Went as far as alternating meetings in Paris and Tokyo.
Renault: innovative design and management
Nissan: quality of its engineering.
Renault had a good reputation in Europe of providing economical vehicles for many years.
Nissan demonstrated a stricter culture.
Certain vehicle requirements / preferences in different locations
Strong Japanese Nationalism
Number of platforms
Compact vs Utility