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Transcript of Nissan-Renault Presentation
Successful Merger Strategies
How did Nissan-Renault gain competitive advantage?
'Marriage of necessity' between Renault-Nissan
First partnership involving a European car company gaining a major interest in a Japanese counterpart
Reasons for this quasi-merger were quite complementary, as weaknesses were addressed.
This unique partnership is a pragmatic, flexible business tool that can expand to accommodate new projects and partners worldwide.
Illustrates how Renault-Nissan gained advantage against the world's best because of pressure & challenge
Strategic alliances= cooperative agreements between potential or actual competitors.
Sharanya Srikanth and Katherine Tsatsaklas
MGMT 2101: Renault-Nissan Presentation
(1) Why was the merger of the two firms so successful?
(2) How did Renault-Nissan increase their market share?
1) Strategic alliances
a) Pre-merger strategies
b) Post-merger strategies
3) Locational Advantages
4) Competitive Advantage
Focusing on Renault-Nissan
Joint venture= new organisation or a ‘corporate child’ e.g Sony Ericsson and Dow Chemical and Ube.
Non-joint venture alliance is two firms working together, ‘getting married’ but not having ‘children’ e.g. Renault-Nissan and Facebook and Skype.
Joined together through cross-shareholding agreement.
Non-joint venture alliance as both operate independently
A good ally, or partner, has three characteristics.
1) A good partner helps the firm to achieve their strategic goals:
For an expanding company strategic goals may include:
a desire to achieve economies of scale and scope
penetrate new markets: e.g Renault-Nissan
gain access to design, technology and production processes e.g. Hewlett Packard and Disney
achieve a degree of synergy: e.g. the Rolls Royce jet engine division
For a declining company it may be part of a
Why did Renault-Nissan need a 'marriage'?
Common= economies of scale
Technological know how
Leader for quality and attractiveness of profits and services
2) Share firm’s vision for the common purpose of the alliance
Key objectives of this alliance were:
(1) Quality and value of products and services in each region and market segment
(2) Key technology in engines, electronics and the environment
(3) Operating profit
3) A good partner is unlikely to try to opportunistically exploit the alliance for its own ends
Example: General Electric will not tarnish their reputation
Preserve brand identity and vehicle diversity
Served as a model for General Motors and PSA Peugeot Citroën, PSA Peugeot Citroën and Mitsubishi, as well as Volkswagen and Suzuki.
Managing the Alliance
Alliances fail for a variety of reasons.
differences in culture
lack of executive commitment
ineffective governance structure
failing to manage interpersonal relationships
How did Renault-Nissan achieve this feat?
Stemmed from a combination of
production locational advantages
access to research
Why is location so important?
reduction in overall costs and increase in global competitive advantage
1) Company strategy, structure and rivalry
Ghosn is also credited with the successful restructuring of the firm through
Ghosn enforced a rigid hierarchical structure. Underpinned by patriotism and bureaucracy
2) Demand conditions
3) Related and supporting industries
4) Factor Conditions
Nissan prior to alliance: Kereitsu supplier network.
Problem: could not keep track of supplier production activity, adversarial netowrk and hard bargaining.
Solution: a better coordinated upstream vertical alliance.
Following alliance: collaborative bargaining, shared knowledge and mutual assistance
Alliance helped Renault-Nissan outperform historic regional rivals, elevating both companies into an elite tier
Comparison with the BMW-Rover Experience
Fundamental mistakes regarding strategy and structure
Lack of proper due diligence
Clash of cultures