renaultnissan-amarriageofreason

7/24/2019 RenaultNissan-AMarriageOfReason

1/13

Renault & Nissan

A Marriage of Reason

Balakrishna Mohan K (EPGP-06-011)Girish Iyer (EPGCM-0!-0")Ma#husu#an Kotha$alli (EPGP-06-0%%)

Pra#ee$ Kuar hara (EPGP-06-0'6)Raee *ose (EPGCM-0!-01%)


2/13

Co$anies at a +lan,e

Renault Nissan

1./Founded 1.6/Formed by merger of two automo

1.'"/Nationalized. Car producer for the masses 1.%6/First foreign production in US

1.!0s & 1.0s/nternationalization and Concept ofSeries ! Renault"s Strategy

1.66/Sunny# one of Nissan"s greatest slaunched

1.'/Record $osses of FF %&.' ( 1.!%/n fuel economy tests conducted )n*ironmental +rotection Agency# Sunnytop

1.!/(ac, to +ro-tability 1.".! *erseas Manufacturing in /aiwa

%034 in USA# %035 in U6

1./Focus on 7uality 8 nno*ation 000! Manufacturing and Assembly placountries. $ocalized R8: for North Amer

1../Set ob;ecti*e to become most competiti*e )uropeancar manufacturer. Cost reduction plan of FF &4 ( o*er < yrs=%003>&444?

&ndfull>line automobile manufacturer in @league of ma;or global automobile compannual *ehicle production.

Continuously pro-table# no debt# %.0 ( cash a*ailable.Strong in )urope and had sales in /ur,ey# Argentina#Central and )astern )urope# North Africa# (razil 8 Russia

I..0s/:ecreasing pro-tability# Sluggish=ome 8 Abroad?. *ercapacity# uge :models


3/13

r+ani2ation 3i4eren,es & iila

3i4eren,es iilarities

$anguage (oth were large and bureaucraticwith hierarchical structures

Communication patterns (oth were mature companies with

$abor management relations Many of their employees were forser*ants or graduates of elite schentrepreneurial talents

ndi*idualistic nature of French Company *s

group>orientation of a @apanese company:ecision ma,ing processes=ndi*idual or Ma;ority *s bottom>up?Accountability =ndi*idual *s Droup?

(oth had permanent employee sy

(oth suEered from increased comAuto ndustry due to e2cess weighineciencies


4/13

Rationale 5or the allian,eRenault Nissan

Alliance was essentialFor $ong term sustainable growth by forming a largergroup in order to le*erage mar,et power./o be among world"s top -*e players in Automobilemar,et

Gith a debt size of US H&% (illion =&.' tim%003# -nding a partner was the only me

Renault"s business was concentrated in )urope.Finding a partner in Asia was critical

Nissan generated a large portion of its repaci-c and US region

A partner li,e Nissan would enable Renault to increase itscompetencies in production technology

Renault"s strength in R8: lied in its design>,now how :esign ,now how was something Nissan

desperately to attract style conscious mconsumers

Renault lagged in strong engineering capabilities#especially in larger displacement engines for increasinglypopular *ehicles such as pic,>up truc,s and SUBJ5G:

Nissan possessed strong engineering ca

Renault had better e2pertise in Supply chainrationalization

Nissan had a hea*y layer of supply chaina liability

(oth -rms could bring their factories into the alliance. n the regions where only one -rm had factoriebegin manufacturing. n the regions where both companies had factories# the alliance could achie*e co

closing one of the factories.Nissan contributed its high producti*ity practices to the alliance while Renault too, ad*antage of Niss


5/13

Negotiation Stages @un>@ul %003K +rospecting by Renault

@ul>Sep %003K denti-cation of Synergies

Sep>:ec %003K 7uanti-cation of the synergies

:ec %003 ! Mar %000K Final Negotiations

/he agreement was appro*ed by Renault (oard on %1 M /he alliance was announced publicly and signed on &9 M

llian,e +reeent


6/13

6ey )lementsK

Reco*ery of Nissan Renault to contribute to the reduction of Nissan"s de

Renault to in*est 14' ( Len =USH '.% (? to acIuireo upon limitsdetermined share price

llian,e +reeent


7/13

6ey )lementsK

Nissan will ha*e the option to become shareholder of RAgreement will allow Renault to acIuire the )uropean -

subsidiaries of Nissan for USHle*el managers would be part of Nissan top o Mr. +atric, +elata ! )B+ =+roduct +lanning 8 Strategy? (oard

o Mr /hierry M. ! M: :eputy CF

Mr. Loshi,azu anawa# C) of Nissan Motor Co. was oEered(oard of :irectors of Renault

llian,e +reeent


8/13

r+ani2ation Plannin+

DAC ! =C) ' B+? of Renault# =C) ' B+? of Nissan

Coordination ce was to support DAC for secretarial tas,s %% CC/s were formed. All CC/s were headed by managers from on

other company selected on competency criteria. /he deputy was from the other company. Members were from both companies.

nly O+lanning 8 +roduct StrategyP CC/ was co>managed

/hese CC/s reported an o*erall sa*ings of USH&44pro;ected sa*ings of US H< ( annually from &44'


9/13

Functional Synergies

+urchasingK A coordinated purchasing policy# -rst in )urope then Gorldwide. )2pected sa*ings of USH%.9 ( =better product Iuality 8 greater purchasing power

Nissan dispensed &4 subcontractors# and plans to reach '4 =144 out of %&44?

+roduct +lanningK Use of common platforms# powertrains and other components while preser*ing se

and brand identities =)conomies of Scale?

Alliance e2pects to create a total of %4 common platforms in the area of Behicle )

@oint study in new area of research and ad*anced engineering in Geight reduction*ehicles# etc.

n terms of complimentarities ! Renault to use Nissan &% engines and Nissan carsmotors from Renault.

:istributionK Creating common hubs for distribution system

llian,e yner+ies


10/13

Deographical Synergies*a$an

Set up of Renault @apon '4 Nissan outlets began mar,eting Renault *ehicles

Nissan to pro*ide sales outlet management and follow>ups# conduct trainings# promote sales# after etc.

Rest o5 sia Renault selling *ehicles through Nissan"s e2isting distribution networ,. n other countries# Renault d

operations with independent companies with help of Nissan.

7atin eri,a Me8i,o/ Renault to return to Me2ico with support from Nissan. Renault will use Nissan"s e2isting de

manufacturing capacity. Nissan will gain with its full utilization of manufacturing capacity while e2pproducts it can oEer and le*erage Renault"s mar,eting strength.

Mer,osur/ Mar,et e2pansion plans for Nissan using strong sales and manufacturing support from be able to minimize its entry cost and strengthen product line>up

Euro$e +resence of both companies# so ;oint mar,eting and sales operations

Gill set up common hubs and pools for their bac, oce functions.

)stimates an o*erall bene-t of USH% ( o*er a ' yr period =&444>&44'?

llian,e yner+ies


11/13

trate+i, 9alue 5or Renault

$ong term sustainable growth by forming a larger group le*erage mar,et power.

/o be among world"s top -*e players in Automobile mar,

/o gain e2pertise in the engineering and production capa

/o bene-t from synergies to increase sa*ings

trate+i, 9alue 5or Nissan Come out of debt size of US H&% (illion =&.' times eIuity?/o gain from strong Sales and Mar,eting team of Renault

/o gain from e2pertise to manage o*er capacity and ineci

/o gain from common platforms and synergies to increase s

trate+i, 9alue 5or Renault an# N


12/13

From a loss of 135.5 ( Len =USH1.< (? in FL %000# Nissan

around in ctober &444 with a pro-t forecast of &'4 ( Le Nissan Motor"s share price on NLS) nearly reco*ered its

share price le*els +erformance targets were being set for indi*iduals. nly

e2ceed their target they will be able to retain their currele*els.

/rimming of wor,force )ncouraging younger high potential employees to ,ey po A mutual respect for each companies remain the strengt

alliance

:o; Ghosn & tea Mana+e# the al


13/13

renaultnissan-amarriageofreason

Documents