Renault-Nissan-Mitsubishi Aliance. Culture clash. Business Analysis Report

Table of Contents

Introduction:

Potential cultural challenges:

Analysis:

Strategies:

Conclusion:

References:

Introduction:

Renault is a French company that is known for iconic cars and Formula 1, while Nissan is a Japanese company known for its innovative and top-quality automotive engineering. In March 1999, Renault and Nissan signed an agreement known as Renault-Nissan alliance. It was based on the exchange of shareholdings between the both companies. Renault took a 43.4% stake in Nissan while Nissan was given 15% non-voting stake in Renault ("The Renault-Nissan alliance hunkers down", 2020). The alliance was made on a mutual self-interest of the both companies to save their brand identities and avoid getting bankrupt. Nissan had recently lost a lot of market shares due to which it was under heavy debt. Even after Renault's investment the credit amount was still more than $11 billion which created a do-die situation (Goshn, 2002).This led to the CEO of Renault, Carlos Goshn, to take over the top-job at Nissan and restructure the company.

This report highlights the potential cultural challenges that Renault might face in Japan. In context of cross-cultural management, these were related to the differences in culture, merger strategies, communication, language, negotiations, and conflict. This report will analyse and evaluate these challenges using Hofstede and Trompenaars cultural dimensions, GLOBE project and the model of culture. Besides, it will devise strategies for Renault to effectively manage and integrate the cultural differences to run smoothly.

Potential cultural challenges:

The business operations of Renault from France can be influenced by the following factors, where the cultural challenges exist:

I. National culture

According to Brotherton (2008), national culture can be defined as a set of practices, beliefs and values that are shared among the people in a nation. Each nation has its own culture. Therefore, in this alliance there can be a cultural clash due to the differences in the national cultures.

I. Merging Culture

The merger of French and Japanese culture is basically going to bring a change in the organisational culture of Nissan which can be influenced by human factor and their ability of cross- cultural adaptation. It is pointed out by Delvalle (2002) that an alliance created through a merger is a situation where serious cultural problems emerge (Joelle & Price, 2019).

II. Communication

The degree to which context influences the meanings and connotations that individuals interpret from communication tends to vary across cultures (Robbins et al., 2017). This difference between the French and Japanese can lead to conflicts and misunderstandings while meetings and decision­making.

III. Language

Language is the most important barrier in communication between different cultures. Every language has its own meanings, alphabets, pronunciation, and perception. It can lead to a management style that avoids internal communication, creates a centralised decision-making system, and encourages recruitment of expatriates (Crawley et al., 2013). This will ultimately lead to conflicts. Moreover, even if the business managers use interlocutors or interpreters, they are not fully reliable.

IV. Negotiations

Negotiation can be defined as a process of reducing differences by building agreements between the two parties whose needs and wants are mutually dependent (Martin, 2010). Cultural differences can influence negotiations which can cause unforeseen inefficiencies. The nature of negotiation differs for every culture and so it is important to managed.

V. Conflict resolution

According to Buchanan & Huczynski (2019), conflict resolution is a procedure to settle conflict between the two disagreeing groups. In an alliance, two different cultures can have multiple conflicts and if it remains unresolved then it can lead to incompetency between the workforce.

Analysis:

National culture:

According to Hofstede, France (68) shows high power distance than Japan (54). This implies that the top-down bureaucratic and dominant management style is prominent in France (Brooks, 2018). France has an individualistic, feminine culture while Japan is highly collectivist and masculine. Males acquire top positions in Japanese companies (Hodgetts et al., 2005). Moreover, Japan (92) show high uncertainty avoidance than France (86). It can be seen by the fact that Japanese organisations are known for their long-term market vision of investments (Brooks, 2018). Using Trompenaars cultural dimension, both the cultures are universal, but France is an emotional culture while Japan is neutral which means that people in France are more expressive with emotions. Moreover, France exhibits a specific culture whereas Japan is diffuse. This implies that the size of public and private space is equal for Japanese. France shows an achievement culture while Japan has an ascription culture which shows that people in Japan respect seniority (Hodgetts et al., 2005).

In regards with GLOBE Project, France show high assertiveness while Japan shows less assertiveness. Japan shows high gender egalitarianism as it is a male dominated society. Besides, France show low institutional collectivism while Japan shows high. This is evident as Japanese corporate cultures reward teamwork (Northouse, 2018). In addition, Japan shows high in-group collectivism than France ("Results - GLOBE Project", 2021).

Communication:

Although, according to the model of culture both the countries belong to a high-context culture, the communication is highly influenced by their cultural backgrounds. Both heavily rely upon non­verbal communication. In situational context if there is a verbal communication then the challenge might be the face to face management relations during encounter. For example, in Japan, if you call a manager by his first name, it sounds very offensive as they are highly formal in their work relationships but in the France using first name is a basic standard. The problem that arises can be that if the French manager or employees addresses the Japanese manager by their first name, the Japanese manager would be embarrassed. On the other hand, if the Japanese manager insists on using his surname, it can be perceived as a barrier in establishing trust by the French manager. (Joelle & Price, 2019)

During non-verbal communication, unlike Japan, people in France give importance to gestures (Sekine et al., 2017). Besides, the O sign means a gay man in France while it is a sign of coin in Japan. The four fingers are interpreted as the number four in France, but it is an insult in Japan ("Body Language - Cultural Variations in Gestures", n.d.).

Merging cultures:

The merger causes change at three levels: strategic, organization and human. Both companies chose “win-win” strategy as this alliance has a mutual benefit. Goshn, CEO of Renault, using a transformational leadership style, had to reposition the company which needed restructuring, so he took in account all the positive elements of Japanese culture (blending) while modifying the corporate culture of Nissan (Zhantilessov et al., 2015).

However, Goshn's motive of reducing the costs in Nissan would lead to the breakdown of Keiretsu relationships which are very important for Japanese despite. The introduction of performance­based awards in Nissan will clash with the norms of Japanese corporate culture. It will produce resentment in the hearts of senior Japanese employees as now managers will be assessed according to their performance instead of time spent in the company (Farha, 2015). Moreover, being a high gender egalitarian country, when the female French workers or managers will come to work in Nissan, the Japanese might not work properly as they are not used to of collaborating with females (Zhantilessov et al., 2015). In addition, Japan has complex hierarchies, the employees obey orders blindly. But, Goshn planned to encourage open debate and allow disagreements at work.

Language:

Language is a major barrier in communication. Both the countries have their own languages with own meanings, perceptions, and symbols. Even if they try to hire a translator, they still might face language issues in a high context and non-verbal communicating culture. For example, in Japan the word “no” has no English word and is only expressed through non-verbal communication. (Collinson et. al, 2020). Moreover, the translation of Japanese word “Hai” is “yes”. But its connotation is not “yes, I agree”, instead of that, it is “yes, I am listening” ("Japanese Verbal & Nonverbal Communication for Business - PLAZA HOMES", 2020).

Negotiations:

There are different approaches and nature of negotiations in the West and other parts of the world. However, in this alliance, the negotiation strategy that was used was a “win-win” strategy where the negotiators are trying to work together and enlarge the cake size. However, the assumptions or the reasons for negotiations can differ. Katz (2008) analysed that inn France, managers make agreements or deals to establish long term relationships while in Japan, people value face, loyalty, their norms and try to maintain harmony. There is clear hierarchy between the top manager and the decision maker in France, and they always tend to reach a consensus. But, in Japan, the buyer is in the dominant position. Both cultures are not willing to compromise. With respect to negotiation style, the French managers ask for complete details before the bargaining stage while the Japanese are more concerned in looking for weaknesses of the other culture.

Conflict resolution:

Hofstede shows that France has an individualistic culture in which individuals focus on their personal will and goals instead of others. This creates a link between self-interest (independent self) and the adoption of “competitive” style of conflict resolution. Moreover, the high uncertainty avoidance of France shows that it might adopt an “avoiding” style where an individual ignores its own and others interests as a protective measure to avoid encounter. (Prabhakar & White, 2009). On the other hand, Japanese have an ethnocentric aptitude to conflict resolution. Japan being collectivist apply the “collaborating” style which is a technique where individuals protect their goals as well as others. Unlike France, Japanese focus on the interdependent self (Allan, 2015). These different conflict resolution techniques are major challenge that the alliance will face.

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