The Renault-Nissan Alliance. A case study

Table of Contents

Table of Figures

Introduction

Strategic alliances – definition, motives and goals

Application of Organizational Development (OD) – Renault-Nissan Case

Conclusion

References

Table of Figures

Figure 1: Basic information about the companies

Figure 2: Basic information about the companies

Figure 3: Motives and objectives for a strategic alliance

Figure 4: SWOT analysis

Figure 5: Force field diagram

Figure 6: Multiple cause diagram

Figure 7: Production and sales

Figure 8: Global market share in 1998, 2008 and 2010

Figure 9: The pyramid of success of the alliance

Case Study of Renault-Nissan Alliance

Introduction

The story of Renault is first the story of a man with an unusual destiny. The adventure began on December 24, 1898. At this time Louis Renault took up a challenge to drive his A-type Voiturette up the steep Rue Lepic in Paris. Founded in 1898 by Louis Renault Voiturette, the company quickly became the leading industrial manufacturer in France. The mechanical, design and stylish innovation make it to a famous brand. Renault as a company has contributed immensely to the development of the automobile industry all over the world. The Renault company employs over 166.000 people across the globe with production plants in Europe and outside Europe (www.renault.com, 2015).

Nissan was jointly established in December 1933 in Japan as Jidosha Seizo Co., Ltd by Nihon Sangyo Co., and Tobata Imono Co. to manufacture and sell Datsun cars and parts. In June 1934, the company was bought by a new sole owner; Nihon Sangyo, who later changed the company’s name to Nissan Motor Co., Ltd. The company works with manufacturing, sales and related business of automotive products, industrial machinery and marine equipments. The Nissan company employs over 133.000 people (Nissan facts booklet found on www.nissan-global, 2015).

Figure 1 shows the basic information about the two companies.

Figure 1: Basic information about the companies

illustration not visible in this excerpt

Source: Own figure based on www.nissan-global.com, 2015; www.renault.com, 2015.

Since the beginning of the 1990’s, Renault had been looking for a global partner. The reason was that the European market (Renault’s major market) was increased. Moreover worldwide competition was fierce and growing customer demands and sophistication increased the pressure on car manufactures. In order to survive in this highly competitive and increasingly sophisticated industry, it became apparent that Renault needed a strong global partner to enable it venture into the international market. Nissan had often been cited as one of the best in Japan. It had top class engineers, which gave the company a unique capability and excellence in engineering and industrial quality. Moreover Nissan seemed to be the most global of all the Japanese carmakers since it was well established in Japan, the Americas and to a much lesser extent Europe. However the lack of focus on profitability and the Asian crisis had a negative effect on Nissan. They started to struggle to remain profitable for more than a decade. (Emerson, 2000).

Figure 2 shows the situation before the companies had the alliance.

Figure 2: Basic information about the companies

illustration not visible in this excerpt

Source: Own figure based on Fagan & Yoshino, 2003.

The agreement establishing the Renault-Nissan Alliance was signed on March 27, 1999. It marked the first industrial and commercial cooperation of its kind between a French company and a Japanese company, each with its own corporate culture and brand identity. Both companies were to share a common strategy of profitable growth and a community of interests. In order to reach this objective the Renault-Nissan Alliance established multiple joint projects, which covers most activities of both companies (Alliance booklet 2015). The cooperation within the alliance is about the most areas of the companies operations. This includes strategic management, purchasing, information technology, personnel exchanges and training as well as a number of collaborative ventures. Since 1999 joint structures have been introduced in Europe to rationalize distribution costs, share fixed expenses, improve the competitiveness of sales network and support the growth of Nissan and Renault. In 2010 the both companies (together) were the 4th largest automobile manufacturer in the world. But why was the alliance between two apparently very different companies/cultures so successful? To answer this question we have to discuss what is a strategic alliance in general and after that we try to find an answer with the methodology Organizational Development (OD)

Strategic alliances – definition, motives and goals

The term strategic alliance has become widely used to describe a variety of different cooperation agreements ranging from shared research to formal joint ventures and minority equity participation (Susini, 2004). According to Ring (2000), an alliance involves the collaboration between two or more firms that retain their autonomy during the course of their relationship. An alliance is strategic when it has been design to enable the partners to pursue objectives that they have defined in the course of making decisions on the corporate level of business level strategies. The following figure 3 shows the motives and objectives why companies establish a strategic alliance.

Figure 3: Motives and objectives for a strategic alliance

illustration not visible in this excerpt

Source: Own figure based on Arino, Darcia-Canal & Valdes, 1999; Bamford, Ernst & Fubini, 2004; Kale & Singh 2009.

The main drivers for the establishment of a strategic alliance are competitive pressure on price, quality and technology, economies in capital investment costs and economies of scale and scope in purchasing, manufacturing, marketing and distribution.

The type of Renault-Nissan alliance is an unequal equity arrangement which is a mix of a competitive and intra-industry alliance since the two partners used to compete on the same range of products and of a noncompetitive agreement since Nissan and Renault are quite complementary as far as geographical market presence and market niches are concerned (Chanaron, 2007).

[...]