Renault - Nissan Alliance
1. NISSAN Group and its agreement with Renault
2. Carlos Ghosn new strategy implementation
To overcome the mounting problems, Nissan suffered the ultimatehumiliation for a Japanese company: it was taken over by the foreigner. In May 1999 France’s Renault SA purchased 37 per cent of Nissan’s common stock $5.4 billion, effectively transferring control of Japan’ssecond largest auto manufacturer to the French firm. Renault empowered one of its most highly respected executives, Carlos Ghosn, to clean up the mess at Nissan. Ghosn first spent five monthscarefully reviewing Nissan’s operation. In October 1999 the Brazilian born Ghosn announced a “rival plan” for the company designed to reduce Nissan’s annual costs by nearly $10 billion. To reach this goal,five Nissan factories in Japan would have to be shuttered and 21, 000 jobs eliminated. About 16000 of the job cuts would occur in Nissan’s domestic operations. Mindful of Japan’s distaste for layoffsand Japanese labor laws that make firing employee expensive, the employment reductions were to be implemented via attrition, which averages about 2000 domestic employees per year.
Other options, suchas voluntary retirement programs, were initially shelved due to opposition from Nissan’s union leaders, although the options have not been permanently ruled out. Further cost reductions were to beimplemented by eliminating regional offices in such cities as New York and Washington and cutting the number of different vehicle models produced and marketed by Nissan.
Ghosn recognized the need tohack away at Nissan’s mountain of debt some 2.4 trillon yen (in early 2001, 117 yen were worst 1 US) and set target it by 2002. Ghosn also sought to streamline Nissan’s dealership networks in Japan andNorth America. In Japan, for example, Nissan owns about half of its distributorship.
Review of the firm’s marketing operations unearthed another set of problems. Ghosn quickly recognized that...
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