Assignment : Renault and Nissan.

Question 1) Why are these two firms engaged in an alliance?
The alliance shaped in 2001 between Renault and Nissan was based on a quest for survival from both parties. Renault had been seeking a foreign partner; its’ focused strategy in Europe (middle class cars) was showing signs of tiredness. They had failed to expand to other regions organically (they withdrew from the US in 1987 and only had tiny shares in Asia) and they had failed to expand through alliance with another European carmaker to increase their position there (Volvo.) The most viable option for them was an Asian player as US carmakers were too big for a sustainable alliance. They took the Asian crisis as an opportunity to find a partner that would help them in their geographic expansion strategy.
On the other side, Nissan had been financially in the red for years. It desperately needed a partner to help put the company back in shape both financially and on the operational levels. It had hoped to partner with DaimlerChrysler but the latter judged the necessary investment in Nissan too risky to go through with the deal. Renault was the lesser option but the only one available in desperate times.
Hence, although Renault had done a bit of research prior to the alliance to find a suitable partner, there is a lot of opportunistic feeling to that alliance.

Question2) What is its’ rationale?
Although the alliance between Renault and Nissan seemed to the outside like an alliance of the weak, there were sound rationales to it.
Both firms had a geographic expansion strategy but lacked competencies to make that strategy a success. In that regard Nissan provided an access to Asian and Australian Market and Renault European and South American markets to Nissan. Nissan lacked in design and this was a strength of the Renault company, they also needed to lean the cost curve and Renault’s number two, Carlos Ghosn (nicknamed the Cost Killer) was clear competencies in that