Envrionmental Anaylysis Of Nissan And Renault Marketing Essay

Envrionmental Anaylysis Of Nissan And Renault Marketing Essay INTRODUCTION: The organisations operating in 21st century are characterised by volatile, turbulent, and brisk changes. The rapid pace of changes has both positive and negative impact on the working pattern of employees in the present environment. Moreover, leadership, globalisation, diversity, flexibility and networks are the major drivers and trends of change management. These trends create opportunities and threats in the organisation which are illustrated as follows. TRENDS ISSUES Globalisation Global vs. Local Diversity Homogeneous vs. Heterogeneity Flexibility Flexibility vs. Stability Networks Interdependence vs. Independence According to Ghosn (2009), Diversity has different angles which bring things together which are inaccessible in the corporate environment and in physical world. Moreover, diversity plays an important role in implementing effective change and to stay competitive in the global environment. The world is so complex and changing at an accelerating speed therefore the agenda should be driven by diversity and globalisation. However, diversity is not something that can be imposed in organisational culture and beliefs (Anderson, 2008). Moreover, the concept Diversity is fundamentally linked dealing with the change. At present, organisations depend on cross functional teams to enhance global competitive edge. However, this type of teams cannot capitulate expected performance (Ancona Caldwell, 1992). In contrast, cross functional team need collaboration between them. Here, to enhance the performance cross functional teams, they need to understand the concept of diversity. NISSAN RENAULT AT GLANCE: Company Particulars Nissan Renault Vision Enrich peoples life Drive the change Mission To offer exclusive and innovative automotive products and services by ensuring high quality values towards stakeholders in alliance with Renault. To achieve success thorough sustainable development by safeguarding quality in which company operates with its partner Nissan. Date of Incorporation 26th, December, 1933. 25th, February, 1899. Revenues (FY 2009) 3.35 billion euro. 33.71 billion euro. CEO Carlos Ghosn. Carlos Ghosn. Headquarter Japan. France. Employees 1,75,766. 1,24,300. Product Range Automobiles, Outboard Motors, Forklift Trucks. Automobile, Industrial Vehicles and Financing. Subsidiaries Infinity, Nissan Forklift, Nissan Marine, Nismo, Autech. Automobile Dacia, Renault Samsung Motors. Operating Worldwide 118 countries around the world. Renault Nissan Alliance is an inimitable partnership of two companies combined for performance and created a national automobile group of global scale, signed on March 27, 1999. This alliance based on two main founding principles: By combining both companies strengths and developing each and every possible synergies throughout to convey a productive approach i.e. Win-Win results. Respecting and preserving each companys self-sufficiency of their brand uniqueness and own corporate. The revival plan developed by an international team of 200 Nissan managers. What this global team has done is fully understand the root causes of our current problems and develop solutions that allow Nissan to act decisively ( Ghosn). The revival plan come together project to develop Nissans business and existence of market and it also reduce net debt from 1.4 trillion Yen to less than 700 billion and also reduce the cost by 1 trillion Yen by FY 2002. The combination of growth and cost reduction will allow Nissan to achieve a consolidated operating profit of 4.5 percent of sales by FY2002, (Ghosn). The main and the first goal of revival plan are to return Nissan to profitability for FY2000. While cost cutting will be the most dramatic and visible part of the revival plan, we cannot save our way to success (Carlos Ghosn). Revival plan highlights Nissans dedication to become worldwide achieving growing market share, competitive and profit based on desirable products and brands. This revival plan not only shows Nissan make progress and develop into a strong company over again, but, make Renault as the worlds fourth largest car maker. ENVRIONMENTAL ANAYLYSIS OF NISSAN RENAULT: PEST Analysis Factors Nissan Renault Political Government policy: Impacted positive on automotive sector so as to Nissan-Renault Policy to promote local manufactures and exporters Economical Time of inflationary and deflationary: Due to rise in interest rates , there is hike in prices of oil and car, buying power of customers goes on pick which indirectly affect to the Nissan-Renault. Currency Evaluation: Volatility and unstable currency rates affects the operation and sales of Nissan Renault. Impact on countries economy: Automobile industry uses plenty of goods such as aluminum, plastic, rubber, computer chips, vinyl, textiles, rubber, coppers, iron and steel.. Social Personality status: As standard of living of rises, people opt for more luxurious car. Population: Increase in population results in more sales of car. Standards and attitudes: Different values and attitudes are affects on the customer. Technological Technological change: The changing in the technology makes huge impacts on the product life cycle. Internet: Nissan Renault has very vast opportunity to advert their product by on website and gains competitive advantage. Opportunities As Nissan Renault is way back in to the hybrid technology so company needs to adapt this technology. However, hybrid technology is not much old so Nissan Renault should initiates to produce hybrid car. Continue to expand mainly in the developing country particularly in the Eastern Europe and Latin America. Introduce new innovative ideas. Threats Instability of fuel prices holds the sales of cars. Purchasing power of the consumer is been affected by the global economy. Competitor growth is been increased in this era for the Nissan Renault. Macro factors such as interest rates, inflation, incomes, recession, and unemployment. LEADERSHIP AND DIVERSITY : There is no question about the leadership vision of Carlos Ghosn. When he evaluated the revival plan by observing the strengths and weakness. He analyzes the situation by setting some objectives that were affecting the company from performing at better level. He makes the teams to choose the better methods of achieving the targets. Carlos understand the the objective and vision of Nissan and work culture was indistinguishable. He clears the strategy and vision in its Revival Plan. The culture of Nissan was homogeneous as they were thinking in the same manner. Though the CEO of Nissan opt for the changes, but the work force did not feel the changes was necessary in the culture of organisation. In order to transform Nissan, there was need for new culture to have impact on the culture of organisation (Nakae, 2005). The cross functional teams has to achieve something in order to delivery of revival plan successfully. For this objective the cross functional teams were form with both car m anufacturing organisation and the desired outcome was to equilibrium the cultural values. Cross functional teams are managed by executives appointed by Carlos who are open minded, reliable, culturally diversified. The whole transformation of leadership was to improve the performance of the Nissan. The Cross Functional teams were not created to share views and ideas of each culture. However, the motto underneath was to split the hierarchical barriers in the organisational culture. However, enabling the changes in the organisation cannot give assurance of success. The protection of self-esteem of the particular culture and the identification of organisation must be assured. However, he argues that facilitating change with upholding interest of organisation can wobbly balance act (Ghosn, 2002, Harvard Business Review). The leadership of Carlos Ghosn has characteristic of cultural diversity and with the help of his diversified cultural experience, he extract the cultural differences in organisation. In addition to this, when revival plan of Nissan was implemented, this was stage of performing for the cross functional team. However, the factor which considered as critical and hurdle in the stage was eastern collectivism and homogeneity of Nissan organisational culture. On the other hand, individual sponsorship with both diverse teams can be helpful to remove certain barriers to diversity of cross functional teams. CHANGE APPROACHES: Following are the change resistors and change approaches given by Kotter to Schlesinger (1979) which can help Nissan and Renault alliance in order to successfully implement rival plan. Participation Involvement of people in Staff Groups Decision Making Increase Commitment Facilitation Support in Identifying Resistance Convincing the Commitment to change Attitude Behaviour to Change Compulsion or coercion Explicit or Implicit Warning for behaviour Written notice for termination on Failure Negotiations Agreements to Overcome Resistance Use of Effective Third-party settlement Communication Learning about the change by Informing Educating Justifying Resolving disputes Adjustments Co-operation Use of Power to fulfil need for adjustment Grouping Threats and Rewards to fulfilment While implementing this change there might be resistance to change at different level in the company as suggested by Kotter Schlesinger ( managing innovation change : A critical guide for organisations 2nd edition, Nigel King Neil Anderson 2002). Individual level Group level Organisational level REASONS FOR ALLAINCE: The main reason of the alliance was to sharing investment, technology, respective cultures and supporting each other. The alliance was particularly made on the eagerness of the Carlos Ghosn to prospective successful synergy and keep freedom of the operations and culture amongst both organizations. Renault was keen to provide a common platform for generate development cost in important economics such as design studies prototyping and validation protocols, purchasing and industrial equipment. Which strategy has also been successful and adopted by several company such as Daimler-Chrysler in the United States and Volkswagen and Skoda in the Eastern Europe. They also focused on to the improve coordination and cost reductions for Nissan and Renault to the economic point of view. The major advantage of the alliance was both companies able to steps forward in to the foreign market for the instance Renault builds their car in the Mexico plant and to the other hand Nissan able to use Renaults Brazils plant. And also able to use their distribution channels in to the different countries. Under the alliance of the Renault and Nissan had agreed to share their components and their engines, for the instance Renault is expert in making diesel engines and Nissan is expert in making petrol and manufacturing procedure. Moreover, vision of two foreign companies to achieve mutual respect and peruse a common target we ask every single team not to do anything for the other teams. Pursue your own interests, growth and profitability. Because you are doing this, you will seek synergies (Ghosn, www.extra.emeraldinsight.com). This was the most important aspect to support the alliance of Renault Nissan, not merger. NISSAN RENAULT ALLAINCE STRUCTURE: Renault Nissan Alliance Objectives To be Ranked Amongst Top Three Companys in the Eyes of Customer Quality Value Product Services Technology Leadership excellence Each Region Segment Sustainability High Profit Margin Growth RENAULT 50% NISSAN 50% RNPO: Renault Nissan Purchasing Organisation RNIS: Renault Nissan Information Services 15% 44.3% Revival Plan Major Areas of Cooperation/Change   Carlos Ghosn was able to convince both the companies to  align  and come to following areas of collaboration, PURCHASING Both the companies are agreed to tie up their purchasing activities and try to minimise the purchasing cost of raw material. In the year 2001 during the rival plan both the companies were sharing about 30% of combine buying activities where as at present in the year 2009 the cooperation has increased to 100% which indicates the success of this alliance. Research and Development Under this regards both Nissan Renault both agreed to following two points. Allocate similar stage and components which are not really visible to customers as open body of automotive products in order to achieve the economies of scale and to reduce purchasing production cost. The platform integrated their efforts by manufacturing cars like Nissan Qashqai Renault Megane and many others which resulted in combine sales of more than 50% in the year 2008.  Ã‚   Switch Over Technology Production The tie-up enable both companies to swap their technological expertise to create competitive advantage. The Alliance was successful in creating gearboxes together for their combine products. They expertise of Nissan in making gasoline engine and Renault in making diesel engine resulted into co production of different engines. Both companies are moving forward to align their strategies and advanced mechanism in safety, environment performance. They also aims to develop zero emission technology which enable them to focus on electric cars by the end of 2010. Cross Cultural Management/Teams The unique alliance between Renault Nissan has been working for more than eight years by setting up collaborations in managing culture at all levels as a continuous process of best practices. It is very difficult for Carlos Ghosn to handle the cross cultural tams of Japan France at the same time but with the effective leadership he was able to create more than 30 teams each year. Apart from the above the alliance has decided to set production standards in both the companies which resulted into increase in the overall sales of the company. Both firms are using each others manufacturing capacities in order to produce mass production which in turn gave core competence in production capacity to both car manufacturers. HOFSTEDE CULTURAL ANAYLSIS : Hofstede model of cultural Dimension (source: hofstede, (1991), available at: www.ifets.info/journals/5_3/frank.html) Hofstedes cultural dimension helps us to categorize the key divergence between cultures. Thus this model was used to evaluate French, Japanese, and European culture. According to Hofstedes analysis there are three cultural dimensions that varies between French and Japanese culture power distance, individualism and masculinity (Hofstede, 1983).Because of the differences in masculinity scores it would be accepted that Japanese workforce have a different outset of gender in comparison to their European and French counterparts. Possibly this could direct to tension or pressure between female European workforce and Nissan employees. Japanese gender differentiation could also create legal problems due to the anti discrimination legislation in the Europe A high Power Distance score is directly linked to an autocratic management style. The variation between Japan and France points out that French managers have a more centralised, less counselling approach than their Japanese age group it is also states that average power distance of Europe is low as compared to France and Japan signifying that autocratic style of management in these countries would be strange throughout Europe both the countries have high scores in terms of power distance the Japanese put a high emphasis on the workforce age,( Deller and Flunkert) 1996 state that even capable junior staff will not be given preference over older colleagues. So employees. The significance of superiority is connected with the Japanese principle of lifelong possession with many of the employees commit to one firm which they toil for the whole of their life. In comparison the French structure chain of command is based on the educational backdrop of the person. The education system of France is so vastly controlled with the most brilliant student being conventional to elite schools. Approval to this school is a status mark that prevails through the existence of person with the French perception of accomplishment being judged by a persons family background, educational level and financial rather than by direct accomplishment (Newson -Balle and Gottschalk, 1996). This could lead to disagreement if Japanese disrespect their French counterparts and the French shows lack of respect to their uneducated Nissan associates A countrys individual signifies the level to which culture underpin person over communal success. However it states that workers work better independently who has high level of individualism in comparison with those low scores France has the highest level of individualism score compared to Japan i.e. France with 71 whereas Japan with 46. Therefore Nissan in its European operations must give an opportunity for its employees to gain accomplishment. Moreover if it is put into practice in Nissan operation it can escort performance and motivation The long period of direction signifies a level that the long term goals greater than the short term goals becomes the centre of attraction for the members of society. However it is vital to understand that managers at Nissan should design the strategies by arriving at a logical assurance while working with the Renault ENABLERS AND BARRIERS FOR REVIVAL PLAN: The alliance leader of Nissan Renault imposed incremental change through Nissan Revival Plan 01/2. The key driver for the change was to provide Nissan with sufficient market oriented strategies to compete in the market with other larger manufacturers with heterogeneity in their Japanese organisational culture. However, high risk in the alliance was to deal with cross culture value and beliefs of organisation. Nissan was facing problem of product recalling which was damaging its brand image and the other is the lack of diesel technology in comparison with their key competitors. The focus of Nissan was on profitability, cost reduction, innovation in Europe to continue its growth and brand reputation. As the commodity prices poses a threat to Nissan they oppose this problem by making some alterations in their input materials. They have developed a twofold strategy which is to maintain the equilibrium between individual uniqueness and maintaining their globalized resources. The increasi ng demand and supply in car manufacturing industry by launching new innovative model was the critical enabler factor for Nissan to cut their manufacturing overheads, increasing purchasing power, reducing bargaining power of consumers to remain presence in the market. The main threats for Nissan is the market saturation which effects its growth as the volume of the car sales fell which has make Nissan cant able to make its presence in the European market. The hurdle in this alliance is the culture of the organization which effects the stability and strength of the organization. However, apart from the , the main objective was to create dual citizenship which balanced the equilibrium and support their cultural values and desires to success of the organization. FORCE FIELD ANALYSIS FOR DRIVERS OF GLOBAL CHANGE: DRIVING FORCE RESTRAINING FORCE Technological Change Huge Investment RD and cost of capital Economic Integration More International market Emerging Market in Developing Countries Increasing speed of international more domestic competition Cross Cultural Challenges Falling of Communist Society Fewer Barriers