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1Renault-Nissan: The Making of a Global AllianceInternational Business AssignmentPrepared by:Mohit Malhotra(67)Monisha Sinha(68)Nirmal Kandth(71)Ranjit Pisharody(75)Sujith Valsalan(113)2010February 1, 2020
Table of ContentsEXECUTIVE SUMMARY1INDUSTRY BACKGROUND2COMPANY BACKGROUND: RENAULT4COMPANY BACKGROUND- NISSAN8THE ALLIANCE PROCESS12HANAWA AND SCHWEITZER14ANALYSIS OF RENAULT- NISSAN GLOBAL ALLIANCE171.MARKETINGPERSPECTIVE182.FINANCIALPOSITIONOFNISSANV/SRENAULT203.OPERATIONSPERSPECTIVE214.HR PERSPECTIVE21RECOMMENDATIONS25CONCLUSION25BIBLIOGRAPHY27
Executive SummaryThis case provides us with two different perspectives of Renault- Nissan partnership deal.Renault, which was the ninth-largest automaker in the world with 4.3% of market share, wasstruggling to make its presence felt outside European market. Recent attempts to form an alliancewith Volvo had failed. So Renault was on a lookout for a strategic alliance in Asia, so that itcould enter the Asian market.Nissan, on the other hand, despite being a producer of excellent quality cars, was suffering frommajor financial problems. The company had problems with its purchase policy and relations withsuppliers. It also had a very diverse product range resulting in a high manufacturing cost. Allthese factors had pushed the company on the brink of bankruptcy. In 1998 it had a total debt of23 billion Euros.Renault approached Nissan with the proposal of an alliance; this elicited a positive response fromNissan. But during the same time period Daimler Chrysler, the German car maker which wasalso interested to takeover an Asian carmaker, also approached Nissan with an offer of merger.But after all the due diligence Nissan concluded that synergy with Renault was greater ascompared to Daimler and alliance with Renault would allow Nissan to maintain its individualidentity, the deal went in favour of Renault. As part of the deal, Renault invested 643 Billion Yenand acquired 36.8% equity of Nissan Motors and 22.5% of Nissan Diesel. For the purpose ofrestructuring Nissan’s operations and finance, three French representatives left Renault andjoined Nissan’s Board: Carlos Ghosn as COO, Patrick Pe`lata responsible for strategy andThierry Moulonguet, in charge of finance.OBJECTIVESThe primary objective of the case analysis was to identify various issues related to Nissan’sfinancial decline as well as Renault’s stagnant market share. The case also deals with thescenario leading to the alliance and post-alliance synergy that would be achieved by both thecompanies.RECOMMENDATIONSThe recommendations are given keeping in view the financial and other benefits that both thecompanies would enjoy post the alliance. To avoid brand confusion in the minds of customers Nissan and Renault should keep brand andproduct identities different where as they should exploit synergies in geographical presence andproduct categories.