51296841-IB-RENAULT-NISSAN-FINAL.docx - 2010 Renault-Nissan...

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1 Renault-Nissan: The Making of a Global Alliance International Business Assignment Prepared by: Mohit Malhotra(67) Monisha Sinha(68) Nirmal Kandth(71) Ranjit Pisharody(75) Sujith Valsalan(113) 2010 February 1, 2020
Table of Contents EXECUTIVE SUMMARY 1 INDUSTRY BACKGROUND 2 COMPANY BACKGROUND: RENAULT 4 COMPANY BACKGROUND- NISSAN 8 THE ALLIANCE PROCESS 12 HANAWA AND SCHWEITZER 14 ANALYSIS OF RENAULT- NISSAN GLOBAL ALLIANCE 17 1. M ARKETING P ERSPECTIVE 18 2. F INANCIAL P OSITION OF N ISSAN V / S R ENAULT 20 3. O PERATIONS P ERSPECTIVE 21 4. HR P ERSPECTIVE 21 RECOMMENDATIONS 25 CONCLUSION 25 BIBLIOGRAPHY 27
Executive Summary This 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, was struggling to make its presence felt outside European market. Recent attempts to form an alliance with Volvo had failed. So Renault was on a lookout for a strategic alliance in Asia, so that it could enter the Asian market. Nissan, on the other hand, despite being a producer of excellent quality cars, was suffering from major financial problems. The company had problems with its purchase policy and relations with suppliers. It also had a very diverse product range resulting in a high manufacturing cost. All these factors had pushed the company on the brink of bankruptcy. In 1998 it had a total debt of 23 billion Euros. Renault approached Nissan with the proposal of an alliance; this elicited a positive response from Nissan. But during the same time period Daimler Chrysler, the German car maker which was also 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 as compared to Daimler and alliance with Renault would allow Nissan to maintain its individual identity, the deal went in favour of Renault. As part of the deal, Renault invested 643 Billion Yen and acquired 36.8% equity of Nissan Motors and 22.5% of Nissan Diesel. For the purpose of restructuring Nissan’s operations and finance, three French representatives left Renault and joined Nissan’s Board: Carlos Ghosn as COO, Patrick Pe`lata responsible for strategy and Thierry Moulonguet, in charge of finance. OBJECTIVES The primary objective of the case analysis was to identify various issues related to Nissan’s financial decline as well as Renault’s stagnant market share. The case also deals with the scenario leading to the alliance and post-alliance synergy that would be achieved by both the companies. RECOMMENDATIONS The recommendations are given keeping in view the financial and other benefits that both the companies would enjoy post the alliance. To avoid brand confusion in the minds of customers Nissan and Renault should keep brand and product identities different where as they should exploit synergies in geographical presence and product categories.

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