Case 3 - Managing operating exposure and FX risk at Nissan...

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Title: Managing operating exposure and FX risk at Nissan Managing global financial risk In order for Nissan to perform better, Ghosn identified that the company had to drastically change the way it does business. The automotive industry is a large capital consumer and thus the first step that was necessary was to reduce the cost of doing business. Ghosn decided that the company should reduce the cost incurred in purchasing by 20%, decrease company capacity by 30%, close five of their plants, and to reduce the number of workers by 20,000 through layoffs and attrition (Book Review, 2005). This was a crucial step in improving the company’s financial performance but was met with resistance from suppliers and the country at large since the external environment was more concerned with status quo rather than sound financial performance. Nissan had one thousand three hundred subsidiaries and thus was incurring large amount of cost to run the business. By reducing capacity and closing plants Ghosn wanted to reduce cost incurred to operate and maintain numerous plants. In order to reduce global financial risk Ghosn put a system in place to reduce debts incurred by the company. He put measures in place to analyze company financial Managing operating exposure and FX risk at Nissan 1
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performance and developed strategies to reduce debts. In the first quarter of 2001 the
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Case 3 - Managing operating exposure and FX risk at Nissan...

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