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BACKGROUND

The Global Leadership of Carlos Ghosn at Nissan

During March 1999, Brazilian Carlos Ghosn took over as the first non-Japanese Chief Operating Officer of Nissan, when Nissan had been incurring losses for seven of the prior eight years. Many of the industry analysts expected a culture clash between the French leadership style and his new Japanese employees. Analysts said, because the financial situation at Nissan had become critical so the decision to bring Ghosn in came at the worst possible time. The continuing losses were resulting in debts (approximately $22 billion) that were shaking the confidence of suppliers and financiers alike. Furthermore, the Nissan brand was weakening in the minds of consumers due to a product portfolio that consisted of models far older than competitors. In fact, only four of the company s 43 models turned a profit. With little liquid capital available for new product development, there was no indication that Nissan would see increases in either margin or volume of sales to overcome the losses.

Some of the issues Carlos Ghosn faced are

Consensus Decision-Making and its Relationship to Career Advancement

Addressing Corporate Culture Issues

Carlos Ghosn s Philosophies of Management

The First Months in Japan and the Cross-Functional Teams

Reforms in Full Swing

Reducing Redundancies

Keiretsu Partnerships

Reorganization

Performance Evaluations and Employee Advancement

The next leader of Nissan was either going to turn Nissan around within two to three years, or the company faced the prospect of going out of business.Understanding the immediacy of the task at hand, Ghosn boldly pledged to step down if Nissan did not show a profit by March 2001, just two years after he assumed duties. But within eighteen months Nissan began to operate profitably under his leadership.

Background of Carlos Ghosn

Carlos Ghosn was borned in Brazil in 1954 to French and Brazilian parents, both of Lebanese heritages; he received his university education in Paris. After graduation at age 24, Ghosn joined the French firm, Compagnie Générale des Etablissements Michelin. After a few years of rapid development to become Brazilian subsidiary, he learned to manage large operations under difficult conditions such as the runaway inflation rates in Brazil at that time. Similarly, as the head of Michelin North America, Ghosn faced the pressures of a recession while putting together a merger with Uniroyal Goodrich. Because Michelin was a family-run company, regardless of his successes in his 18 years with Michelin, Ghosn realized that he would never be promoted to company president. Therefore, in 1996 he decided to resign and join Renault S.A., accepting a position as the Executive Vice President of Advanced Research & Development, Manufacturing, and Purchasing. Ghosn led the turnaround initiative at Renault in the aftermath of its failed merger with Volvo.Because he was so focused on increasing margins by improving cost efficiencies, he earned the nickname Le Cost-Killer among Renault s top brass and middle management personnel. Three years later, when Renault formed a strategic alliance with Nissan, Ghosn was asked to take over the role of Nissan COO in order to turn the company around in a hurry, just as he had done earlier in his career with Michelin South America. To Carlos Ghosn this would be the fourth continent he would work on, which combined with the five languages he spoke, shows his capacity for global leadership.

Background of Nissan

A company called Jidosha-Seizo Kabushiki-Kaisha (which means Automobile Manufacturing Co., Ltd. in English) was established in 1933, in Japan. It was a blend of several earlier automotive ventures and the Datsun brand which it acquired from Tobata Casting Co., Ltd. Shortly after that in 1934, the company name was changed to Nissan Motor Co., Ltd. After the Second World War, Nissan grew steadily, expanding its operations globally. It became especially successful in North America with a lineup of smaller gasoline efficient cars and small pickup trucks as well as a sports coupe, the Datsun 280Z. Along with other Japanese manufacturers, Nissan was successfully competing on quality, reliability and fuel efficiency. By 1991, Nissan was operating very profitably, producing four of the top ten cars in the world.Nissan management throughout the 1990s, however, had displayed a tendency to emphasize short term market share growth, rather than profitability or long-term strategic success. Nissan was very well known for its advanced engineering and technology, plant productivity, and quality management. During the previous decade, Nissan s designs had not reflected customer opinion because they assumed that most customers preferred to buy good quality cars rather than stylish, innovative cars. Instead of reinvesting in new product designs as other competitors did, Nissan managers seemed content to continue to harvest the success of proven designs. They tended to put retained earnings into equity of other companies, often suppliers, and into real-estate investments, as part of the Japanese business custom of keiretsu investing. Through these equity stakes in other companies, Ghosn s predecessors (and Japanese business leaders in general) believed that loyalty and cooperation were fostered between members of the value chain within their keiretsu.

By 1999, Nissan had tied up over $4 billion in the stock shares of hundreds of different companies as part of this keiretsu philosophy. These investments, however, were not reflected in Nissan s purchasing costs, which remained between 20-25% higher than Renault s. These keiretsu investments would not have been so catastrophic if the Asian financial crisis had not resulted in a devaluation of the yen from 100 to 90 yen = 1 US dollar. As a result, both Moody s and Standard & Poor s announced in February 1999, that if Nissan could not get any financial support from another automobile company, then each of them would lower Nissan s credit rating to junk status from investment grade . Clearly, Nissan was in need of a strategic partner that could lend both financing and new management ideas to foster a turnaround. In addition, Nissan sought to expand into other regions where it had less presence. In March 1999, Nissan President and Chief Executive Officer Yoshikazu Hanawa found such an alliance opportunity with Renault, which assumed a 36.8% stake in Nissan, allowing Nissan to invest $5.4 billion and retain its investment grade status. Hanawa was also able to get Renault s top management to agree to three important principles during negotiations.

The three important principles

a.Nissan would maintain its company name

b.The Nissan CEO would continue to be selected by the Nissan Board of Directors c.Nissan would take the principal responsibility of implementing a revival plan.

Hanawa made the request to Louis Schweitzer, CEO of Renault, to send Carlos Ghosn to Nissan to be in charge of all internal administration and operations activities. Why would Renault agree to all of these conditions in this bailout of Nissan? Renault was also looking for a partner, one that would reduce its dependence on the European market and enhance its global position. In 1997 85% of Renault s revenue was earned in Europe, 32.8% of which came from its domestic (French) market. Renault also had high market share in Latin America, especially Brazil. On the other hand, Nissan has the second largest market share in Japan and a strong market share in North America (see Appendix 2, Nissan market share). Nissan lacked, however, market share and distribution facilities in Latin America. By creating the new alliance, Nissan and Renault expected to balance their market portfolios and become more competitive. Renault wanted a partner that was savvy and established in the North American and Asian markets. Furthermore, the merger of Daimler and Chrysler in May 1998 gave Renault a sense of urgency about finding a partner to compete more effectively on a global scale. So Carlos Ghosn was designated to join Nissan as COO because Renault and Nissan agreed to a Global Alliance Agreement on March 27, 1999 with him.

Addressing National Culture Issues

After going to Japan, Ghosn knew that industry analysts were reasonable in doubting whether a nonJapanese COO could overcome Japanese cultural obstacles, as well as effectively transform a bureaucratic corporate culture.In order to transform the company back into a successful one, Ghosn was going to have to address several Japanese cultural norms

The following are some of the issues he faced.

Consensus Decision-Making and its Relationship to Career Advancement

Since the war, the Japanese business culture for decades had been producing leaders who were very good at reaching consensus and working cooperatively within a department (a derivative of the murashakai consensus based society system). Thus, the conventional wisdom in Japan was that conscientiousness and cooperation were the key elements to maintaining operational efficiency and

group harmony. This paradigm often resulted in delays to the decision making process in an effort to achieve consensus.As an unintended consequence of the emphasis on conscientiousness, Japanese professionals tended to avoid making mistakes at all costs in order to protect their career growth. This can result in frequent informal informational meetings and coalitions (called nemawashi) that occur between professional departments prior to a decision-making meeting. Through these informal contacts, participants try to poll the opinions of other participants beforehand in order to test which positions have the strongest support so that their position is aligned with the position most likely to be influential. Then, at the time for a meeting with their superiors, participants tender their aligned positions one by one to the ultimate decision maker with the feeling that if the decision maker agrees to the consensus, then no one individual can be identified later for originating a faulty position if that decision results in failure. Rules and conformity replace process.

In Japan, age, education level, and number of years of service to an organization are key factors determining how an employee moves up the career ladder. Due to a cultural tenet called NennkouJyoretu, placing power in the hands of the most knowledgeable and experienced, promotions are normally based on seniority and education. In practice, the only things that usually thwart these timeand education-based promotions are performance errors that reflect poorly on the team and any behavior that causes disharmony among team members. When something goes wrong, the most senior person accepts responsibility while accountability at lower levels is diffused. This part of Japanese culture had been useful to reinforce control over operations and enhance quality and productivity.

During the postwar period of the company s growth, it contributed to great working relationships among everyday team members at Nissan, but these norms, by the mid 1990s, were actually impeding the company s decision making. Specifically, these cultural norms severely hampered risk-taking and slowed decision making at all levels. Existing teams of employees routinely spent much time on concepts and details, without much sense of urgency for taking new action, due in part to the risks involved with actions that could result in failure. This mindset contributed to a certain degree of complacency with market position and internal systems at Nissan, undermining the company s competitiveness.In a related cultural issue, as employees became increasingly aware that Nissan was not performing well, the Japanese culture of protecting career advancement led to finger pointing rather than acceptance of responsibility. Sales managers blamed product planning. Product planning blamed engineering. Engineering blamed manufacturing and so on. When Ghosn first arrived in Japan, he was surprised to learn that, while most of the employees sensed that there was indeed a problem within the company, they nearly always believed that their respective departments were operating optimally.

The consensus was that other departments and other employees were creating the company s problems. Ghosn also learned that many of the employees of the company did not have a sense of crisis about the possibility of bankruptcy at Nissan because of the Japanese business tradition, which implied

This was in part due to a focus on what was best for maintaining the company s size and its employees. better products to meet market demands) or for investors (higher earnings and higher stock value). in an unusual break from Japanese business culture. cross-border. both formal and informal. Lack of cross-functional. Lack of a clear profit orientation 2. cross-cultural lines of work. the follow-up during implementation was often not effective. Staffs seemed relatively uninformed of key corporate business decisions. No shared vision or common long term plan 5.e. Second. This was not usually the case in other Japanese companies. The businesses for their part were committed to providing lifetime employment to their workers. top management had developed tunnel vision regarding its strategic focus on regaining market share. Addressing Corporate Culture Issues Not only were there Japanese cultural norms for Ghosn to contend with. Lack of a sense of urgency 4. This view was based on the long standing partnership between the government and the major businesses to ensure employment and expand exports to world markets. which were holding the company back.that large troubled employers would always be bailed out by the government of Japan. i. Additionally. Insufficient focus on customers and too much focus on competitors 3. Ghosn identified the following problems at Nissan 1. First. rather than what was best for customers (newer. there were communication problems between the layers of the organization. while top management seemed out of touch with what policy execution issues were present at the middle and lower management levels. more units to produce. but there were procedural norms at Nissan. Carlos Ghosn s Philosophies of Management . as opposed to restoring margin per unit sold. Ghosn realized that Nissan s fundamental problem was the lack of vision from management and the persistent problem of ignoring the voice of Nissan s customers. once decisions were made at Nissan.

Perhaps it was the way he started that set the foundation among the employees. he reiterated many times. He was the first manager to actually walk around the entire company and meet every employee in person. 2. and customer satisfaction. The key. Ghosn embraced the cultural differences between the Japanese and himself. These three principles are as follows: 1. shaking hands and introducing himself. He felt that by accepting and building on strengths of the different cultures. Communication of company direction and priorities this is the only way to get truly unified effort and buy-in. believing fervently that cultural conflict. Strategy is only 5% organizational prosperity is tied directly to measurably improving quality. costs. In fact. It also sent a . he has credited all of the success in his programs and policies (described below) to the willingness of the Nissan employees at all levels to change their mindsets and embrace new ideas. In addition. if paced and channeled correctly. Execution is 95% of the job. Ghosn initiated long discussions with several hundred managers in order to discuss their ideas for turning Nissan around. What he did bring with him was three overriding principles of management that transcended all cultures. The First Months in Japan and the Cross-Functional Teams Even though Ghosn expected that his attitude toward cultural respect and opportunism wouldlead to success. This began to address the problems within the vertical layers of management by bringing the highest leader of the company in touch with some of the execution issues facing middle and lower management. say. then the turnaround he sought would likely backfire. Carlos Ghosn came to Japan knowing that if he were to start imposing reforms by using the authority of his company position. In this vein. And he used these as a backdrop to give employees structure as to their efforts of determining the proper reforms.Despite all of his doubters. Ghosn was pleasantly surprised by how quickly Nissan employees accepted and participated in the change of their management processes. It works even when the company is facing layoffs. including Ghosn himself. 3. was that no one leader should try to impose his/her culture on another person who was not ready to try the culture with an open mind and heart. would be given a chance to grow personally through the consideration of different perspectives. rather than work through the Japanese culture. could provide opportunity for rapid innovation. all employees. and do are all the same thing. Transparency an organization can only be effective if followers believe that what the leaders think.

when he chose expatriates to accompany him from Renault to Nissan. Through these CFTs. Ghosn opted to develop a program for transformation which relied on the Nissan people to make recommendations. In a sense he was making it clear that he was also putting his own future in their hands because he had publicly stated several times that the Nissan company had the right employees to achieve profitability again in less than two years. With this in mind.signal to other executives that they needed to be doing the same thing. instead of hiring outside consultants. He felt that if the employees could accomplish the revival by their own hands. First and foremost.change. then confidence in the company as a whole and motivation would again flourish. Ghosn mobilized existing Nissan managers by setting up nine Cross. Research and Development. Instead. In Japan. he chose not to use his newfound understanding of the problems to impose a revival plan.com. He began to organize CrossFunctional Teams to make decisions for radical5 Middleton. Purchasing. as shown by their recommendations and opinions. and Organizational Structure. the trouble was that employees working in functional or regional departments tend not to ask themselves as many hard questions as they should. After these interviews. John. General and Administrative. Manufacturing and Logistics. he decided that the employees were quite energetic. ExpressExec. Working together in CFTs helped managers to think in new ways and challenge existing practices. Part of his interest in doing this in-house was to address the motivation and horizontal communication issues that he encountered throughout the organization. Sales and Marketing. Complexity Management. Renault had made an agreement with Hanawa to remain sensitive to Nissan s culture at all times. But he did not stop there. Before the strategic alliance occurred between Renault and Nissan. he was allowing the company to develop a new corporate culture from the best elements of Japan s national culture.Functional Teams (CFTs) of approximately 10 members each in the first month. Thus. The CFT teams had responsibility for the following areas: Business Development. Phaseout of Products and Parts. after completing his rounds of talking with plant employees. Ghosn established the nine CFTs within one month of his arrival at Nissan. Ghosn had the teams review the company s operations for three months and come up with recommendations for returning . Finance and Cost. And. He knew that the CFTs would be a powerful tool for getting line managers to see beyond the functional or regional boundaries that defined their direct responsibilities. he screened carefully to ensure that those expatriates would have his same cultural attitudes toward respecting Nissan and the Japanese culture. and Ghosn was intent on following through on that commitment.

These leaders were drawn from the executive committee and ensured that the teams were given access to all the information that they needed. CFTs used a system reporting to two supervisors. The CFTs also prescribed some harsh medicine in the form of plant closures and employee reductions. To overcome this each CFT formed a set of sub teams.Nissan to profitability and for uncovering opportunities for future growth. the major financial house in Japan. They are to carefully watch the on-going revival plan and try to find further areas for improvement. They continue to brief the CEO. including Nissan s. Ten people could not cover broad issues in depth. One of the regular members acted as a pilot who took responsibility for driving the agenda and discussion. giving them a sense of responsibility and ownership about turning Nissan around. went bankrupt and was not bailed out by the Japanese government. In many cases. it allowed them to understand how the standard measures of success for their own departments were meaningless to Nissan unless they were framed in a way that connected to other departments to result in customer attraction and retention. team had two senior voices that would balance each other. By contrast. Since the members of the teams were often mid-level managers who rarely saw beyond their own functional responsibilities. they reported to Nissan s nine-member executive committee and had access to all company information. this new coordination had high impact on participants. working together in cross-functional team s helps managers to think in new ways and challenge existing practices. The pilots usually had frontline experience as managers. the best way to turn Nissan around. To prevent a single function s perspective from dominating. Ghosn did have one great stroke of luck that helped him reinforce the need for change. Ghosn. and then executing. Japanese employees. At approximately the same time as he was arriving in Japan. The CFTs would remain an integral part of Nissan s management structure. . Before that. As Ghosn explained in a speech in May 2002.Even though the teams had no decision making power. The trouble is that people working in functional or regional teams tend not to ask themselves as many hard questions as they should. This recent turn of events helped to develop a sense of urgency among Nissan employees. The teams also provide a mechanism for explaining the necessity for change and for projecting difficult messages across the entire company. Yamaichi. did not worry about corporate problems because the government was always saving the day. used the Yamaichi example whenever he could to continue to motivate his employees. repeating that their fate would be no different if they did not put all of their effort into figuring out. however the team s missions have changed somewhat. The pilot and leaders selected the other members. these mid-level managers enjoyed learning about the business from a bird s eye perspective and felt fully engaged in the change process. Specifically. The teams consisted of around ten members who were drawn from the company s middle management. to his credit. These sub-teams also consisted of ten members and focused on particular issues faced by the broad teams.

rather than planning and reexamining decisions. From that point forward he stressed implementation and follow-up. Reducing Redundancies To achieve these results. They contended that falling revenues and dissipated market share were 6 Ghosn. In addition. very little implementation yet. Management (especially Ghosn) was increasingly perceived as transparent among all levels of employees. Mr.000 jobs (14% of Nissan s workforce were planned. and the dealer network. only planning. There was. Ghosn endured strong criticism from the media. 7 Since Japanese business culture had tended to have lifelong employment as a principle. Ghosn created and communicated what he called the Nissan Revival Plan (or NRP) in October of 1999. Vol. Other CFTs were formed. however. which included plant closures and reduced headcount. including being labeled as a gaijin. January 2002. regardless of the circumstances. as unacceptable and reckless. the closing of five factories and the reduction of 21.due to Nissan s aging product line rather than to Moriyama s performance. Having received from the CFTs the recommendations. 80. decisions were being made faster. In addition. the fruit of the CFTs and the increased sense of urgency were apparent. management.Reforms in Full Swing Within the first six months. and there was increased communication and understanding about what was important to management. Harvard Business Review. and (4) cost reduction. which Ghosn attributed to his respect for protecting Nissan s identity. Ghosn s main focus areas included (1) Development of new automobiles and markets (2) Improvement of Nissan s brand image (3) Reinvestment in research and development. No. Ghosn fired several managers who did not meet targets. In addition to the media and . a foreigner. Hiroshi Moriyama. but the bulk of his efforts lay in ensuring high-quality execution of the decisions that were laid out in the plan. Many industry analysts cited his demotion of Vice President of Sales and Marketing in Japan. Saving the Business without Losing the Company. Job cuts would occur in manufacturing. Carlos. 1.

industry analysts. Ghosn also put an emphasis on cross-functional department members having very clear lines of responsibility and high standards of accountability. Reorganization Another major component of the NRP was the restructuring of the organization toward permanent Cross-functional departments. engineering) and regional (e. he assigned each staff member two responsibilities: functional (e. I did not accept any report that was less than totally clear and verifiable.g. North America). Ghosn created a matrix organization to improve transparency and communication. Ghosn also made it clear. both oral and written. Nissan regained billions in tied up capital to use for debt servicing and new product development without losing any significant pricing advantages. For higher-level staff. Nissan actually began to substantially lower its costs after the keiretsu investments were sold. As a result. Keiretsu Partnerships As one of the biggest changes of the NRP. Right from the beginning. which each serviced one product line. thereby building awareness of both functional and regional issues. He repeated this often to drive home the point that the way to restore the power of the Nissan brand was through each individual customer s experience. the staffs gained better visibility of the entire business process and began to focus on total business success and customer satisfaction. that engineers were not to reduce product cycle times or do anything that would negatively impact product quality or reliability. because Ghosn put such an emphasis on reducing purchasing costs. As it turned out. thereby stimulating risk-taking behavior and personal accountability. Ghosn is quoted as saying. The result was that each staff member would have two bosses. marketing. also expressed concern about the layoffs. domestic. Employees were disciplined much more strongly for inaccurate or poor data than misjudgment. Ghosn also eliminated all advisor and coordinator positions that carried no responsibilities and put those personnel in positions with direct operational responsibility. However Nissan maintained customer-supplier relationships with those former keiretsu partners. as opposed to misleading performance goals that could be taken out of context.. Every report. In fact. the government. Nissan broke away from the Japanese cultural norm of keiretsu investments. and I expected people to personally commit to every observation or claim they made. Within this matrix. was to be 100% accurate.. I made it clear that every number had to be thoroughly checked. however. In addition. but Prime Minister Keizo Obuchi responded by offering subsidies and programs to help the affected workers. .g.

a female factory worker who had only a high school diploma was promoted to be a manufacturing manager based on her strong abilities to perform the work. or educational level. he thought these tests of authority were growth experiences for young managers.000 car sales for Nissan worldwide.1%. seven plants produced automobiles based on 24 platforms. relating promotion and salary increase to the ability to perform challenging or demanding tasks. a further reduction of purchasing costs by 15%.7% presently to 6. This was a result of achieving a purchase price from kereitsu suppliers that matched the prices offered by Renault s suppliers. length of service. 2005. Under Ghosn s compensation system. four plants produced automobiles based on 15 platforms. longer-serving employees caused some problems regarding lack of cooperation. These incentives included cash incentives and stock options for achievements that could be linked directly to successful operating profits and revenue. The one in Nissan 180 represents an additional 1. Ghosn stated in a speech for an annual business review. mid career hires (400) outnumbered college recruits (280).11 Prior to NRP. And promotions were no longer limited to age. In 2002. an 8% operating profitability with no changes in accounting standards. In addition. the supplier base shrunk by 40% and the service suppliers decreased by 60%. The Near Future Implementation of Nissan 180 On May 9. For example. and a significant increase in customer satisfaction and sales satisfaction ratings. All new goals were to be accomplished by April 1. The promotion of some younger leaders over older. in which managers usually received no stock options or bonuses. one year ahead of schedule. He went on in the speech to set out the goals for a new plan. all the official commitments we took have been overachieved one full year ahead of schedule Nissan is now ready to grow. Because hiring outside . 2002. Two years after the start of its implementation. and the zero represented zero automotive debt.Performance Evaluations and Employee Advancement Ghosn also put focus on performance by introducing a performance based incentive system. The First Three Years The NRP was achieved in March 2002. After NRP. This was a large departure from the traditional Japanese compensation system. the eight. the highest achievers got the highest rewards. But just as Ghosn saw cultural differences as growth opportunities.000. the plan called for an increase of global market share from 4. In addition. one he called Nissan 180 which would focus on profitable growth. The Nissan Revival Plan is over. One success was a 20% reduction in purchasing costs.

How could the momentum and the energy that his employees exhibited be maintained now that they had all reached the goals that were seemingly Herculean just over two years ago. Before this could happen. Challenges for Ghosn and Nissan As Ghosn contemplates the future. There was also a culture clash between the French leadership style and the new Japanese employees. he knows that the transformation has really just begun. or would Ghosn be able to mobilize them to get to the next level of profitable growth and reestablishment of brand power and market share? He was aware that current succession plans called for him to return to Renault as its new CEO. but he was also pushing a new. replacing Louis Schweitzer in 2005. Would there be a letdown of effort and results by Nissan employees. In 1934 it was named by Nissan Motor co. Ghosn faced different problems when he was in charge of Nissan. it has insufficient focus on customers and too .it was a combination of several earlier automobile venture and the Datsun brand. product initial quality and reliability. The financial situation at Nissan had become critical. Could the new approaches that had been so successful become part of the Nissan culture without his continued guidance? Would the success of the NRP spoil the sense of urgency that helped reinforce the need for change allowing Nissan to slip back into old habits? How could he find someone to carry forward the need to create a sustainable pattern of customer focus and profitable growth? THEME Nissan is world renowned company .managers might create animosity among managers within Nissan. ltd. It also didn t have a HR Department that s why it lacked in perfect strategy and management. customer-focused initiative called Quality 3-3-3 . Nissan has always emphasized on short term market share growth rather than long term strategic success. Ghosn would be challenged to find an adequate replacement who could take Nissan to new heights of accomplishment as planned. to illustrates his leadership globally. Nissan lacked a clear profit orientation. Nissan brand was weakening in the minds of consumers.1996 Carlos Ghosn joined as COO. and sales & service quality. He said that this program focuses on three categories of quality: product attractiveness. this practice reflects a sharp change in hiring decisions. Not only was Ghosn aggressively launching the Nissan 180 program to transition out of the Nissan Revival Plan program.

cross. which combined with the five languages he spoke. cross structural sense of work. in another confront? Strengths Nissan fought back incredibly fast to shock the critics under he global leadership of Carlos Ghosn The brand Nissan was weakening in the minds of consumers due to a product portfolio that consisted of models far older than competitors. And Nissan has no share vision or common long term plan. there was no indication that Nissan would see increases in either margin or volume of sales to overcome the losses. plant productivity.functional. For Ghosn this was the fourth continent he would work on. Only four of the company s 43 models turned a profit. Nissan was left with very little liquid capital available for new product development. and quality management. Under the bold leadership of Carlos Ghosn.much focus on competitors also lack of sense of urgency. Moreover. It also lacked cross. The continuing losses incurred by Nissan were resulting in debts (approximately $22 billion) that were shaking the confidence of suppliers and financers. Nissians advance technology Nissan was very well known for its advanced engineering and technology.border. . Nissan s product planning department blamed engineer and engineering blamed manufacturing so on. The fundamental problem was the lack of vision from management and the persistent problem of ignoring the voice of Nissans consumers. Nissan turned around fighting the $22 billion debt in just eighteen months to become profitable again. illustrates his capacity for global leadership. Main Issue Finding out the way to sustain the employee s efficiency to accomplish different missions and vision whether Nissan will be able to maintain the right track properly through the substitution of its CEO. so there was a conflict between the departments as well.

if correctly channeled and paced. the decision to bring Carlos Ghosn in was in the worst possible state of Nissan considering its financial crisis. He had expected all the employees of Nissan to grow personally through the consideration of different cultural perspective by accepting and building on strengths of the different cultures. just the way he had done earlier in his career with Michelin South America. plant productivity. and quality management. According to their analysis. Ghosn embraced all the cultural differences between the Japanese and himself since he had the belief that cultural conflict. Carlos Ghosn leading Nissan cutting the costs Carlos Ghosn was very focused on increasing margins by improving cost efficiencies. When Renault formed a strategic alliance with Nissan. Carlos Ghosn planted himself inside the hearts of his employees by being close to them. A drop in non-operating expenses of Nissan. contributed to the steep increase in Nissan s profit. could provide the opportunity of rapid innovation.Nissan Motor Co Ltd used to be a globally expanding auto manufacturer well known for its advanced engineering and technology. such as interest on outstanding debt due to lower net indebtedness and more efficient financial management. listening to their views to a turnaround in Nissan . Carlos Ghosn s Philosophies of Management gave Nissan the boost it required to fight the losses in a considerably short span of time Critics had anticipated a severe cultural clash to be introduces by bringing in a Non-Japanese leader into Nissan in 1999. Ghosn was asked to take over the role of Nissan COO in order to turn the company around in a hurry. He had earned the nickname Le Cost-Killer among Renault s top brass and middle management personnel because of his intense cost-efficient strategies even before joining Nissan in March 1999. Its growth was very steady until it suffered the losses for about seven consecutive years starting resulting in a enormous debt of approximately $22 billion.

Nessian need to turn on within two to three years or the company faced the prospect of going out of business. Nissans profitability When Nissan began to operate they took only few months for ghosn to stock crisis and supporters. shaking hands and introducing himself. Lucrative competition regarding quality. In addition. It had a special success in North America with its lineup of smaller gasoline efficient cars and small pick-up trucks as well as a sport coupe named 280Z under the brand name DATSUN which in fact was the predecessor of the Brand Nissan. They were successful in producing profitability with four top ten cars in the world. Pact opportunity with the Renault and its investment grade status . In this situation ghosn took the charge of Nissan .Carlos Ghosn was actually the first Nissan manager to walk around the entire company and meet every employee in person.but it took only eighteen months for him to stock critics and supporters alike when Nissan began to operate profitability under his leadership. Nissan was widely reputed for its product quality. reliability and fuel-efficient engines. reliability and fuel efficiency In 1991s Nissan was successfully opposing regarding quality. These teams were assigned to review the business operations and to come up with recommendations for returning Nissan to profitability and uncover opportunities for future growth.realizing the immediacy of the task at hand he took initiative to show profit by 2001. reliability and fuel efficiency. Ghosn had initiated nine Cross-Functional Teams (CFTs) consisting of existing Nissan managers to develop a new corporate culture in Nissan. Ghosn initiated long discussions with several hundred managers in order to discuss their ideas for turning Nissan around.

allow them to invest huge amount of money. To turn around they need such a partner form that they can take both financial and management ideas to foster an orbit. principal responsibility. To protect their career growth Japanese always tried their best and its can be seen in their any informal meeting where that meeting became informational also. requiting and maintain its company name. Willingness of the employees in surpassing of all culture and imposing new management: Clear strategy and effective communication help employees to work pleasantly and to get this they influence Ghosn to transcend culture and impose new management strategy. Transparency. . Nissan s Informational informal meeting of decision making: In Any cost Japanese tried to avoid making mistakes in order to protect their career growth.after that the decision maker or the top management feels weather the decision makes agrees to the consensus. improving quality. Nissan needs a strategic partner. Nissan got an Alliance opportunity with the Renault allowing Nissan to invest $5. So in Japan Nissans any informal meeting became as a wrathful informational meeting.4 billion and retain its investment grade status. cost. customer satisfaction and communication was the main work frame of the management. Nissan employees accepted and participate in the change of their management process quickly to lead success. With this agreement they sake 34.In March 1999. Nissan president and chief executive officer Yoshikazu found an opportunity of alliance opportunity with Renault. Nissan employees accepted and participate in the change of their management process to lead success in noticeable short time. Ghosn brought Japan three overriding principals of management that transcend all culture.8%. It was used as an environment to give employees structure to reform their efforts. And it retains its investment grade status. In the time of meeting superiors participate tender their aligned position randomly . Nissan able to take huge opportunity in decision making.

The continuous losses were resulting in debts. This resulted in shaken confidence of the suppliers and financers of the company regarding the future of Nissan. After incurring loss for 7 consecutive years.Cross functional teams (CFTs) of Nissan Ghosn mobilized existing Nissan managers by setting up nine cross functional teams of approximately 10 members each in the first month that makes the company developing new corporate culture form the best elements. There was little liquid capital available for new product development. Productive employees are the most wanted feature for all the organization. Supply change management is an important tool for any organization. If companies financial condition goes down than the confidence level also shakes. So Ghosn mobilized existing Nissan managers by setting up nine cross functional teams of approximately 10 members each in the first month that makes the company developing new corporate culture form the best elements. Weakened Brand image of Nissan due to the product line consisting of older models . Work within a group in an effectively way can help manager to in new ways and challenge. And the confidence level of the supplier and the distributor depends on the company s financial condition. no one could hope Nissan would gain increase in margin or volume of sales overcoming the losses it had already incurred. CFTs are the powerful tool for getting line manager to see away from the functional or regional boundaries that defined their direct farm duties. So the confidence level of the supplier and financer was shaking down. Productive and efficient employee is a boon for any organization. As a result. Nissan s financial state had become critical in 1999 considering the huge $22 billion debt that it was burdened with. Weakness Nissan was going through a severe financial crisis by the late 1990s Cultural clash between French and Japanese s leadership creates problem in Nissan.

This gives us with a picture of how customers were turning away from the global automaker. They have some offensive idea that customer only prefer to buy only good quality cars rather than stylish and innovative cars. nissan s deigns does not reflect the opinion of the customer. . and quality management made it possible for Nissan to become a renowned automaker by the end of the 1980s. Emphasizing on short-term market share growth overlooking the prospects of profitability or long-term market growth Nissan management throughout the 1990s had displayed a tendency to emphasize short-term market share growth. Now a day s customer also prefers style with quality. They have some offensive idea that customer only prefer to buy only good quality cars rather than stylish and innovative cars. When they found that they have a good market position. rather than profitability or long-term strategic success. Nissan now had a product portfolio consisting of older models compared to its competitors. Nissan's fortunes had begun to decline. they became complacent. Customer satisfaction is the core things of the company. Misinterpretation of the market scenario Nissan s advanced engineering and technology. plant productivity. nissan s deigns does not reflect the opinion of the customer. and quality management. resulting in dropped profits and sales. Out of the 43 models marketed by Nissan. Nissan Motor Co Ltd used to be a globally expanding auto manufacturer well known for its advanced engineering and technology. But Nissan s designs had not reflected customer opinion because they assumed that most customers preferred to buy good quality cars rather than stylish. 39 were incurring losses. innovative cars. plant productivity. Nissan. quelling hopes that the 1990s would be as lucrative as the 1980s.Customer satisfaction is the core things of the company.

This left Nissan with inadequate liquid funding to go for research and new product development. In the investment of stock share thought there purchasing cost didn t shows up but their purchasing price was higher 20%-25%than Renaults.Organization often tries to put emphasizing on long term market share. Nissan had incurred more cost compared to other automakers concerning its forward and backward integration proving Keiretsu an ineffective approach for ventures like Nissan that are already in financial crisis. Nissan s high purchasing costs Nissan s purchasing costs was higher than the other competitors. Investing largely in equity building of other companies As a part of the Japanese business custom of Keiretsu investing. Nissan s management. Such a partnership would have helped Nissan to expand into other regions where it had less presence. Such huge investment couldn t bring . they have loss or down market share in short term but over all condition may be positive in long run. and into real-estate investments. So organization should concern with long term market share. Nissan management tended to put its retained earnings into equity of other companies. Moreover. Nissan was very much in need of a strategic partner to lend both financing and new management ideas to foster a turnaround. like any other Japanese company believed that loyalty and cooperation were fostered between members of the value chain within their keiretsu. often suppliers. But this integrated approach to enhance loyalty and cooperation could not help Nissan s high purchasing cost Nissan had invested a sum of $4 billion in the stock shares of hundreds of different companies as part of this keiretsu philosophy mostly suppliers and real-estate industries. Nissan management through out the 1990s however had displayed a tendency to emphasize short term market share growth rather than long term market share strategic success.

it was a weak player in Latin American markets Without distribution channel any company can not run their business. By the mid 1990s. But it had been a weak player in Latin American markets. Before war there was great working relationship between the team members. For efficient work organization need effective team member and the harmony of the members. But the member of teams . Specifically. Nissan had to purchase materials at a higher ate from the suppliers whom Nissan had helped with investment. Existing teams of employees spent more time on concepts and details without realizing the state of emergency Nissan was going through. as it had inconsiderably aimed at achieving consensus. Nissan and Renault agreed to a Global Alliance Agreement on March 27. 1999. So distribution channel plays an important role. Therefore. Lack of market share and distribution channels Nissan lacked market share and distribution channels in Latin America. This resulted in poor competitiveness. Risk-taking behavior was severely hampered by the cultural norms Japanese culture had been useful to reinforce control over operations and enhance quality and productivity. Risk-taking behavior was severely hampered at all levels. the urgency of a strategic alliance was getting intense considering its increased debt. Nissan has the second largest market share in Japan and a strong market share in North America. Depending blindly on conventional wisdoms Conventional wisdom that conscientiousness and cooperation are the key elements to maintaining operational efficiency and group harmony became a reason for delayed decision making process. these norms were actually impeding the company s decision making.any good to Nissan. Rather. Nissan had to find a strategic ally to compete in such markets. As for Nissan.

Most senior person will be responsible if something goes wrong though it has accountability in lower level management. None of them were ready to take the responsibility. education level and numbers or year s service was the measurement way of efficiency and how they can move up the career leader. they started to point finger at others blaming each other to protect their career advancement.Nennkou Jyoretu Education. Japanese cultural tenet called Nennkou Jyoretu placed power in the hands of the most knowledgeable and experienced. No ones takes the responsibility . But in a crisis like 1990 s.routinely spent much time on concept and details rather than the risk taking or the new action taking according to the urgency of the work. Communication problem between layers of management . The employees of Nissan became increasingly aware of the crisis that the company was going through because of the individual departments not performing well. Performance is the best way to measure the efficiency or seniority of any employees.so top management may faced to find out the problems and their proclivity may falls. When Nissan was not performing well then the employees became aware in their career advancement and they became and they start blaming on other instead of taking the responsibilities. Consequently other employees de-motivated and they don t get any influence to show their creativity and new works. But the cultural norms hamper a lot in risk taking behaviors. the above mentioned problems were rather identified to have retard the pace Nissan. age. In other hand in this situation employees don t want to improve their problems. This had resulted in a dreadful working relation between employees. Education and age base promotion. number of years service based promotions usually spoil the performance that shows poorly in team and creates disharmony among team members. And this creates a huge problem within the organization. Finger Pointing as a defense to career advancement Japans are very conscious abut their career growth. But in Japan age.

Communication is the core concept of business. . Staffs were relatively uninformed of key corporate business decisions that had been taken. And if anything goes wrong in the group than responsibility goes to most senior person of the team. which implied that large troubled employers would always be bailout by the government of Japan.promotion depends on the basis of age educational level. Again. As Japan s business culture says that large troubled employees are bailed out by the government so Many employees of the company didn t have a sense of crises about possibility of bankruptcy at Nissan. Staffs were relatively uninformed of key corporate business decisions that had been taken. If Nissan s employees don t know what are the problems are faced. There were also the communication problems between the layers of the organization. Most successful organization proved them because they have the strong communication system between top management and lower level management. In this reason new ideas or think in new ways couldn t challenge their performance. That makes disharmony in the group. Again.In an unusual break from Japanese business culture. Even they have no idea about this. communication problems prevailed in Nissan between the layers of the organization. top management seemed out of touch with what policy execution issues were present at the middle and lower management levels. Japanese business tradition that large troubled employers would always be bailed out by the government of Japan Employees of the Nissan didn t have the idea of crisis about the possibility of bankruptcy at Nissan because of Japanese business tradition. Employees working in functional or regional departments lagging in accountability Employees working in functional or regional departments tend not to ask themselves as many hard questions as they should regarding their performance. top management seemed out of touch with what policy execution issues were present at the middle and lower management levels. So the employees of functional level and regional level department tend not to ask any question regarding their performance. Accountability of other members is diffused. According to Japanese culture most senior person gets the responsibility .

Nissan s top management failed to delegate the responsibilities to the lower level employees and that created a vacuum within the company. Nissan s top management was botched to allot the tasks to the lower level employees and that created a vacuum within the company. More production regardless of the fact that their product line is lagging in terms of design and other customer potential was focused bye Nissan. They also classified their customers. Nissan has been focusing on regaining its market share as opposed to restoring margin per unit sold rather than what is best for their customer. What are the needs of their customer. Nissan has been focusing on more production regardless of the fact that their product line is lagging in terms of design and other customer expectations. Customer satisfaction is the main perception of the organization. OPPORTUNITIES Strategic Partner of Nissan: . The lack of vision from management and the persistent problem of ignoring the voice of Nissan s customers Top management had developed a tunnel vision that was best for the company size and its employee rather than customer needs. catapulting Nissan to record profits and a dramatic revitalization of its brands. Nisan has been focusing on out-competing rivals with unit of production taking the customer choice for granted. What results that s dissatisfaction among the customer. the company has rebounded in what many leading economists consider to be one of the most spectacular corporate turnarounds in history.Employees at Nissan constantly believed that his or her department was performing well leaving others to blame only. Employees had the idea of the bad time that Nissan was going though but none thought of Nissan being bankrupt since the Japanese Government has always been saving corporate companies in financial crisis like this. Under Ghosn's "Nissan Revival Plan" (NRP).

Hanawa was also able to get Renault s top management to agree to three important principles during negotiations like: 1. Nissan President and Chief Executive Officer Yoshikazu Hanawa found such an alliance opportunity with Renault. So. if the top level management of Nissan can continue to cope up with this new alliance well it has a great scope to have the highest place. but it lacks a high market in North America and Asians markets. France and in Latin America. Furthermore. Nissan would take the principal responsibility of implementing a revival plan Here we can see that Nissan has a great opportunity to start their new venture with the new company named Renault. And Renault was much considering.4 billion and retain its investment grade status. allowing Nissan to invest $5. And as Hanawa was able to get Renault s top management to agree to three important principles during negotiations. Renault wanted a partner that was savvy and established in the North American and Asian markets. Nissan would maintain its company name he Nissan CEO would continue to be selected by the Nissan Board of Directors and Nissan would take the principal responsibility of implementing a revival plan. In March 1999. especially in Brazil. By creating the new alliance Renault. which assumed a 36. The Nissan CEO would continue to be selected by the Nissan Board of Directors 3. Because Renault has strong position in Europe. the merger of Daimler and Chrysler in May 1998 gave Renault a sense of urgency about finding a partner to compete more .Nissan was in need of a strategic partner that could lend both financing and new management ideas to foster a turnaround. Renault has found that Nissan is a very good choice for that because Nissan had the second largest market share in Japan and a strong market share in North America. Expanding Nissan s Business into New Regions: Nissan lacked market share and distribution facilities in Latin America.8% stake in Nissan. Nissan would maintain its company name 2. Nissan and Renault expected to balance their market portfolios and become more competitive. we can see that this man was smart enough in negotiating like. which allowed Nissan to invest $5.4 billion and retain its investment grade status.

believing fervently that cultural conflict. who work under them. Because employees are the assets of a company and if they find their supervisors much cloudy. he reiterated many times. More Execution and Less Strategy: . say. and do are all the same things. His philosophy was that if he would do better with a mix of his own outlook and the Japanese ones too. As a result. with Carlos Ghosn who was designated to join Nissan as COO. In this vein. Transparency is something that is really important to have within the company. was that no one leader should try to impose his/her culture on another person who was not ready to try the culture with an open mind and heart. So transparency is a very much important thing within this Nissan and the employees are also going to be encouraged a lot more if this transparency continues always. they will not be very much willing to do their works clearly as well. if paced and channeled correctly. Cultural Differences Could Provide Opportunity for Rapid Innovation Despite all of his doubters. as he was an optimistic. Transparency within Nissan: Ghosn always believed that an organization can only be effective if followers believe that what the leaders think. He always thought that cultural deference s cannot do harm only rather. rather than work through the Japanese culture. Ghosn embraced the cultural differences between the Japanese and himself. including Ghosn himself. would be given a chance to grow personally through the consideration of different perspectives. The key.effectively on a global scale. he took it in a positive sense. could provide opportunity for rapid innovation. The CEO as well as the other top level managers have to do all of their plans organized and make it clear to others. then the turnaround he sought would likely backfire. all employees. Carlos Ghosn came to Japan knowing that if he were to start imposing reforms by using the authority of his company position. 1999. Renault and Nissan agreed to a Global Alliance Agreement on March 27. He felt that by accepting and building on strengths of the different cultures. If Paced and Channeled Correctly. Especially the top level management has to create an image within its employees that what they do are always clear to all of them.

Opening a new program. it would surely have a great positive change. A good strategy of business alone cannot do the best of it but it is execution which is can be more important than strategy. they put their best effort to change their mindset and accept and innovate new idea.Nissan has a strategy in which execution is 95% of the job. This is a different strategy taken by the Nissan s CEO but his this philosophy will going to work very efficiently if used properly. it has a good scope to do much better than now. As Nissan is giving priority to the thing that maintain 95% execution and 5% strategy is organizational prosperity which is tied directly to measurably improving quality. costs. So if Nissan can follow this in a planned way. but for that the first thing is that the company has to have the perfect form of it. and customer satisfaction. He began to organize Cross-Functional Teams to make decisions for radical change. Ghosn opted to develop a program for transformation which relied on the Nissan people to make recommendations. Part of his interest in doing this in-house was to address the motivation and horizontal communication . and customer satisfaction. he has credited all of the success in his programs and policies to the willingness of the Nissan employees at all levels to change their mindsets and embrace new ideas. Ghosn was always supportive towards his employees and as he used to encourage the employees. In fact. Because execution is something which can be the key of success of a company. as shown by their recommendations and opinions. costs. Strategy is only 5% organizational prosperity is tied directly to measurably improving quality. The Nissan Employees are Optimistic and Quick Learners: Even though Ghosn expected that his attitude toward cultural respect and opportunism would lead to success. so if it does maintain. Ghosn was pleasantly surprised by how quickly Nissan employees accepted and participated in the change of their management processes. As Nissan has such a force of good employees. The CEO as well as the employees can bring up new ideas and implement the easily with good spirit and it would really help the company to go ahead. instead of hiring outside consultants. With this in mind.Cross Functional team (CFT): When Ghosn found out that the employees of Nissan were quite energetic.

because the Nissan employees are directly related with the company. then confidence in the company as a whole and motivation would again flourish. Ghosn s main focus areas included: (1) Development of new automobiles and markets. It is the employees within the company who actually knows the best what to do even more than the other consultancy firm. So if this department can be formed well and include all the efficient and knowledgeable employees it would be a great scope to take Nissan in a much higher level. Nissan Revival Plan (or NRP): When Ghosn understood that CFT can only give recommendations and there were little implementation yet and only planning. Ghosn created and communicated what he called the that in October of1999. Having received from the CFTs the recommendations. (2) Improvement of Nissan s brand image. and . but the bulk of his efforts lay in ensuring high-quality execution of the decisions that were laid out in the plan. He felt that if the employees could accomplish the revival by their own hands. which included plant closures and reduced headcount. It would also decrease its expenses because the other they don t need to pay In the outsourcing. Nissan s CEO s this step is something that can be valued to a higher extend. In a sense he was making it clear that he was also putting his own future in their hands because he had publicly stated several times that the Nissan company had the right employees to achieve profitability again in less than two years. Other CFTs were formed. From that point forward he stressed implementation and follow-up. (3) Reinvestment in research and development. CFT is a strong team within the company which consists member from the company and it is a great thing by which the employees get motivated and they can share their recommendations.issues that he encountered throughout the organization. rather than planning and reexamining decisions.

Nissan had made big amount of money with which it can expand at least a wing of it. And by this. relating promotion and salary increase to the ability to perform challenging or demanding tasks. Performance Evaluations and Employee Advancement Ghosn also put focus on performance by introducing a performance based incentive system. Nissan broke away from the Japanese cultural norm of keiretsu investments. This was a large departure from the traditional Japanese compensation system. As it turned out.(4) Cost reduction. or educational level. Opportunities after Getting Separated with Keiretsu Partnerships: As one of the biggest changes of the NRP. Under Ghosn s compensation system. This was a unique department within Nissan which really helps the managers to take decisions and by the suggestions of the employees the managers can easily do their works. And because Nissan reduced its price rate so it was a great opportunity for them to attract customers and make a good profit. the highest achievers got the highest rewards. In fact. And promotions were no longer limited to age. because Ghosn put such an emphasis on reducing purchasing costs. So this is a great opportunity for Nissan having a department like this which can really help it s manages out. These incentives included cash incentives and stock options for achievements that could be linked directly to successful operating profits and revenue. Nissan regained billions in tied up capital to use for debt servicing and new product development without losing any significant pricing advantages. length of service. For example. However Nissan maintained customer-supplier relationships with those former keiretsu partners. a female factory worker who had only a high school diploma was promoted to be a manufacturing manager based on her strong abilities to perform the work. . Nissan actually began to substantially lower its costs after the keiretsu investments were sold. in which managers usually received no stock options or bonuses.

allowing Nissan to invest $5. he knew that industry analysts were reasonable in doubting whether a nonJapanese COO could overcome Japanese cultural obstacles. France and Latin America especially in Brazil. So in a company Ghosn introduced to reward his employees based on their performance.4 billion and retain its investment grade status. Nissan President and Chief Executive Officer Yoshikazu Hanawa found such an alliance opportunity with Renault. Hanawa was also able to get Renault s top management to agree to three important principles during negotiations. which assumed a 36. working with it.8% stake in Nissan. as well as effectively transform a bureaucratic corporate culture. Ghosn was going to have to address several Japanese cultural norms in order to transform the company back into a successful one. Here we can see the threat for the company is that Ghosn the COO of Nissan wasn t from Japan and as he was from a very different culture so it is a big threat for the company that how is he going to cope with the very new culture and the employees. but they can have very good abilities in different fields. Nissan was in need of a strategic partner that could lend both financing and new management deas to foster a turnaround. On the other side Nissan has its market in Japan and North America. This is a great opportunity for Nissan to get its employees to work hard and to achieve better output of works. .By this initiative of Ghosn Nissan has a great chance to do better. Because all of the employees want to get reward and to get that they try their best. Nissan sought to expand into other regions where it had less presence. Here Ghosn has a risk to cope with the company Renault. In March 1999. New Culture for the CEO of Nissan: When Ghosn went to Japan. THREATS Alliance with Renault: Clearly. In addition. So it would be a threat for Nissan to cope with the new partner. And this is a fair enough process. because this is the first time Nissan is going to have a venture with a company which has already a market in Europe. By this the employees get motivated easily and they get the spirit to do well. Because as we know most of the Japanese don t know English very well.

If a company cannot attract customers and do not care about their needs it is a big threat for that particular company to lose all of its profit and incoming plan. As an unintended consequence of the emphasis on conscientiousness. But customers are not at all less important to a company rather it its somehow more important than the competitors. As it doesn t have this there is a big threat to it already. At first it is must for a company to have a good relationship with customers and taking considering their needs. This paradigm often resulted in delays to the decision making process in an effort to achieve consensus. . Nissan doesn t have a good profit orientation. Japanese professionals tended to avoid making mistakes at all costs in order to protect their career growth. Lack of a clear profit orientation Here what we can see is Nissan lacks a clear profit orientation. Insufficient focus on customers and too much focus on competitors Nissan was always giving priority to the customers but it had less concentration on the customers. the conventional wisdom in Japan was that conscientiousness and cooperation were the key elements to maintaining operational efficiency and group harmony. This can result in frequent informal informational meetings and coalitions that occur between professional departments prior to a decision-making meeting. so what we can see is. As it is a big company it should have established a clear strategy to give a clear orientation of profit. the Japanese business culture for decades had been producing leaders who were very good at reaching consensus and working cooperatively within a department Thus. Nissan doesn t have a good strategy to follow and it lacks in the field of managing properly.Consensus Decision-Making and its Relationship to Career Advancement Since the war.

Creating urgency is something very important. This is officially discussed. undermining the company s competitiveness. So. Lack of cross-functional. So it is a big threat for a company not to have a vision and a long term plan. cross-border. So it is a big threat for Nissan. Lack of a sense of urgency Existing teams of Nissan employees routinely spent much time on concepts and details. Because every company should fix their goal or vision before starting a certain business and then has to have a long term plan. due in part to the risks involved with actions that could result in failure. cross-cultural lines of work . Because if the company doesn t have a goal. exactly if it doesn t have a shared and clear vision the company is going to let down obviously. It is true that a company without goal is not actually a company. it is obvious that it is not going to get any of its jobs done. if this continues. There is threat to lose for the company because anytime any harm can happen with this for the company. This mindset contributed to a certain degree of complacency with market position and internal systems at Nissan. And it has to show the urgency to alter the situation. Nissan does feel the competitors around it are strong and Nissan is also very concerned about the situation but what we can see is it cannot create urgency to cope with the situation. it does a good help to get something. that if it can t show up urgency for things we are going to very sad. Without this power you cannot create an obvious situation so early. without much sense of urgency for taking new action. The employees of it didn t have the proper capability to create a sense of urgency and without taking much care about this they took different initiatives that may not work out well. If a company can show its urgent needed situation. No shared vision or common long term plan Nissan doesn t have a clear vision.But Nissan was always very concerned about the competitors and less on customers. there is a big chance to lose a large number of customers which will ultimately lead the company to face a big loss.

Ghosn opted to develop a program for transformation which relied on the Nissan people to make recommendations. Like Nissan has the cross function n then cross border and cross cultural lines of work. This CFT was a very good initiative for the company but it is also a threat for it as well. which brings a threat for it. Execution is 95% of the job. Strategy is only 5% organizational prosperity is tied directly to measurably improving quality. costs. . With this in mind. and customer satisfaction. Because if any of this line doesn t work the company has a chance to get down. The employees within the organization may lack experience and lesson exactly about this consultancy. And here we can find a threat that it is not always a wise decision not to hire people from outside. The cross functional team (CFT) When Ghosn found out that the employees of Nissan were quite energetic. And cross-functional department members having very clear lines of responsibility and high standards of accountability. So Nissan lacks in these areas. He felt that if the employees could accomplish the revival by their own hands. He began to organize Cross-Functional Teams to make decisions for radical change. So it is a threat for them. he had a challenge to cope up with the very new culture and employees that was a cross cultural line. as shown by their recommendations and opinions. Nissan had to expand its business to other regions that was the cross border line. then confidence in the company as a whole and motivation would again flourish.We can see that all of these elements are present within Nissan. As the COO of Nissan wasn t from Japan. As we can see the members of CFT are being elected from the employees within the organization. Strategy is only 5% Nissan s execution is 95% of the job. Part of his interest in doing this in-house was to address the motivation and horizontal communication issues that he encountered throughout the organization. In a sense he was making it clear that he was also putting his own future in their hands because he had publicly stated several times that the Nissan company had the right employees to achieve profitability again in less than two years. But for that the company doesn t any consultant from outside. instead of hiring outside consultants.

And it is a threat to. This can be pointed as a threat. As this strategy was taken by Ghosn but it is not always perfect to maintain this.000 jobs (14% of Nissan s workforce) were planned. The one in Nissan 180 represents an additional 1. costs. 2005. then two years after the start of its implementation.000.000 car sales for Nissan worldwide. Ghosn endured strong criticism from the media. Nissan thought to take a new plan and they made a plan about one Ghosn called Nissan 180 which would focus on profitable growth all new goals were to be accomplished by April 1. and customer satisfaction. Large Number of job reduction and closing of factories To achieve determined results.Implementation of Nissan 180 The Nissan Revival Plan was over. regardless of the circumstances. Ghosn fired several managers who did not meet targets. management. The Near Future. Because this can also be a great threat to have a weaker strategy of business. Job cuts would occur in manufacturing. a foreigner.Nissan is giving priority to the thing that maintains 95% execution and 5% strategy is organizational prosperity which is tied directly to measurably improving quality. So this policy of 95%execution and 5% strategy can bring a big threat for Nissan. and the dealer network. In addition. though it was done to establish a result but it things can also go other way round. A weak business strategy can break down the segments of a business and create a uncontrolled situation. including being labeled as a gaijin.7 Since Japanese business culture had tended to have lifelong employment as a principle. Human Resource Issues . So this very new plan could also be threat for Nissan. As Nissan has reduced a large number of employees and closed down factories it is surely going to bring changes in the business. If they had any lacking in their new plan and in their marketing strategy it can become a big threat for the company as well. Ghosn closed down five of the factories and the reduce 21. all the official commitments we took have be overachieved one full year ahead of schedule.

The decision was not for long term. Because before expanding. Nissan grew steadily. But it was lacking R&D department. practices and employees attitudes toward their jobs. R&D department is very necessary for any organization which wants to expand their business globally. Because if any company wants to expand their business in any new region then it is very necessary to do enough research about the market conditions. enough research should be done. hiring effective employees. These are related with human resource issues. Analyzing and designing work. He walked around the entire organization and also met with every employee of the organization. The decision was focused on competitors rather than the customers. For gathering this information. Nissan has a number of employees. HR issues refer to policies. expanding their business will not be so much effective. . did not implemented. because there was cultural clash between the French leadership style and the Japanese employees. and also know the weaknesses of competitors. But it was facing losses for seven years. But when Ghosn joined at Nissan the scenario was different. determining human resource needs. There was a huge gap between the layers of the organization. evaluating employees performance and giving them feedback. train the hired employees for efficient working. In that way he made a closer relationship with the lower level managers and employees. No R&D department There is no R&D department at Nissan. it is necessary to understand market needs and wants. then Nissan will be able to achieve success. Most of the time the decisions which were made. Human resource issues are very significant factors for any organization in this world. That s why it is necessary to develop R&D department at Nissan.Nissan is a motor company. Without having R&D department. if Nissan be able to motivate the employees efficiently. recruiting employees for specific position. and also creating positive work environment all of these things are HR issues. Only the top management contributes in decision making. rewarding employees. Human resource issues at Nissan are given as bellows: Decision making process at Nissan The decision making process at Nissan was centralized. The lower level managers had no contribution in decision making process. select the best place from where it will be convenient to get all types of facilities. If employees feel closer relationship with the organization only then they will be able to give their best performance. So Nissan want to expand their operations globally. After the Second World War.

When Carlos Ghosn joined at Nissan. it can also . It was based on performance and working skill. he observed everything carefully. Compensation system at Nissan Before joining Carlos Ghosn as COO at Nissan the compensation system was based on age. It will be difficult for the company to globally expand without having any HR department. so they will be able to achieve the best performance of their employees. After developing (CFTs) the clash between the employees and managers decrease. And it also motivates the employees a lot. The way which Nissan followed that could demotivate the employee in different ways. As we all know the appropriate use of HR issues is the key component in organizational success. The team consists of ten members from different area. and working years. Because only the HR department can understand the necessities of skillful employees. Nisan had a number of employees.Developing cross functional teams There was a large communication gap between the top level managers and the middle level managers. He also observed there is a cultural clash between the managers and the Japanese employees. The promotion was not based on age. Because. It is very important to have HR department. No HR Department at Nissan One of the biggest problems associated with Nissan is that it does not get any HR department and we think it is a very bad strategy for the company. A horizontal communication was developed at Nissan. That s why the organization faces a lot of problems. Then Ghosn developed a performance based incentive systems. he developed nine cross functional teams. And their strategy will not work effectively. The highest achievers will get highest rewards. employee deserves compensation according to competence. The employee gets their compensation according to their performance. skill. The cross functional teams really work out. and experience. education. It was not an effective way to evaluate employee s performance. It is more or less impossible for any company to achieve success without having human resource department. by using its employees it was easy to achieve vast profit. That will be a competitive advantage for the company. and numbers of years of service to an organization. There will be a lot of questions will arise if any organization does not get any HR department. So it was seen most of the younger employee get promoted based their performance. The company will not be able to use their human resources. education level. After observing everything. So employees try to do their best job and it increases the organizations profit.

It is not that easy to find out the right employees for a very important position who can do his job as like as Carlos Ghosn. incentives. For this reason. What is the solution? Carlos Ghosn should be very careful in selecting the right person for the position of COO at Nissan. The company has a large number of employees. Especially his compensation system and developing (CFTs) was really admirable. Why is this solution right? Carlos Ghosn is aware that he needs to take over the position of CEO at Renault. so he has to leave Nissan in the near future. benefits etc. From the above we get the idea about the human resource issues about the Nissan Company. so he has to leave Nissan in near future. That can increase the productivity as well as the profit of the company. Recommendation What is the problem? Carlos Ghosn will take over the position of CEO at Renault. The lacking of HR department becomes fulfilled then Nissan must go further. So Nissan should establish a proper succession management system to find out the future leader for the company. . And by using the employees effectively the company cans achieve huge profit. So he should establish a proper succession management system at Nissan to find out the future leader for the company. Ghosn needs to find out an adequate replacement who could take Nissan to new height of accomplishment as planned. But he should find out the adequate replacement who could take Nissan to new height of accomplishment as planned.motivate the employees drastically by providing rewards. He handled everything in a skillful way. Carlos Ghosn was really a skillful person who was able to change the overall scenario of the company.

we get the information that Carlos Ghosn as the COO of Nissan had planned to lay off 21. What is the solution? Carlos Ghosn should have a proper system for downsizing employees and he should right size the employees instead of downsize. both strategically and operationally. Thus an organization can take the decisions very easily as well as effectively when any changes occur in the organization. Sometimes employees can protest against the company and that can break the company image in the market. So Carlos Ghosn should find out the less productive employees for the company and should only downsize them. If Nissan establish a proper succession management system then it would be very easy for Carlos Ghosn to find out the best employees for the position of COO at Nissan. Furthermore.Succession management helps an organization to develop people for future positions.000 jobs (14% of Nissan s workforce). Why is this solution right? From the case. Moreover he can not downsize employees without any prior notice because that is illegal as well as very painful for an employee. management and the dealer network. So we would like to recommend that Nissan . Job cuts would occur in manufacturing. Moreover downsizing has a number of psychological. What is the problem? As the COO of Nissan. Moreover he should not downsize a large number of employees at a time without any prior notice. downsizing has a major impact on surviving employees as well as on the organization itself. Carlos Ghosn has planned to close down five factories of the company and also has decided to downsize 21. Downsizing a large number of employees is not a good practice because it could have a negative impact on employee morale. social and financial effects not only on the terminating employees but on their families as well.000 employees (14% of Nissan s workforce) and also has decided to close down five factories of the Nissan.

WHAT IS THE SOLUTION? . At that time only four of the company s 43 models turned a profit. It was an excellent achievement for Nissan as well as for Carlos Ghosn. But we would like to recommend that Nissan should moving on in this process and in the near future the company should increase the number of profitable car models by at least 80%. rather than profitability or long term strategic focus. WHAT IS THE SOLUTION? The number of profitable car models should increase more.should have a proper system for downsizing Instead of downsizing Carlos Ghosn can emphasize on rightsizing. the number of car models that were profitable increased to 18 of 36 models from 4 of 43 models. WHAT IS THE PROBLEM? Nissan management had displayed a tendency to emphasize short term market share growth. WHY IS THIS SOLUTION RIGHT? Nissan had been incurring losses for seven of the prior eight years before in March 1999. WHAT IS THE PROBLEM? The number of car models that were profitable increased to 18 of 36 models from 4 of 43 models. However in 2002. Nissan should continue the process of increasing the number of profitable car models and should increase the number of profitable car models by at least 80%.

Nissan should emphasize on long term market share rather than short term market share. On the other hand competitors had done a great job by finding out the needs and wants of customers and they made their cars according to their customers demand. Along with other Japanese manufacturers. So Nissan should focus on understanding their customer s needs and made their new models of car according to their customer s choice. innovative cars. Nissan was successfully competing on quality. But the problem was that during the previous decade Nissans design had not reflected customer opinion because they assumed that most customers preferred to buy good quality cars rather than stylish. producing four of the ten cars in the world. innovative cars. Nissan was operating very profitably. That was a wrong idea used by the Nissan s top management. WHAT IS THE PROBLEM? During the previous decade. So Nissan has been doing the business for a long time. WHY IS THIS SOLUTION RIGHT? Now a day s one of the key marketing strategies is to understand or find out the needs and wants of customers. WHY IS THIS SOLUTION RIGHT? Nissan was doing the business from 1933 and the company grew steadily after the Second World War. The fact is that Nissan has been doing the business for a long time. so that they must have emphasized on long term market share. Nissan s design had not reflected customer opinion because they assumed that most customers preferred to buy good quality cars rather than stylish. By 1991. reliability and fuel efficiency. . WHAT IS THE SOLUTION? Nissan should focused more on their customer needs to develop new product according to their customer s choice.

Nissan manager seemed content to continue to harvest the success of proven designs. . WHY IS THIS SOLUTION RIGHT? The Nissan brand is weakening in the minds of consumer due to a product portfolio that consisted of models far older than competitors. So he should establish a proper succession management system at Nissan to find out the future leader for the company. innovative cars. During the previous decade Nissans design had not reflected customer opinion because they assumed that most customers preferred to buy good quality cars rather than stylish.WHAT IS THE PROBLEM? Instead of reinvesting in new product designs as the other competitors did. So it is recommended to Nissan that they should reinvestment more money in research and development to find out innovative models of car for their customer. only four of the company s 43 models turned a profit. In fact. Implementation Recommendation Carlos Ghosn should be very careful in selecting the right person for the position of COO at Nissan. WHAT IS THE SOLUTION? Nissan should focus on reinvestment in research and development to find out innovative models of car for their customer. That is also one of the biggest reasons of Nissan for incurring losses for the last seven years.

But he should find out the adequate replacement who could take Nissan to new height of accomplishment as planned.Why is this solution right? Carlos Ghosn is aware that he needs to take over the position of CEO at Renault. If Nissan establish a proper succession management system then it would be very easy for Carlos Ghosn to find out the best employees for the position of COO at Nissan Implementation Carlos Ghosn needs to implement a proper succession management system in Nissan to find out the future leader of the company. How to implement Succession management system is necessary for effective organizational functioning. Moreover he must have a look that succession management plan should align with the Nissan s strategy. so he has to leave Nissan in near future. Where to implement? . Thus an organization can take the decisions very easily as well as effectively when any changes occur in the organization. We think that Nissan should establish a long-term succession planning which give employees the opportunity for assuming higher responsibility in the future. Succession management also helps the organization to respond properly when inevitable and unpredictable changes occur. So Nissan should establish a proper succession management system to find out the future leader for the company. Succession management helps an organization to develop people for future positions. It is not that easy to find out the right employees for a very important position who can do his job as like as Carlos Ghosn. Moreover it helps people for future positions which also improve current performance. Moreover it gives continuity and future direction in the turmoil of change. Carlos Ghosn must implement a proper succession management system in Nissan by the help of HRD of Nissan.

Downsizing a large number of employees is not a good practice because it could have a negative impact on employee morale. Why is this solution right? From the case. So it is his responsibility to find the right person for Nissan who can continue the success of Nissan in future years. Recommendation Carlos Ghosn should have a proper system for downsizing employees and he should right size the employees instead of downsize. social and financial effects not only on the terminating employees but on their families as well. When to implement? This succession management system must implement at Nissan as early as possible because Ghosn has to leave Nissan ion the near future. .000 employees (14% of Nissan s workforce) and also has decided to close down five factories of the Nissan. Furthermore. Who will implement? Carlos Ghosn as the COO of Nissan will implement this succession management system with the help of Human Resource Department (HRD) of Nissan. management and the dealer network. Moreover he should not downsize a large number of employees at a time without any prior notice. Moreover downsizing has a number of psychological. Job cuts would occur in manufacturing.Carlos Ghosn should implement this succession management system throughout the whole organization. downsizing has a major impact on surviving employees as well as on the organization itself. we get the information that Carlos Ghosn as the COO of Nissan had planned to lay off 21. both strategically and operationally.

000 employees (14% of Nissan s workforce) and also has decided to close down five factories of the Nissan. both strategically and operationally. Where to implement? Nissan should implement a proper HRD in all of their plants to find out the right employees for the company. Downsizing a large number of employees is not a good practice because it could have a negative impact on employee morale. selecting and downsizing employees.So Carlos Ghosn should find out the less productive employees for the company and should only downsize them. Who will implement? . Sometimes employees can protest against the company and that can break the company image in the market. Moreover he can not downsize employees without any prior notice because that is illegal as well as very painful for an employee. Implementation Nissan needs to implement a proper Human Resource Department (HRD) which will make necessary and effective decisions regarding recruiting. So Nissan needs to implement a proper Human Resource Department (HRD) which will make necessary and effective decisions regarding recruiting. downsizing has a major impact on surviving employees as well as on the organization itself. selecting and downsizing employees. How to implement? Carlos Ghosn as the COO of Nissan had planned to lay off 21. Furthermore. So we would like to recommend that Nissan should have a proper system for downsizing Instead of downsizing Carlos Ghosn can emphasize on rightsizing.

However in 2002. When to implement? Nissan must implement a proper Human Resource Department within the shortest possible time because a perfect Human Resource Department is key to the success of many organizations. It was an excellent achievement for Nissan as well as for Carlos Ghosn. selecting and downsizing employees. .Carlos Ghosn as the COO of Nissan will implement a proper HRD in all the company offices and he must communicate with all of his top level management on this issue. Why is this solution right? Nissan had been incurring losses for seven of the prior eight years before in March 1999. Recommendation The number of profitable car models should increase more. But we would like to recommend that Nissan should moving on in this process and in the near future the company should increase the number of profitable car models by at least 80%. the number of car models that were profitable increased to 18 of 36 models from 4 of 43 models. Nissan should continue the process of increasing the number of profitable car models and should increase the number of profitable car models by at least 80%. Implementation: Nissan should implement a research and development team which can give the idea of producing innovative and stylish car models to increase the number of profitable car models in future. Moreover a proper Human Resource Department (HRD) will make necessary and effective decisions regarding recruiting. At that time only four of the company s 43 models turned a profit.

It was an excellent achievement for Nissan as well as for Carlos Ghosn. But the problem is that competitors are making more profit and their profitable car models are more than Nissan. Recommendation # 4 Nissan should emphasize on long term market share rather than short term market share. Where to implement? A research and development team has to be establishment in each manufacturing plant of Nissan and this team should consist of members from manufacturer worker.How to implement? In Nissan the number of car models that were profitable increased to 18 of 36 models from 4 of 43 models in 2002. So Nissan should implement a research and development team to increase the number of profitable car models in future. Who will implement? Carlos Ghosn should take the most of the responsibility to establish a proper research and development team at Nissan with the help of top level management of the company. . When to implement: Nissan must implement an effective research and development team within the shortest possible time because it helps the company to increase the number of profitable car models in future.

reliability and fuel efficiency. Where to implement? A long term success plan should be implemented in each plant of Nissan and the HRD of every plant should emphasize on long term market share growth. The fact is that Nissan has been doing the business for a long time. CEO and COO should establish a long term plan for the company to gain the profit for a long time. Nissan was successfully competing on quality. rather than profitability or long term strategic success. Nissan made profit but for a very short term basis. Along with other Japanese manufacturers. reliability and fuel efficiency. producing four of the ten cars in the world. By 1991. How to implement? Nissan management throughout the 1990s. Along with other Japanese manufacturers. vice president. Nissan was doing the business from 1933 and the company grew steadily after the Second World War. Nissan was operating very profitably. had displayed a tendency to emphasize short term market share growth.Why is this solution right? Nissan was doing the business from 1933 and the company grew steadily after the Second World War. however. So Nissan has been doing the business for a long time. so now they must emphasize on a long term strategic success. Who will implement? . so that they must have emphasized on long term market share. Implementation? Nissan should establish a vision or a long term goal for the company to stay in the market for a long time. The top management of the company including president. So Nissan has been doing the business for a long time. Nissan was successfully competing on quality.

On the other hand competitors had done a great job by finding out the needs and wants of customers and they made their cars according to their customers demand. CEO and COO should establish a long term plan for the company to gain the profit for a long time. So Nissan should focus on understanding their customer s needs and made their new models of car according to their customer s choice Implementation Nissan should expand their marketing activities to focus more on their customer needs by properly using different types of marketing tools. So he should emphasize on this revival plan to include long term strategic planning as early as possible. vice president. Recommendation Nissan should focused more on their customer needs to develop new product according to their customer s choice. That was a wrong idea used by the Nissan s top management. How to implement? . When to implement? Carlos has taken a necessary step to make a revival plan for Nissan. But the problem was that during the previous decade Nissans design had not reflected customer opinion because they assumed that most customers preferred to buy good quality cars rather than stylish. Why is this solution right? Now a day s one of the key marketing strategies is to understand or find out the needs and wants of customers. innovative cars.The top management of the company including president.

Who will implement? Carlos Ghosn as the COO of Nissan should implement or reorganize the marketing department of the Nissan. When to implement? An effective marketing department is vital for a company s success. Recommendation Nissan should focus on reinvestment in research and development to find out innovative models of car for their customer. So Nissan should establish or reorganize their marketing department to emphasize on their customer needs. So they should reorganize their marketing department to understand their customer needs and to develop new product according to their customer s choice. Moreover there should be a marketing manager in the company s head office who will make the necessary decision regarding marketing activities. So marketing is necessary for selling the products. . so Ghosn should implement or reorganize the marketing department of the Nissan as early as possible. Nissan lacks to maintain a nice marketing campaign.Though you have a very good product which maintains a very good quality but you would not be able to sell the product unless you have a very good marketing campaign. Where to implement? There should be one marketing department in each plant of Nissan and each marketing department will communicate with each other. Nissan can use some modern marketing tools for effectively understanding their customer s needs.

How to implement? During the previous decade Nissans design had not reflected customer opinion because they assumed that most customers preferred to buy good quality cars rather than stylish. This team mostly consists of people from marketing department. engineering department and manufacturing department workers. innovative cars. Now Nissan should take their best people from each department and should establish a new research and development team. Implementation Nissan should implement a research and development team to make the innovative and stylish models of car for their customer. That is also one of the biggest reasons of Nissan for incurring losses for the last seven years. innovative cars. So it is recommended to Nissan that they should reinvestment more money in research and development to find out innovative models of car for their customer. Where to implement? Nissan should establish a research and development team in each manufacturing plant and their will be a manger of this department who will make the ultimate decision by discussing all the finding of every research and development team Who will implement? . In fact.Why is this solution right? The Nissan brand is weakening in the minds of consumer due to a product portfolio that consisted of models far older than competitors. That is also one of the biggest reasons of Nissan for incurring losses for the last seven years. During the previous decade Nissans design had not reflected customer opinion because they assumed that most customers preferred to buy good quality cars rather than stylish. only four of the company s 43 models turned a profit.

appendix . When to implement? Nissan must implement an effective research and development team within the shortest possible time because it helps the company to produce the innovative and stylish models of car for their customers.Carlos Ghosn as the COO of Nissan should take necessary steps to implement a research and development team to make the innovative and stylish models of car for their customers.