Cross-cultural Management and

Leadership in M&A

Presented By:
Adil Zhantilessov
Evonne Dai
Irene Chan
Yousra Emara 1
 Contents
1. Introduction of Nissan Renault

2. Japanese Culture

3. Nissan Turnaround by Carlos Ghosn

4. The Role of Leadership in Successful International Merger &

Acquisitions

5. Why Renault-Nissan Succeeded and DaimlerChrysler-

Mitsubishi Failed

6. Conclusion
s

Introduction to Nissan Renault

3
 Introduction to Renault Nissan
Nissan Timeline

Carlos Ghosn

1992 1999 2001

1933 1950s to 1980s
Started Strategic
Nissan 1970s Operating
restructur alliance Successful
was Rapid loss &
severe -ing plan with turnaround
founded growth
competition Renault

1983-1988 1990-1993 1999

1898 Obtained
Renault Suffered Attempt to
from loss merger 44%
was shares of
founded and
acquire Nissan

Renault Timeline
 Nissan’s Strengths & Problems before the
Alliance
Strengths

- International presence - Lack of profit-orientation

- Manufacturing system - Lack of customers focus

(excessive focus on competitors)
- Leading-edge technology in
some areas - No co-ordination of work

Problems
- Talented and loyal employees - No shared vision

- No sense of urgency
 Objectives of the Alliance

Renault Nissan
Respective objectives
Improving quality Reduce cost
Internationalize its business (Asian & Reduce debt
North-American) Expand market in Europe & Latin
Technological know-how America
Design & Marketing

Common objectives

Leader for the quality and attractiveness of products and services

Japanese Culture
 Japanese Religion
• Many different religions, "We are born as Shintoists, get married
but mostly Shinto & as Christians, but die as Buddhists.
Buddism

• Japanese religion is rarely

preached, it is a moral
code, a way of living

• Affect its social and cultural

values.

Main Beliefs
 Shinto belief is “fulfillment of duty”
 Follow the code of Confucianism
 Harmony within social groupings, between humans and nature
 Japanese Culture

High uncertainty High power

Collectivism
avoidance distance

Masculinity High context

 Collectivism

Collectivism culture: value harmony, fitting in and politeness,

“saving face”

• The “Kereitsu” – affect purchasing in terms of cost and

quality
• Debates and conflicts are not valued or are seen as offense
• Decisions were made by people with similar thoughts
• Stress on consensus and compromise  prolonged decision
making process
• Spent too much time apologizing for service failures
 High Uncertainty Avoidance
Cultures high in uncertainty avoidance avoid unstructured
situations with "strict behavior codes, laws and rules, disapproval
of deviant opinions, and a belief in an absolute Truth …"
(Hofstede, 2011)

o There was 90% effort on planning VS 10% on

implementation
o Study all environmental factors before important
decisions
o There is a long-term oriented thinking
o Stress on quality  20% higher in cost
o Repeat existing models rather than new styles
 High Power Distance
Subordinates expect to be consulted in small power distance societies,
versus being told what to do in large power distance societies.

 Unthinkable for a small group of middle

managers to come up with a plan for the
company’s future organization
 Feedbacks are channeled through a peer
 Respect seniority: life-time employment
and senior-based reward
 Young employee could not take up senior
positions
 Masculinity

Masculinity: a society in which social gender roles are clearly distinct,

i.e. men are supposed to be assertive, tough, and focused on material
success; women are supposed to be more modest, tender, and concerned
with the quality of life

 Males occupied important

positions
 Not used to collaborate and
communicate with females
 Male employees not appreciate
to be supervised and managed
by female
 High Context

High-context communication tends to be more indirect and more

formal. Flowery language, humility, and elaborate apologies are
typical.

 Functional requirements and

specifications were not clear.
 ‘If people don’t act, it doesn’t
mean that they don’t agree
with you, it means that they
don’t understand’
 The “Blaming culture”
Turnaround by Carlos Ghosn
Who is Carlos Ghosn?!

• Born in Brazil
• Lebanese parents
• Studied in Engineering in France
• Spent 18 years in Michelin in Brazil
and North America
• Joined Renault in 1996 as EVP of
Advanced R&D, Manufacturing and
Purchasing
• Appointed as COO of Renault in
1998
• Appointed as COO of Nissan in June
1999 and as CEO in June 2001
 Carlos Ghosn

What Makes him Unique:

• Wide cultural awareness
• Charisma
• Intelligence
• Self-confidence
• Determination
• Integrity

“It’s easier to improve a company in trouble than a company

with an average performance”
Nissan Revival Plan (NRP)

• On October 18, 1999, Nissan

introduced a three-year plan to
revive the company.

• The Nissan Revival Plan (NRP)

is a bold, sweeping program
with a goal of nothing less than
recreating the organization.

• NRP sets the stage for the

creation of lasting, profitable
growth.
 Nissan Revival Plan (NRP)

1. Nissan will return to net

profitability in fiscal year 2000

2. Nissan will achieve a minimum

operating income to sales
margin of 4.5 percent by fiscal
year 2002

3. Nissan will reduce consolidated

net automotive debt to less than
¥700 billion by fiscal year 2002

4. If any of these are not met, the

executive committee has
promised to resign.
NRP: Meeting the Revival Commitments
№ Main goals
1 Net income
2 Minimum operating income
to sales margin
3 Net consolidated automotive
debt
4 Suppliers and purchasing
costs
5 Platforms and assembly
plants
Results , 1998 Planned results, 2002
(according to NRP)
Loss of ¥ 28 billion Return to profit (in 2000)
1.7 % 4.5%
¥ 2 041 billion less than ¥ 700 billion
Too many suppliers- Cut the purchasing costs
3000 and very high by 20%, reduce the
purchasing cost number of its suppliers
24 platforms spread 15 platforms spread
between 7 plants between 4 plants
NRP: Meeting the Revival Commitments

№ Main goals Results , 1998 Planned results, 2002

(according to NRP)

6 New products 4 out 43 models are Introduce 22 new

profitable vehicles with high
potential demand

7 New technologies Some of models have Vehicles are more

not attractive design enjoyable, safer and
and are more than 5 ecologically friendly
years in the market

8 Investments in R&D 3,7 % of sales 5% of sales

9 Number of employees 131 000 Reduce to 127 000

NRP: Meeting the Revival Commitments
NRP: Meeting the Revival Commitments
Measures Taken by Carlos Ghosn

Business Technical
Process Process

Corporate
Culture

Nissan Revival Plan

 Corporate Culture Measures

1. Language policy: All top-level meetings were held in

English, intensive language courses for all Nissan
employees
2. Dictionary of essential terms which includes clear
definitions
3. Thoughts, words and action are the same
4. Demanded the best quality of the job, strong control of
every numbers
5. Cross-cultural training – having over 1500 employees
from Renault learn about the Japanese business culture
and 400 Nissan employees study the French culture
 Business Process Measures

1. 5% to establish a plan, 95% to execute

2. Encouraged open debate and open disagreement
3. A performance-oriented compensation, 35% of salary is
performance-related
4. Promotions are based on performance, not on seniority
5. The use of e-mail is encouraged
6. Cross functional teams (CFT) creation
7. Cut jobs through early retirement, job transfer
8. Terminate the relationships with most Keiretsu suppliers
Business Process Measures and CFT

Purpose of CFT: to generate ideas and recommendations for change

Critical areas: purchasing, engineering and R&D

Every CFT consists of 10 people:

1 leader (middle manager), 1 former Renault manager
2 sponsors (senior executives),and other employees

Sub-teams of 10 people to investigate particular issues.

Total number is 500 people
 Technical Process Measures
1. Shiro Nakamura, 25-year veteran design chief from Isuzu Motors,
becomes a new Nissan’s head of design.
2. The Approved project to build a new 930 million $ assembly plant in
Mississippi.
3. 790 million $ approved project in conjunction with Renault to develop
a viable fuel-cell car

Other Measures

1. Solicited support from the union leaders for NRP

The Role of Leadership in Successful
International Merger & Acquisitions
29
Leadership in Mergers & Acquisitions

• Successful post-M&A integration depends on a sound

leadership style that enables organizational and cultural
adaptation.

• During the period M&A integration, if employees believe that

their leaders care about them, they develop a positive attitude
toward the change and commit to greater involvement in the
integration.

•There are different schools of thought in leadership theories

that emphasize different leadership styles, However that
transformational and transactional leadership styles can
improve employee engagement.
Types of Leaderships Styles

There are two types of Leaderships styles

Transactional Transformational
Leadership Leadership
 Transactional Leadership

• It is a style of leadership in which the leader promotes

compliance of his followers through both rewards and
punishments.

• Also known as managerial leadership, focuses on the role

of supervision, organization, and group performance.

• Leaders using the transactional approach are not looking to

change the future, they are looking to merely keep things
the same
 Transformational Style

•A transformational leader is a person who inspires

(transform) followers to achieve extraordinary outcomes.

• Able to arouse, excite and inspire followers to put out extra

effort to achieve group goals.

•Change followers’ awareness of issues by helping them to

look at old problems in a new way.

•Pay attention to the concern and developmental needs of

individual followers
Four Components of Transformational
Leadership Style
1. Charisma or 2. Inspirational
Idealized Motivation:
Influence: The degree to which
The degree to which the leader articulates a
vision that is appeals
the leader behaves in
to and inspires the
admirable ways and
followers with
displays convictions optimism about future
that cause followers to goals, and offers
identify the leader meaning for the
who has a clear set of current tasks in hand.
values and acts as a
role model.
Four Components of Transformational
Leadership Style
3. Intellectual 4. Individual
stimulation: attention:
The degree to which The degree to
the leader which the leader
challenges attends to each
assumptions and individual follower's
encourages needs and acts as a
creativity in the mentor or coach and
followers. appreciates the
individual's
contribution to the
team.
 Factors of Success in M&A

Main factors that should be implemented by leaders &

affects the success or failure the M&A of Companies:

1.Due 3. Talent
Diligence Management
5. Evaluation
Process
2. Strategic
4. Aligning
drivers & Culture
planning
 Due Diligence

• Due diligence is the series of exploratory activities used

in evaluating a company prior to finalization of the M&A.

• The traditional approach to due diligence focuses on

several key areas: financial, legal and regulatory, and
accounting and tax.

• When everything in the examination process checks out

from a financial, legal, and regulatory standpoint, the
merger partners typically move forward.
 Strategic Drivers

• It means defining strategic drivers or reasons why a

company wants to go through M&A process.
• Most of the companies can go through M&A for either:
- Organizational growth
- Increasing market share
- Gaining entrée into new markets
- Obtaining products
- Keeping pace with change

• Successful M&As should focus on post the M&A on

rationale and objectives and then managing the tactical
and functional activities to achieve those.
 Aligning Culture
Defining corporate culture is based on viewing it on three levels:

Emotional Culture: Political Culture: Structural Culture:

As influenced by the As the distribution of Such as company size,
personal feelings that power throughout the industry, and other
employees hold toward readily identifiable
organization.
the company, its characteristics
policies.

• Culture is an Iceberg, the visible part, such as how the office is structured,
formal or informal, what lies beneath the surface such as the nature of
people, time, economics, business success.

• The real task for leaders to align culture of two companies is based on a
thoughtful and thorough analysis of the people If leaders want them to
change the people, they should make sure they are malleable.

• Leaders also should make the people part of their vision based on the
people's culture
 Talent Management

• When organizations go through M&A, they need to determine whether or not

there is a need for a retention incentive plan.

• If so, they have to decide who should participate, how people will awarded, the
timing and structure of the plan and finally how much the overall plan cost
 Examples of Global Cases of M&A

Cases of
Cases of Failure
Success
•Daimler
•Disney – Pixar Benz/Chrysler

•Exxon-Mobil •AOL &Time

Warner
•Nissan Renault
•Quaker &
Snapple

Reference Source: CNBC

Why Renault-Nissan Succeeded and
Daimler Chrysler-Mitsubishi Failed
42
 Renault-Nissan VS DaimlerCrysler-
Mitsubishi

Comparison in the following 3 aspects

• Fit With Organizational and National Culture
• Different Leadership approaches
• Team Building
• Idealized Influence
VS
• Individualized Consideration
• Intellectual Stimulation
• Authority from mother company
 Renault-Nissan VS DaimlerCrysler-
Mitsubishi
Fit With Organizational And National Culture
Ghosn Eckrodt

• Effectively introduced cross-

• Only implement a veneer of teams
functional, divisional and regional
and put power in hands of home-
teams.
country expatriates.
• Increased assertiveness and
• High power distance and in-group
performance orientation and
collectivism
reduced power distance.
• Embraced the cultural differences
 Different Leadership Approaches

Transformational leadership:
identified the change, created a
vision to guide the change
through inspiration, executed the
change in tandem with
committed followers.

Did not find an effective

leadership approach to
conduct change management,
and failed to use and
empower the team.
Different Leadership Approaches

Team Building

Idealized Influence

Individualized Consideration

Intellectual Stimulation
 Different Leadership Approaches
Team Building

Ghosn Eckrodt

• Built cross-company teams

(CCTs) and cross functional
teams(CFTs)
• Used few teams.
• Modeled teamwork and • Relied on its own managers.
focused on bottom-line
performance to address
Nissan's cultural problems.
 Different Leadership Approaches
Idealized Influence

Ghosn Eckrodt

• Active role models, personally • Did not have a clear

involved in CFT pilots. integration strategy and did
not role model a sense of
• Commitment to addressing the
urgency.
problems, be open and friendly
and wanted to talk to people and • Did not role model
learn. accountability.
• "Walk the talk". • Failed to execute plans.
 Different Leadership Approaches
Individualized Consideration

Ghosn Eckrodt

• Provided guidance to the

employees and defined the roles of
all managers. • High power distance.
• Approached the change with
complete transparency and fairness. • Important information was
• Built a performance-based restricted to top-level managers.
incentive system and challenged
lifelong employment.
 Different Leadership Approaches
Intellectual Stimulation

Ghosn Eckrodt

• Encouraged and facilitated learning

for each member of the team.
• Embraced other cultures and • Did not gave encourage learning
creative ideas. and growth.
• Recruited the best young talent
from universities.
 Authority from Mother Company

Renault DaimlerCrysler

• Eckrodt needed approval from

• Renault gave freedom and headquarters in Germany and did
authority to Ghosn to transform. not have a direct reporting line to
DaimlerChrysler CEO.
 Insights & Conclusion
• Leadership plays a fatal role in the success of M&A
• Understanding the multicultural aspects help to integrate both
two cultures and companies smoothly in order to achieve the
business success
• No “right” or “wrong” culture
• The success of the M&A depends on the deep analysis of the
market and company, followed by a concrete implementation
plan for business processes.
Carlos Ghosn: “If you have to work
and do something significant in a
country it is much easier if you
connected with the country and the
culture.
52
 References
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361
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Renault-Nissan succeeded and DaimlerChrysler-Mitsubishi failed, Human Resources Management, Vol.
51, pp 433-456
 Tom, E. (2012): 5 Drivers of Successful Mergers, Acquisitions, The HVACR Management Magazine,
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Leadership, Strategy and Leadership, Vol. 30 (3), pp 13-18
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 Hughes, K. (2007): Redesigning Nissan (A): Carlos Ghosn Takes Charge, INSEAD, France
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Questions & Discussions