Renault Nissan – the

Paradoxical Alliance
Case analysis
Group 1: - Ramin Navvabpour
- Nhung Ho Van
- Shah Naoaj Ahmed
- Emil Qasimov

23/2/2018
Agenda
 Background Information
 Macroeconomic environment PEST analysis
 Industry Level analysis ( Porter’s five forces)
 Firm level Analysis (SWOT, Ansoff Matrix)
 Strategic Alliance (Advantages and Risks)
 Strategy Implementation
 Value chain analysis
 K.S.Fs of Strategic Alliances
 Strategies’ Outcomes and Effects
 The Future Globalization Strategies of Renault-Nissan
 Recommendations
 Question and Answer 23/2/2018
 RENAULT – NISSAN
BACKGROUND INFORMATION

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Background Information
Renault:

•Renault is a French multinational automobile manufacturer

•Established on February 25, 1899
•Headquartered in Boulogne- Billancourt, France
•Strong market in share in Europe and Latin America

Nissan:

•Nissan Motor Company Ltd, is a Japanese multinational automobile manufacturer

•Establish on December 26, 1933
•Headquartered in Nishi-ku, Yokohama, Japan
•Pioneer in the Manufacturing of the automobiles
•Strong market presence in Japan, North America and Asia
•Faced financial Distress in 1990
Strategic Alliance

Strategic alliance is an agreement for cooperation among two or more

independent firms to work together towards common objectives. It is not a
formation of new identity but  a cooperation to reach their common goal while
remaining apart and distinct.

• Renault Nissan alliance was signed in March 27th, 1999

• Headquartered in Amsterdam, Netherlands
• Based on cross shareholding agreement
• Renault acquire 36.6% stake in Nissan ( 44.4% in 2003)
• Nissan took a stake of 15% in Renault
Objectives of the Strategic Alliance
MACROECONOMICS
ANALYSIS

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PEST analysis
Political: Economic:
 Political uncertainty  U.S & Western Europe accounted for
 Oil price 65% of the auto industry
 Various policies and regulations in the  Hyperinflation
automotive industry  Globalization and less trade restrictions
   Customers demand for more value on
their product

Social:
 The demand for more Eco-friendly and
sustainable automobiles
 Urbanizing and restructuring the public
transportation system to be more eco-
friendly
 Interconnectedness
 Rising population and rising demand
 
Technological:
 Technological Innovations
 Technological value addition in the cars
such as GPS, Heating cars, automatic
functions etc.
 High number of internet users and
online marketing opportunities
 Interconnectivity of the devices with the
automobiles
PORTER’S FIVE FORCES
MODEL

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Industry Analysis: Porter’s five forces
Bargaining power of the suppliers: High
 Few companies in the supplier sector
 Common source to buy raw material
 High switching cost
Threat of substitutes: Low
 Not fully substitutable
 Different substitutes such as: Public
transport, Taxi, Trains, Airplane are
available
 But there will still be demand for luxury
cars
Threat of new entrants: Low
 Requirement for very high investment
 Complex manufacturing process
 Difficulties to capture market share
Industry Rivalry: High
 Many automobile manufacturing company
 Tuff competition among the rivals for market share
 Strong market leaders
Bargaining power of Buyers: High
 Consumers are unwilling to pay for automobiles at higher
price
 Consumers want more value for their money
 Manufacturers have been implementing more technology
into lower level cars
 Demand for better MPG
SWOT ANALYSIS

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S & W Analysis before Strategic Alliance

Atlas Renault 2015- Edition 2016

SWOT Analysis after the Strategic Alliance
ANSOFF MATRIX

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ANSOFF Matrix
Strategic Alliance (Advantages and Risks)
STRATEGIC ALLIANCE

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Strategic Alliance

Atlas Renault 2015- Edition 2016

 Main Values of alliance

 Trust
 Work fairly, impartially and professionally.
 Respect
 Honor commitments, liabilities and responsibilities.
 Transparency
 Be open, frank and clear.
 How to implement strategies by overcoming distances
(CAGE Framework)
Dimension Solution

Joint-Culture study teems for cross-cultural training , Six months initiation

Culture stage, All top-level meetings were held in English, Intensive language courses
for all Nissan Employees, employing female managers
Encouraged open debate and open disagreement, Building Revival committee,
Boundary-Spanning Leadership, Cross-company teems, Cross-Functional
Administration Teams, a performance-oriented compensation and promotions are based on
performance not on seniority, Terminate the relationships with most Keiretsu
suppliers

Huma Resource Exchange, Building Joint Teams (Inter-Organizational Teams),

Geography
Encouraging the use of e-mail and office automation

Economy Cross shareholding and Financial supports by Renault Group

Strategies derived from Strategic Alliance

Strategy Activities

Aggregation Renault-Nissan Purchasing Organization (RNPO)

Renault-Nissan Information Services (RNIS)

Producing new brands and models based on the local or regional

Adaptation customer preferences and purchasing power

Knowledge and Technology Arbitrage

Arbitrage Human Resource Arbitrage
Market Arbitrage
The Alliance Structure

Schmid S., Grosche P. 2008

VALUE CHAIN ANALYSIS

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Value Chain Analysis
KEY SUCCESSFUL FACTORS

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 Factors for a successful strategic alliance

Put Strategy First Invest in joint

upfront planning

Plan the end Create trust

Start small Keep track

McGahan G., 2016

Build Enterprise-wide
capability
Strategies’ Outcomes
and Effects

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Financial Results

• Reduced the costs by 20% over 3 years

• Reduced plantation, inventory and
automotive debts
• Improve capacity utilization from 53% to
82% in 2002
• Increase output efficiency
• Reduce SG&A costs by 20%
• Dispose noncore assets
Financial Results
Non - Financial Results

• A phenomenon of strategic alliance in automobile industry

• New model of organizational structure in terms of business

communication, cross-cultural alliance as well as management revolution
 Future Globalization
Strategies of Renault – Nissan

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Future Globalization Strategies of Renault – Nissan
Strategy of profitable growth with three objectives - To be among the top three
automakers in terms of:
• Technology innovation,
• Revenue and operating profit and
• Quality and customer satisfaction.

The alliance was the world’s largest automaker in 2017 with 10.6 million autos
sold around the world.

Supporting future world by funding for start-ups with $1 billion, established other
collaboration like Renault – Nissan – Mitsubishi with other global automakers.

Build ethically, socially and environmentally responsible business at every stage.

Recommendations

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Alternative strategies/Recomendation

• Establish new alliances with leading companies to develop their products

and markets in electric mobility, smart mobility and autonomous driving
sectors.

• Formulating and implementing specific strategies to differentiate and

diversify products based on local sensitiveness

• Investing in R&D for product renovation as well as alliances with

Technology Institutes to optimize and maximize the product development

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Thank you for your attention!

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