Renault-Nissan Alliance: Overcoming Challenges Of Globalisation And Reorganisation Business Environment

The Renault-Nissan alliance

Discuss about the Globalisation and Reorganisation Business Environment.

Renault-Nissan alliance is one of the highly recognized alliances in the past. Nissan is on the company which has gained huge and continuous success before the era of 1990s. But because of several reasons and the global recession the company experiences a huge downturn in its profits, sales and brand value. For approximately a time period of a decade the company flows in the era of difficulties. But the destined alliance of Nissan and Renault help Nissan to grow and recognized as one of the successful automotive industry. The alliance of Nissan and Renault took place in the year 1999. The main and the primary objective of the alliance for Nissan were to overcome its debt load which was increasing with a rapid rate (Fletcher III, 2012). The global recession, international competition and the lack of innovativeness made the company a weaker institute which has no chances of having a sustainable and successful future ahead. The alliance empowered Nissan to boost up and redevelop its brand image and revenues. After the alliance there was complete restructuring of Nissan which took place and this resulted into various positive outcomes. There were certain multicultural; issues but with appropriate strategies and policies the companies managed those issues in an effective manner (Stahl and Brannen, 2013). The alliance provided innovativeness and effectiveness in the overall operations and functioning of Nissan.

The early 1990s were the most vulnerable and nastiest period for the economy of Japan as this period led the economy fall into great recession. In 1980s the Japanese economy experienced vast growth and successful in almost all the industrial sectors but as the impact of rebounding of US economy there were various negative impacts which were imposed over the Japanese economy. It was recognized that the value of Yen was increasing rapidly as compared to Dollar in the time frame of 1980s. But in the early 1990s, there were few major car manufacturing companies of the US which suddenly raise their sales volume through innovativeness in their products, improved efficiency and reduced cost (Tsutsui and Mazzotta, 2014). This impacted the business of Nissan and other various Japanese companies. The surplus gain which was earlier experienced by the Japanese companies was transferred to those US organizations. The global recession laid huge negative impact over the success over Nissan as in comparison with the competitors such as Toyota, there were less financial strengths available with Nissan to handle the losses and recession. And as an outcome of the global recession, Nissan had a huge declined in its sales and profits (Lechevalier, 2014).

Differences and Similarities between French and Japanese cultures

In the year 1991, there was introduction of the first and primary financial decline. This was the time when the operating revenue of the company was drop down by 64.3 percent. Over the years 1993 and 1994, there were continuous losses which weakened the foundations of Nisan. To save the company from such higher losses there were several steps taken up by the company such as reducing costs of the material as well as manufacturing expenses. It was identified that Nissan was the first company which was pressurized to shut one of its plants and also to cut approximately twelve thousand workers from the payroll. All this took place to reduce the cost and handle the company in the era of great global recession (Shimokava, 2010). The Japanese companies were suffering from a threat of high debt loads which made several companies bankrupt. Nissan also had a huge debt load off around US$32 billion. The Industrial Bank of Japan was one f the biggest support which help Nissan in keeping its operation going. Till the year 1996, the losses of Nissan were kept to be continuously growing with a rapid rate. By the year 1997, the overall share of Nissan in the auto market of Japan was dropped down by 20 percent. The major impacted was led by the two huge competitors of Nissan i.e. Honda and Toyota. As well as there were few mistakes of Nissan too as the company was unable to develop a pace with the dynamic needs off the market and the consumers. For instance, at the time when the competitors have offered sports utility vehicles as well as minivans to the consumers, Nissan was nowhere to offer such new and innovative products. Thus the sales were plummeted with a rapid rate (Fletcher III, 2012).

Hence 1990 is said to be a lost decade in the history of Nissan and other various Japanese companies as this decade has shown a sudden fall in the revenues, sales and market reputation of the companies including Nissan at the utmost. The difficulties of the Japanese keeps on continuing for almost a decade and with gradual efforts and strategies the companies strives hard to maintain their position in the markers (Schaede, 2010).

There were a number of challenges encountered at the alliance of Renault and Nisan because of the act that both the companies possess different cultural norms and beliefs. There certain positive as well as negative implications of those cultural similarities and differences respectively. The major and the primary cultural differences among the two countries were based on the enterprise loyalty, the process of decision making, feminist Vs masculinity, religion, uncertainty avoidance and time perception and collectivism Vs individualism (Yu, Subramaniam and Cannella Jr, 2013). First talking about collectivism Vs individualism, in the French culture i.e. in Renault there prevails the culture of individualism where the interest of an individual is above and over the interest of the community. But in Japanese culture the collectivism is of high importance, there prevails the dominance and power of a group. Thus it was one of the biggest differences among both the cultures (Zahid and Shah, 2010). The new CEO of Nissan, Carlos Ghosn imposed a new system in the organization where the rewards were given on the basis of individual performance which encourages the working of an individual rather than collective performance (Kumar and Das, 2010).

Power distance and Other Similarities

Based upon the religion, in french culture there follows monotheist religion based on truth whereas in Japan there follows Buddhism, Shintoism and Confucianism based on virtue. Based over the discrimination bases on gender it has been analyzed that Japan there follows completely a masculine one whereas in French culture and that too in Renault there is equity. No discrimination on the basis of gender is there in the organizations. People are given equal chances to show their talent and skills (Lasserre, 2012). The decision making process is one of the differential factors as in French culture there has usually been taken fast and quick decisions whereas in Japanese culture the decisions are taken after having a long discussion and thought process. As per the loyalty factor it can be said that the employee in Renault and other France companies are comparatively less loyal as in the Japanese organizations the employees are highly engaged with the companies are their level of loyalty is very high towards the organization (Peters, et al., 2010).

Power distance is one the similarities among the cultures of Japan and France. Power distance can be explained as the association among the management and the staff of the organization. In both the Japanese and the French cultures the power distance is high. The employees used to follow the decisions take by the higher authorities and the managers. It can also be analyzed that the association of employees with their higher authorities is formal at both the places (Kumar and Patriotta, 2011).  In France there are rooms for the employees to discuss issues with higher authorities but in Japan such possibility is not offered. One of the similarities in both the cultures is the use of English. To have better communications no domestic language was preferred and the main communication which was undertaken was in English language which gives a sense of belongingness to all the people from diverse cultures. There is one more similarity which impacts the organizations in greater context is the literacy level of the employees. Renault and Nissan do not have to face difficulties regarding the skills and aptitudes of the employees as the workforce in both the organizations were well trained and educated (Kumar, 2014).

The alliance of Renault and Nissan is one the most recognized and successful alliance which has empowered both the organizations and has provided several positive outcomes which resulted into both organizational growth and the economic development. The alliance has also forecasted the speak of a European or East Asian socio-economic model as the association of these two organizations have been evaluated as one of the factor which  can contribute in the social development. The European socio-economic model can be understood as a shared vision that in what manner the society must be organized (Morel, Palier and Palme, 2012).

The purpose of this model is to serve the society, take care of the social well being together with the organizational development. The primary aim of the model is to achieve continent’s sustainable development. There are some of the specific aspects of the European socio-economic model such as to provide quality work and extensive employment opportunities to the individuals as a general responsibility, social protection, appropriate wealth distribution, progressive taxation, fair working conditions, equality, non-discrimination at workplace, availability of equal opportunities to the people and fundamental social rights (Sapir, 2006). All these are the major aspects of working over a socio-economic model. There are several assumptions that the alliance of Renault and Nissan will help in building a European socio-economic model by reducing the unemployment rate, by developing opportunities for the young people by which they can achieve appropriate housing, by safeguarding the improved employment conditions, by offering social protection and marinating equity. As now the organization is one of the top leaders in the automotive industry thus it has the power to change the working model and give high emphasis over the implementation of the European socio-economic model. Thus it can be analyses that with the alliance of Renault and Nissan there are several possibilities of speaking of a European socio-economic model. This will result into various positive outcomes such as reduction in poverty, appreciation for the labor participation, high protection regarding the risks associated with the labor markets, social welfare, higher employment rate and other various social and community well beings (Tabellini, 2010).

Conclusion

There are situations where synergies can change the entire situation. The essay has highlighted one of such example of synergy. From this essay it can be concluded that by joining hands and making an alliance the companies can change their future outcomes. Nissan has experienced huge decline and failure in the early 1990s. The downfall remained for a longer time period as there were a number of difficulties with Nissan had to fight such as global recession, increasing competition, poor financial condition and no rooms for innovativeness. The essay highlights the comeback of Nissan by a successful alliance with Renault. There were certain positive implications of the alliance such as upsurge profits, higher competitive benefits, improved financial conditions, successful operations, greater innovativeness and improved brand image. It has been also concluded that there were number of difficulties which arise because of the cultural dissimilarities among the companies but the management has overcome such issues by maintain a balance and taking best use of the cultural diversity. It has been concluded that with the alliance of Renault and Nissan there will also be a positive outcome fir the society as this alliance emphasizes on developing a socio-economic model of functioning. This model helps in development of the societies and also helps the economy to boost. Therefore from the overall perspective the alliance is one the successful association in the automotive industry which has benefitted every segment of the society.

References

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