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Nissan Motor Corporation , usually shortened to Nissan, is a Japanese multinational
automobile manufacturer headquartered in Nishi-ku, Yokohama, Japan.
Since 1999, Nissan has been part of the RenaultNissan Alliance, a partnership between Nissan
and French automaker Renault. As of 2013, Renault holds a 43.4% voting stake in Nissan,
while Nissan holds a 15% non-voting stake in Renault. Carlos Ghosn serves as CEO of both
companies.
Nissan Motor Corporation sells its cars under the Nissan, I nfiniti, Datsun, and NI SMO
brands.
Nissan was the sixth largest automaker in the world behind Toyota, General Motors,
Volkswagen Group, Hyundai Motor Group, and Ford in 2012.[10] Taken together, the
RenaultNissan Alliance would be the worlds fourth largest automaker. Nissan is the leading
Japanese brand in China, Russia and Mexico.

The trend towards globalization was everywhere in the auto industry. In order to stay
competitive many automakers were seeking strategic alliance to gain market share and
decrease costs. Nissan felt that it had many things to offer another manufacturer that could
benefit a potential partner. Strategic alliances allow for companies to reach a broader market,
manufacture new goods, used effective cost saving techniques, and learn from others.
Nissan like many automakers has had a long bumpy history with both successes and failures.
I n 1998 the industrial outlook for the automobile industry was promising overall. However
Nissans future wasnt looking as promising. At this time in the companys life Nissan is seeking
a strategic partner for various reasons. Nissan was in a bad position financially. Engineering
culture took precedence over managerial culture, while the quest for performance and quality
won over costing. Promotion was based entirely on the length of service. Nissans inability


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to establish a purchasing policy or a system of relations with suppliers added to the problem.
For a long time Nissan had been focused on high quality and engineering innovation without
focusing on the resulting costs. As a result Nissan has accumulated debts totaling 23 billion
euros. The Japanese car manufacturer went from having a global market share of 6.4% in
1990 to 4.9% in 1998. Due to decreased number of sales Nissan had a hard time paying back
its list of annually repayments.
Yoshikazu Hanawa took office for Nissan during the middle of a Japanese recession. Prior to
joining in 1996 Nissan had accumulated a debt to sales ratio of 62%, along with continued
losses since 1992. By 1998 Nissan has reported losses of 14 billion with the debt to sales
ratio rising to 66%. This ratio was growing because the auto industry was becoming more
inundated with vehicles, it was estimated that automakers had the production capacity to build
70 million vehicles, but the demand was an estimated 52 million. This decrease in cars demand
on top of the increase costs per car associated with research and development hurt automakers
across the board, especially Nissan.

Bankruptcy was the direction Nissan was headed. Nissan needed a quick solution, Mr.
Yoshikazu Hanawa, set a symbolic date, March 30, 1999 as a deadline for a deal. This marked
the end of the Japanese financial year, when short-term credit lines were to be renegotiated.
Mr. Hanawa wanted to use this deadline to help negotiations with perspective alliance
partners. If both parties knew when a deal had to be made by both companies would work more
productively. Nissan needed a partner to bail them out financially in the short term.

Nissan didnt want to loose their identity. They wanted a partner to not only help them
financially but also allow them to help with restructuring the production system and purchasing
policy. Japanese culture has always had the notion it is better to learn to fish then be given a
fish. Renault was not the only fisherman trying to teach Nissan, DaimlerChrysler was also in
negotiations with them. It was clear that DaimlerChrysler had the funds needed to help pay off
Nissans debts but it wasnt clear that they would be able to help Nissan fix the problems that
caused the debt in the first place. At this time it seemed as though DaimlerChrysler wanted
Nissan to help in its quest to take over the car manufacturing industry. If DaimlerChrysler
formed an alliance with Nissan, Nissan could lose its Japanese identity. Renault believed that


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they could teach Nissan the art of fishing, Renault experience with consolidated large
deficits also helped make them a perfect fit with Nissan.
Nissans need for a strategic alliance is due to their increasing debts, declining market share,
high costs of production, and the Japanese recession. A strategic alliance with the right
company could help Nissan reduce their debt, increase sales, lower cost of production, and
expand their global market.

Nissan faced a number of challenges when working on a strategic alliance with another car
manufacturer. Challenges will occur with any alliance, no two companies fit perfectly together.
When discussing the reasons why Nissan is in search of a strategic alliance the problems they
have were discussed as well. Due to Nissans recent financial problems their attractiveness to
others has diminished. Nissan has accumulated debt in excess of 23 billion euros, this debt
with have to be paid off at some point by Nissan or any potential partner. Any prospective
partner would have to make changes to Nissans purchasing policies and supplier
relationships. Nissan has a wide variety of platforms that keep costs high because only some
parts can be used for different vehicles. Appendix 10 shows us that Nissan is a top car
manufacturer in terms of sales however their inefficiencies resulted in a low earning before tax
percentage of approximately 2%. We can see that their sales are strong but their costs of
production are just too high. Nissan can become profitable with changes made to reduce the
cost per vehicle. As well as having a low EBT, their debt to equity ratio has been growing to
an extremely high 339% in 1998.

Other challenges Nissan will face in trying to find a partner for a strategic alliance is Nissans
corporate structure. They work in a very collective way, decisions are not made by one person,
rather decisions are made by groups, increasing time to make decisions while not always
picking the right one. One place were this is evident is in their production facilities. Nissan has
12 plants worldwide; each one of them has the capacity to build way more then actually
produced. In 1998 seven plants in Japan and the rest of Asia had the capacity to produce
2,260,000 cars but they only produced 1,706,000 this over 24% less then possible. This is a
huge expense because underutilization costs money. Nissan is in need of a strategic alliance to
not only help financially but also help them make production more efficient while implementing
change in company structure.



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Lastly one potential issue with Nissan is in their distribution methods. Unlike its competition
Nissan privately owns 50% of its dealership; Toyota only owned 10% of dealerships. This is
another reason Nissan was operating at a loss, if these dealership lost sales they would only
lose money in the cars, Nissan was losing money on the cars and the money it cost to run the
dealership. Because these dealerships were owned by Nissan dealers had no autonomy in
selecting car models, resulting in poor market feedback. According do the 12th president of
Nissan, Yataka Kume, Nissans cars are becoming further and further away from the true
voice of our customers. Nissan needs to make changes to become more successful. They need
to produce cars more cost effectively and efficiently by making changes to company structure,
sales force and product lines. A strategic alliance with the right company can help revamp the
companies image and structure resulting in increased market share and revenues.

These challenges combined with their need for an alliance does not make Nissan a bad
company rather misguided. Many of the problems they face now are in direct relation to
decisions and polices made years ago. Similarly when looking at Renault, what some may see
as a weakness other might see as a strength. Nissan has huge potential production capacity;
this is something that might attract any manufacturer looking to form an alliance. Renault for
example could potentially produce cars in a Nissan factory under the Renault name, helping
to reducing costs of production for both companies.


Nissans problems before the change
$ 20 billion in debt
The reasons of the problems
Recession in early 90s in Japan
There was complacency and a lack of urgency in the culture
There was no cross-functional and cross-regional communication
The design of the cars was out of touch with the market
A high degree of bureaucracy


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There was an emphasis on engineering culture rather than managerial culture
and promotions.
Like many other companies, Renault has been looking to expand into the Asia for its large
potential market. They felt that the best way to do this was through a strategic alliance. Renault
has been looking for another automobile manufacturer to peruse a possible alliance with since
the early 90s.
Renaults main objective in finding a strategic alliance partner was to increase their market
share by selling cars in new markets in Asia and North America. As you can see on Appendix
2, in 1998 Renault did not sell cars to ASEAN or Association of Southeast Asian Nations, and
North America. At the time according US Census Bureau, the United States had an adult
population of 175,400,000 people. That is a large market in itself, Nissan at that time had a
4% market share in North America selling 656,704 vehicles in 1998. Renault was also looking
for a partner that could help expand their product line. Renault has always been a leader in
compact car sales, but does not even produce a pick-up or 4x4 vehicle. Both of these vehicle
segments are attractive for their high potential and larger profit margins.

By March 1999, Renault and Nissan had signed an agreement, which formed an alliance
between the two giant automobile companies. The alliance essentially helped both parties
benefit from each other. For instance, at this time, Nissan was in a desperate need for cash to
pay off its interest payments and Renault was able to provide it with the necessary cash reserves
it had. In addition, Nissan was able to enter the European and US automobile markets through
the alliance. Nissan was also able to learn from Renault's product lines such as the
technological know-how in the small compact cars it specialized in. On the contrary, through
the alliance, Renault was able to penetrate the Asian markets that it lacked previously.
Renault also added some of Nissan's product lines to its own such as the commercial and large
passenger cars that Nissan specialized in. In addition, Renault was able to learn from Nissan's
technological advancements in the manufacturing process. Overall, Renault-Nissan alliance
showed complementary strengths from both parties and seemed to help both companies in the


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right ways. By the end of 1999, Renault-Nissan was ranked fourth in the automotive industry
based on its total output of 5 million automobiles and had grasped about 9% of market share
worldwide (Renault, 2009).
The Renault-Nissan alliance was formed based on three distinct goals.
1. It was to combine and utilize the resources to achieve economies of scale.
2. It was to use each other's complementary strengths to improve the efficiency in its
technologies, production process, and market share.
3. It was to provide a distinct brand name in its automobiles to preserve a strong brand
image for each type of automobile it produces to attract various customers to its
products. These goals allowed Renault and Nissan to help grow profitably while being
from different cultures similar to the DaimlerChrysler merger.

The first phase of the alliance was in 1999 where Renault took a 36.8% stake in Nissan for
about 4.4 billion with the option for Nissan to take a stake in Renault at a later date. Renault
also had the option to increase its stake in Nissan at a later date. By that time, three executive
directors from Renault joined the Nissan's board. Carlos Ghosn, one of the executive directors
was appointed the Chief Operating Officer, he announced that he would turn Nissan around
within three years while cutting its debts in half. At the same time, eleven employees from both
companies started to look for synergies to be employed even though they have already started
this process a long time before the alliance was formed. Based off of 2000-2002 data, the
synergies were to have contributed to the cost savings of about $3.5 billion (Renault, 2009).

On May 2002, the second phase of the alliance was initiated as Nissan took a 15% stake in
Renault. However, these shares did not have any voting rights and Renault used these funds to
raise its shareholdings. As a result, the French state would own a smaller stake in Renault.
(Falls to about a 26% stake in Renault.) This phase was actually announced in October 2001,
a year earlier than expected because Nissan was able to reduce its overall debt levels from
1,350 billion in 1999 to about 433 billion in 2001. The purpose of this phase was to improve
both companies financial position while increasing its shareholdings. In addition, through the


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second phase, the Renault-Nissan B.V. was formed. It was incorporated under the Dutch laws
and both Renault and Nissan had equal ownership over it. Within it, the Alliance Board of
Directors consisted of three Renault directors and three Nissan directors chaired by Carlos
Ghosn who was also appointed as CEO of Nissan in 2001.

Renault-Nissan B.V. was a strategic management group to define the strategies and to manage
the synergies between the two automobile companies through joint activities on a global scale.
For instance, common power trains and platforms were shared between the two companies.
By 2002 there were two common power trains and platforms that were in use and it hoped to
attain eight power trains and ten platforms by 2010. In order to incorporate this, the Renault
Nissan B.V. had to form the Renault-Nissan Purchasing Organization in April 2001. This
organization hoped to handled over 70% of both companies purchases in the long run. By the
end of 2002, it had already accounted for about 40% of the alliances purchases. In addition,
the production facilities were also shared where Nissan's commercial vehicles were
manufactured in Renault's production facilities and Renault's minivans were manufactured in
Nissan's production facilities. Lastly, the creation of a joint information technology and
information systems department allowed both companies to have similar systems which
increases its effectiveness to function as a team. The creation of these organizations provided
the necessary synergies in the IT/IS, production and purchasing areas of the alliance.

In todays rapidly challenging business environment, it is readily acknowledged that it is
necessary for organisation to make changes in order to stay competitive. Change management
is vital in an organisation as it act as a way to ensure that business is moving in the right
decision which indeed requires proper handling as it relates to human involvement. Many
researchers argued that implementation is not solely the end point of a process of formulation
but rather the interaction of many interactive and discontinuous factors i.e. management
decision processes, environmental and business sector characteristics.
Nissan built alliances with Renault S.A. (Renault) to ensure the survival of the business due to
huge debt, The said alliances benefited both parties in terms of market penetration and
capabilities. As a result from the said alliance, Renault obtained an equity stake of over 36%


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in Nissan and its leader, Carlos Ghosn was appointed as the key person in charge for the
implementation of the change. During the transition change, Ghosn met will all the employees
from different departments to discuss on the current state of Nissan and the way to move
forward. Thereafter, a radical or transformational change plan was implemented in order to
ensure the success of the business in terms of profitability.

Based on Beers model of effective change strategies, Nissan adopted the combined strategy of
1. Theory Economic (E)
2. and Organisation Development (OD)
This is supported by Eriksson and Sundgren (2005) conclusion that both theory E and OD
should coexist as the success for a change relies in the interface between the two strategies.
In Nissan, the application of the E strategy is seen from the implementation of aggressive cost-
cutting plan through downsizing, lay-offs and restructuring that is related to the its
performance while in terms of OD, it involves the change in having English as the medium of
communication in the organisation, setting up of the nine cross-functional teams for generation
of ideas and culture change within the organisation which mainly touched on the Human
Resource practices that overall leads in creating the capability to sustain competitive
advantage. With the said changes in place, Nissan has managed to revive its business to
compete in the market and at the present moment is one of the leading automakers in the
industry.

Much literate suggest that implementing change is not an easy process. Although the change
is foresee as an advantage to the organisation, there will always be mental rejection from the
humans included in the process. Therefore, implementation of change needs to be handled
sensitively with a structured approach to ensure the success transition from current to future
state. In terms of Nissans implementation, it is classified under the blue print change (Hayes,
2010:427) as the final result is known i.e. Nissan to be profitability and be one of the top auto
producers in the industry which Ghosn was able to formulate a clear plan of action in achieving
the said vision.


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The change requires creating a new system which sequentially always demands leadership.
The role of leadership in change management includes creating a vision, aligning relationship
around the vision and inspiring others to achieve the vision. In implementing change, a leader
plays a key role in shaping the success of the change process which is in line with Beer et al,
suggestion on the role of a leader in mobilising the initial commitment as a step to begin for
the change process. Evidence from literature indicates leaders role in the change process
wherein it have an impact to the success of change through the linkage between both leader
and follower behaviour.

Ghosn is considered as a transformational leader as he brought changes in the company and
the effect of the changes is sustained under his leadership style. Studies have indicated that
transformational leaders are able to realign the employees values and norms by promoting
both personal and organisational changes which indeed enhance employees ability to accept
change.

Ghosn leadership is not based on the Japanese style but rather applying the multicultural
experience that enables him to embrace culture differences and building on them. This is
considered one best way to manage change as studies have found that a flexible, loosely
applied culture based on some diversity and possibly involving the existence of number of
subcultures is prove more effective. For a change to take place, leaders need to convince people
on the necessary of the change which usually need a strong leadership and visible support from
the management. Kotter (2007) indicate that managing the change is not enough, as leaders
have to lead the direction in ensuring the implementation of the change.

One of the changes made from the alliance exercise was the implementation of a new
management style by setting up a nine cross functional team which the main objective is to
achieve the goal for Nissan Revival Plan and business commitments. With the new management
style, teams are given three months to review their operations and come up with
recommendations for profitability and growth. As a result, it brought employees into a new


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organisation context through new roles and responsibilities that consequently create a
situation that forces new attitudes and behaviour on employees in accepting the need for
change which is supported by Beer et al. (1990) as the most efficient way in changing
behaviour.

Based on findings, it is noted that most successful cases in change relies on powerful coalition
in the company (Kotter, 2007) as it is influence by the nature of work environment and
organisational culture of which leaders could affect the employees attitudes in working
towards change and motivation. The new functional team have allowed employees to think in
a different perspective which leads to the mechanism in explaining the necessity for change
across the entire company.
Ghosn as a leader incorporate the values of team work in Nissan to ensure all employees are
dedicated to the shared vision in building urgency and momentum around the need for change.
The requirement of more coordination and teamwork between functions and business units is
identified as one of the key factors in implementing a change which is supported by research
findings where there is linkage between leadership behaviours to the activities involved in
implementing change.
Literature indicates that successful implementation of change is a difficult goal and often
flounders because of improperly framed by management. Finding from a survey with
organisations indicate that 66% has agreed that one contributing factor for the implementation
problems is ineffective coordination of implementation activities. Leaders have a very
important role in the selection and planning of a suitable management approaches as proper
planning needs to be carefully identified to ensure a strong foundation which leads to an easier
process of implementing change. Indicate that time is key factor in organisational change but
it is always neglected due to performance driven results. It takes time for ensuring a success
of change as rushing and expecting too many outcomes will lead to failure.
It is agreed that organisation is more effective when components such as structure, technology,
systems and people are aligned with each other and when there is a good fit between the


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organisation and the environment. In implementing change, action taken for the change should
be identified to determine the flow of changes to ensure the outcome of the change process. .
Goodman and Rousseau (2004) suggest that it will help organisation to understand the lag
between change and results by paying attention to feedback cycles which allows identification
on mistakes as well as recommendation action for improvement.
Planning should not only include the aspect of the results but to also determine the obstacles
for the change to materialize. Goodman and Rousseau (2004) suggest that change intervention
allows the increase of knowledge sharing for a better result performance where it reduces time
for a given engagement that will result to faster outcome on the result. It is noted that
knowledge system is widely used due to its beneficial functions such as positive feedback on a
change as it improves in performance. However, it is argued that knowledge exist in the
organisation but is not properly used that affects the coordination of the implementation
process. For Nissan, the company has identified the main problem of the company and tried to
apply a new set of actions in a different manner which in line with the double loop learning
process. Argyris (2002) indicate that double loop learning take place when errors are
corrected through exploring the possibility in doing things differently.

Double-loop learning is an educational concept and process that involves teaching people to
think more deeply about their own assumptions and beliefs. Double-loop learning is
different than single-loop learning which involves changing methods and improving
efficiency to obtain established objectives (i.e., doing things right). Double-loop learning
concerns changing the objectives themselves (i.e., doing the right things).

One of the key purposes of leadership education is to influence peoples thinking and behaviour
to become more effective leaders. Leading is about transformation. The intend of double loop
learning is also transformation, the transformation of deeply held perspectives of the world in
which we work and act. Double loop learning can be viewed as a distinctive educational
strategy that contains high level potential to shift the perceptions of our learners.


The strategy or method used to achieve this type of deeper learning is a form of


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communication, of dialogue that involves a good deal of interaction among learners. It
proposes that the educator "drill down" into a topic in order to identify and bring the taken-
for-granted assumptions and beliefs of the learners to the surface. Double-Loop Learning
helps people acquire and integrate new information and develop new skills, to question and
possibly discard familiar and perhaps dysfunctional ways of thinking, feeling, and acting.

Drilling down into the subject of leaders and leadership will take learners past the obvious to
some of the non-obvious notions we all have held that no longer function well in our evolving
world of work. Dialogue about our deeply-held, taken-for-granted ideas about organizations,
for example, focuses on what we know to be obvious then moves to the less obvious.
Communication between people within organizations involves sophisticated tools. The obvious
include emails and telephones and departmental meetings. Less obvious perhaps, are the tools
that are usually mistaken for communication itself, even for the organization itself. For
example, management systems of information and authority, budgets, evaluation and appraisal
systems, databases and so on. Even less obvious, tools of
communication include statements of visions, missions, values, and policies.

The terminology involved in these kinds of communication can develop a kind of myopia in
which people no longer see other aspects of the wider process of communicative interaction in
which they are participating. The perspective being suggested invites one to explore the
communicative process itself, in which the mere presence of, the images of, and the fantasies
about, leaders all affect local processes of communicative interaction in the living present.

The usefulness of the strategy of double-loop learning for leadership education and
development comes from its potential to extract tacit knowledge from individuals and convert
it to explicit knowledge. It is a way to better understand the ordinary, to question our everyday
working world, to think outside the presumptions and limitations that we have, perhaps
unconsciously, constructed for ourselves.

Information sharing will increase the knowledge of the employees which can be adapted
through a learning process that allows a collective ability to act more effectively in an
organisation (Hayes:2010: 322). Moreover, creating a new learning experience will allow
companies to build its competencies as it is related to detection and correction of errors


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(Argyris, 2002) which is associated with continuous improvement. Hayes (2010:308) indicated
that most literature in organisational learning focuses on the acquisition of knowledge, the
recognition of its potential and its application to improve organisational performance. Based
on Nissan case, it is summarise that the key to implementing change is a continuous
improvement built in terms of information between people and processes, combination both
business and human dimension towards shared objectives.

Despite identifying the need of organisational learning, it is feasible for companies to plan a
systematic training approach within the organisation as change is related to individual change.
Change will need employees to think and behave in a different way and it is vital for
organisation to provide the knowledge and skills to ensure the success of the change. Hayes
(2010:350) indicates that training and development enables company to align between
competencies of the employees and leaders as well as the task and structure of the system.

Much literate suggest that implementing change is not an easy process. Although the change
is foresee as an advantage to the organisation, there will always be mental rejection from the
humans included in the process. Therefore, implementation of change needs to be handled
sensitively with a structured approach to ensure the success transition from current to future
state. In terms of Nissans implementation, it is classified under the blue print change as the
final result is known i.e. Nissan to be profitability and be one of the top auto producers in the
industry which Ghosn was able to formulate a clear plan of action in achieving the said vision.

1. Organizations readiness
Nissan was in bad shape before the alliance exercise due to its financial position and needed
a solid strategy to ensure the viability of the business. Hence, the sense of urgency has been
established at the highest priority with the support from the management
As there is a sense of urgency for change, a leader must promote change by creating vision. A
clear vision is needed in guiding people through a major change which leads to a reduction of


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error rate that determine the success or failure of the implementation. A vision needs to be
clearly defined with development of strategies in order to direct the change effort. The said
vision will assist employees to understand the reason for the change. For Nissan, the main
vision for the alliance exercise is to turnaround the company from a loss to profitable business
while maintaining the companys identity and self esteem of its employees.
2. Organization Culture
Many researchers highlight that culture is one of the important key aspects to be considered
for the implementation of change. To change the culture in an organization is not an easy tasks
as usually employees are comfortable with the job and organization and as a result they are
resistant to change.
Nissan is a company based in Japan with strong build culture in the organization. It was
difficult for the employees to accept the changes particularly in reward and progression system
i.e. from seniority to performance based. It is the culture of Nissan to ensure that all employees
have a lifelong career in the company which certainly create the culture of complacency that
impacted Nissans competitiveness. Meanwhile, another culture problem faced was the
organizations inability to accept responsibilities of which having a culture of blame. Ghosn
has observed that all the said factors have contributed to Nissans performance which requires
a radical change process. It is noted that Nissan adopted Schwartz and Davis suggestion as
mention above wherein the companys culture was change ultimately to ensure the success of
the change implementation. During the change process, employees were given a period of one
year to change their attitude and to adapt to the changes accordingly. The changes
implemented have affected the employees work orientation in terms of resistance to change as
it was foresee that their particular job was at risk.
Management plays a vital role in supporting the change as they set as a leader whereby
employees will adhere to the changes faster. This can be effectively done by showing the
implication of the change to the organization in terms of profits, productivity or quality work
life. For the case of Nissan, a clear focus on the companys priorities and plan and successfully
executed accordingly with the backup of a good leader. Transparency was built as a new
culture in the organization as it allows others to provide ideas rather than only top
management. This as a result leads to a consistency between how the organization operates in
thinking and doing its daily operations.


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3. Level of Communication
Another important aspect in implementation change is communication as it has an important
impact to the success or failure of a change programme. It plays a vital role in the change
process as it allows leaders to create a shared sense of direction, establish priorities, reduce
disorder and uncertainty as well as facilitating learning. In having a good communication,
leaders need to ensure that all communication channels will provide information sharing that
allows accurate absorption of relevant information by employees. Employees need to be
constantly aware on the changes as they contribute to the success of the implementation of
change. Meanwhile leaders on the other hand should continuously collect feedback by
interacting with employees as well. As a result, organization will look forward for a successful
outcome in the change implementation.
The environment for communication should be open and supportive to enable employees in
sharing their concerns, frustration and need without fear of revenge which will lead in building
the credibility of the company for a better implementation process. It aligns the overall concept
of change as employees are aware on the proposed changes while management collects
feedback by interacting with employees. Nissan adopted underscore and explore
communication strategy wherein the message was conveyed to all level of employees all across
the company in order to get employees aligned with companys goals. The said method reduces
ambiguity and provides a clear picture on how the change will develop a better future for
Nissan. Employees are likely to accept the pain of change if it clearly shows how their
contribution affects the future gains.
Beers model of effective change strategies,
Nissan adopted the combined strategy of Theory Economic (E) and Organisation
Development (OD) (Beer and Nohria, 2000). This is supported by Eriksson and Sundgren
(2005) conclusion that both theory E and OD should coexist as the success for a change relies
in the interface between the two strategies. In Nissan, the application of the E strategy is seen
from the implementation of aggressive cost-cutting plan through downsizing, lay-offs and
restructuring that is related to its performance while in terms of OD.


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Kirt lewins model of 3 step change process
The unfreezing stage creates a situation for readiness for change through motivation in terms
of the companys clear vision which is seen attainable in the future that consequently increase
the employees level of confidence in accepting to the need for change.

Kotters 8 step change model
It satates that the success of the transformational effort depends on the right action taken at
each stage.

Burke - letwin model of transformational change
They key feature of the B-L model of transformational change is the leadership. It lies in the
center of the model showing its effect on the external environment , performance , culture and
mission and strategy.


The expectancy theory
clearly indicates that individual consciously choose course of action based upon perceptions,
attitudes and belief which result to desires in enhancing pleasure and avoiding pain
There was a positive attitude from the employee side towards resistance to change as they see
they could see that their job was at stake.

Double loop learning theory by Argyris (2002)
For Nissan, the company has indentified the main problem of the company and tried to apply
a new set of actions in a different manner which in line with the double loop learning process.
Argyris (2002) indicate that double loop learning take place when errors are corrected through
exploring the possibility in doing things differently.



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Employee see change only when they see as it is important for them to change.
Readiness of change is a key to ensure a successful implementation process of change as when
the level of readiness is high, employees are likely to initiate change with greater effort by
displaying more cooperative behaviour that will result to more effective implementation.

Richard bechards assumption.
Basic building blocks being groups, basic unit of change are groups and not individuals
All parts of an organization manage their affairs against goals. Controls thus are
interim measurements, not the basis of managerial strategy.
One goal is to develop open communication, mutual trust and confidence between and
across levels.
People affected by the change must be allowed active participation and a sense of
ownership in the planning and conduct of change

Nissan listens to the employees concerns and in fact created a new way of communicating
through email. The said method reduces ambiguity and provides a clear picture on how the
change will develop a better future for Nissan.


The automobile industry is having as hard a time as ever to stay in the green. Renault-Nissan
has done better then the average manufacturer. As of the beginning of 2009 Renault-Nissan
was the third largest global automaker in terms of sales while having a global market share
of 9%. They have been successful through layoffs and factory closings. Renault-Nissan hopes
to stay strong and CEO Carlos Ghosn recently announced they are working on a fully electric
vehicle. If the trend towards reduced fuel consumption continues, Renault-Nissan will be ready.


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By March 1999, Renault and Nissan had signed an agreement, which formed an alliance
between the two giant automobile companies. The alliance essentially helped both parties
benefit from each other. For instance, at this time, Nissan was in a desperate need for cash to
pay off its interest payments and Renault was able to provide it with the necessary cash reserves
it had. In addition, Nissan was able to enter the European and US automobile markets through
the alliance. Nissan was also able to learn from Renault's product lines such as the
technological know-how in the small compact cars it specialized in. On the contrary, through
the alliance, Renault was able to penetrate the Asian markets that it lacked previously. Renault
also added some of Nissan's product lines to its own such as the commercial and large
passenger cars that Nissan specialized in. In addition, Renault was able to learn from Nissan's
technological advancements in the manufacturing process. Overall, Renault-Nissan alliance
showed complementary strengths from both parties and seemed to help both companies in the
right ways. By the end of 1999, Renault-Nissan was ranked fourth in the automotive industry
based on its total output of 5 million automobiles and had grasped about 9% of market share
worldwide (Renault, 2009).

Managing change successfully has never been an easy task and can neither be problem free.
Buchanan et al. (2005) summarised the related factors influencing the nature and outcome of
change are such as
individual, group, organisational, social and political. Therefore before any change takes
place, it is important for a leader to properly analyze the implementation of the organisational
change in order to determine the extent for the change that will benefit both organisational
performance and employees.
From the Nissan case, it was observed that one of the main lessons learn from the
implementation of change process is the clear focus set by Ghosn wherein a clear plan is
executed based on priorities. Ghosn brought in clear vision by altering the core organisational
process with the nine cross functional team. Moreover, factors such as having a high urgency


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level for the need to change and a strong guiding and powerful coalition has managed Nissan
to motivate the employees while creating an environment that accept change and subsequently
sustaining the companys competitiveness. Based on the Nissan performance after the alliance
exercise, it is concluded that the company is able to sustain its change due to these aspects of
organizational readiness; fit with the competitive strategy, managerial values and internal
power distribution and the values and power of key stakeholders

A company planning to expand internationally can use different strategies to adjust to the
external pressures, threats and opportunities. The two main pressures faced by companies are
the pressures to reduce costs and pressures for local adaptation. These strategies determine
whether the company is an international, multinational, global or a transnational company.
Most automobile companies are cost driven in the sense that reducing costs are more important
than the need for local adaptation. Therefore, automobile companies believe that in general it
is more important to achieve economies of scale/scope in order to stay competitive in the
international markets rather than through a differentiation strategy. This suggests that in
general most automobile would fall under a global company where it views the world as a
single marketplace and its main objective is to create a standardized product that addresses
the customer's needs. The Renault-Nissan allianceseems to have used a different approach.
The Renault-Nissan alliance seemed to fit the characteristics of a transnational company while
DaimlerChrysler fit more as a global company. A transnational company combines the benefits
of global scale efficiencies with benefits of local responsiveness. For instance, Daimler and
Chrysler had two headquarters even after the merger with Daimler making changes necessary
to Chrysler. They did not take into consideration of what their local
Customers demanded and did not consider localizing their products to meet the customers'
needs. They tried to concentrate only on the cost savings, which reflected a global company.
On the contrary, the Renault-Nissan alliance was able to combine their decision making
strategy, share resources and technologies within both the production operating areas within
the company through cross cultural teams. These implementations allowed Renault-Nissan to
incorporate both the cost efficiencies and local adaptations in their product lines. The Renault-
Nissan alliance did have two headquarters but they ultimately formed the Renault-Nissan B.V.
during the second phase. In addition the other entities within the alliance, combined with the
cross cultural teams and through shared resources, they were able to produce a differentiated


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product to satisfy a country's specific needs. They were also able to coordinate better than
DaimlerChrysler and was ready for the possibilities of change in the global markets such as a
downturn in the automobile industry. Through the comparison of the DaimlerChrysler merger
and Renault-Nissan alliance, it can be said that in order for an automobile company to succeed
internationally, it's organizational structure needs to be in the form of a transnational company
with well integrated cross cultural teams.























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