Documente Academic
Documente Profesional
Documente Cultură
UNIVERSITY OF SUNDERLAND
Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
Nguyen Dinh Tu
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Strategic Management
INTRODUCTION...........................................................................................................................4
COMPANY BACKGROUP............................................................................................................5
COMPANY SITUATION................................................................................................................5
Business-Level Strategies................................................................................................................7
PORTERS 5 FORCES....................................................................................................................8
The threat of new entrants...........................................................................................................9
The threat of substitute products..................................................................................................9
Bargaining Power of Buyer.......................................................................................................11
Bargaining Power of Supplier....................................................................................................12
Competitive Rivalry within the industry...................................................................................12
BALANCE SCORE CARD..........................................................................................................13
Internal analysis for Nissan.......................................................................................................14
SWOT analysis..............................................................................................................................18
Strengths....................................................................................................................................18
Weakness...................................................................................................................................18
Opportunities.............................................................................................................................19
Threats.......................................................................................................................................19
RECOMMENDATION.................................................................................................................20
CONCLUSION..............................................................................................................................21
References......................................................................................................................................22
APPENDIX....................................................................................................................................25
Appendix 1.................................................................................................................................25
Financial Perspective.............................................................................................................25
Customer Perspective............................................................................................................25
Internal Process Perspective..................................................................................................25
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Learning and Growth Perspective.........................................................................................25
Appendix 2.................................................................................................................................25
For Financial Perspective......................................................................................................25
For customer perspective.......................................................................................................26
For Internal process perspective............................................................................................26
Learning and Growth perspective..........................................................................................26
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EXECUTIVE SUMMARY
Nguyen Dinh Tu
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INTRODUCTION
Recently, the demands of the customer about vehicle more and more increase, so it leads
developing of the automobile industry. Nissan Motor Co., Ltd is a big automobile industry in the
world, they also want to expand their company to become the leading-company in this industry,
so they implemented the strategy to support them does it.
In the report, the author identifies the business level strategy of Nissan by Porters generic
strategies and then evaluates it by Porters 5 forces and Balanced Scorecard to help Nissan know
current strategy impact to the overall company including the internal and external environment.
After that, the report also gives some recommendation for Nissan to improve and develop the
company to support them face with the change of market and become the leading-company in
the automobile industry.
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COMPANY BACKGROUP
Nissan Motor Co., Ltd is the Automobile Manufacturing in the world and company was
established by Aikawa in 1933 and company has maintained and developed in market from 80
years. The main business operations of Nissan's production of passenger cars, sedans, sport
utility vehicles. Nissan has also achieved much success. They have built many famous brands
such as Leaf, Sunny, Verba, etc. and particularly M, EX, JX and FX. (nissan-global, n.d).
COMPANY SITUATION
Firstly, according to Nissan-global, the total production in November 2015 increases 6.2% yearon-year to 461,127 units. The Production in Japan increased 6.2% year-on-year to 66,680 units
and outside of Japan also increase 6.2% year-on-year to 394,447 units including US, Mexico,
UK, Spain, China and other regions. Besides, the sales of Nissans product in Japan including
mini-vehicles declined 9.3% year-on-year to 41,786 units, but sales of Nissans in other regions
like US, Mexico, China increase. (nissan-global, 2015).
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Business-Level Strategies
From the current situation of Nissan, the report shows that Nissan quietly success in the
automobile industry, so to achieve these successes, Nissan applied the Cost leadership strategy.
To analyzing this strategy, the report use Porters generic strategies. According to Porter, the
Porters generic strategies is a framework to support organization analyzing and applying to
strategies for individual business-level strategies. (Porter, 1998)
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PORTERS 5 FORCES
To evaluation the strategy of organization, we need to know the current strategy will support
organization make profit and maintain the competitive advantages with other competitors. To do
this, Porters 5 forces is a good method to help organization analysis about external environment
and the strategy of company can reduce the pressures surrounding the firm.
In 1979, Mr. Michael E. Porter developed a Porters 5 forces framework to analyze the level of
competitive of organization. And this framework looks at 5 specific factors (Threat of new
entrants, threat of substitute products or services, Bargaining power of suppliers, Bargaining
power of customers and Competitive rivalry) to determine the competitive advantages of
organization can support them make profit and they maintain this competitive advantages a long
time or not. (Arline, 2015).
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To open the car manufacturing, it is not complex and the business must follow some basic
regulations and laws such as minimum wages regulation, labor law, and environment
regulation and so on. Moreover, depend on their host country; there are some special
business such as material cost, labor cost, overhead cost and so on.
Besides, the organization also has knowledge about car manufactory to meet the
requirement of customer or the change of market. Moreover, they also need to use the
good technology to increase productivity as well as meet the standard of their country.
In addition, when one organization enters to car manufactory, they need to compare with many
big competitors like Nissan, Ford Motor, Toyota Motor, Hyundai Motor, etc.
Although car manufactory is a good industry with the high market share as well as
market growth, new business also faces many problems from the competitor, capital, and
regulation.
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Financial
Object
Efficiency of
profitability
Customer
Customer
Satisfaction
Internal
Internal control
Process
Learning and
Growth
Research and
Development
Employee
satisfaction
Nguyen Dinh Tu
Measure
Return on capital employed
Return on Sales
Cash and cash equivalents at end of
unit
%
%
Millions of Yen
the period
Market Share
Sales
Advertising expense
Administrative expense/total
%
Millions of Yen
Millions of Yen
%
5.3
11375207
289098
8.62%
revenues
Production capability
Recall product
Number
Millions of
4688344
3,53
R&D expenditure
Skilled employees
Product
Billions of Yen
Number
14,007
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Result
5.64%
5.18%
802612
506.1
4.3
19.4
over 4.2
Strategic Management
From result of Nissans BSC in 2015, we can see that
First of all, although Nissan produces the sports cars, the car is not the luxury. Because
the strategy of Nissan is cost-leadership, so they do not more focus on the added value in their
product, they only try to reduce the cost of each product to reduce the price. Therefore, Nissan
does not attract more customers in rich people who are the main target of their product. Thus, the
ROCE and ROS rate of Nissan is not high which only 5.64% and 5.18%. It also is one reason
make the sales of Nissan in 2015 decrease 0.9% (nissan-global, 2015). However, Nissan has
very strong in the cash (Cash and cash equivalents at end of the period are 802,612 millions
of yen), so they also have enough money to spend for current liability and invest many new
projects. This is a good point for Nissan because Nissan always has good capacity to face the
problem in future. From the good finance, Nissan is easy to expand market or company in future.
Secondly, as the author mention, Nissans product is not attractive, so the marketshare of Nissan in worldwide only 5.3% in 2015 compare with the Toyota 11.6%, it so that the
current strategy of Nissan only support them maintain and develop slowly. If Nissan wants to
become the leading company in automobile industry they should apply more strategy or change
current strategy. Besides, Nissan also spend a lot of money for advertising, according to annual
report of Nissan 2015, they spend 289,098 millions of yen for advertising, but it does not
successful as they expected.
Thirdly, because Nissan apply cost-leadership strategy, so one of ways to support
Nissan reduces cost is increasing the productivity. From that, they can reduce the fixed cost, so
Nissan produces 4,688,344 products in 2015 and increases 6.2% (nissan-global, 2015). Nissan
wants to reduce cost, they do not focus on the administrative process because the Administrative
expense per total revenues rate is 8.62%, it is not high, but in the automobile industry, this cost is
very important because it also impacts the quality of the product. Because Nissan does not focus
on administrative process, they made the mistake in the operation process, so in 2015 Nissan
must recall 3.53 million products worldwide (Taboola, 2016). It not only impact to the profit of
Nissan, but it also effects to the image of Nissan in customer.
Finally, employees are the most important factor in Nissan, so Nissan always try to
keep their employee work in a company in the long term, so the employee turn-over rate in
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Nissan is low, it only 4.3% per year. Because they usually train their employee to help them work
better such as in one year one employee in Nissan spend 19.4 hours training, it is good things for
Nissan in future, because these employees give Nissan many good ideas for Nissan to improve
and develop the company. Moreover, the trainee satisfaction in Nissan over 4.2%, it means
Nissan has many motivation activities to keep the employee in the company. Besides, Nissan
also wants to meet the strict requirement of the customer, so Nissan invest a lot of money in
Research and Development (R&D) department, which is 506.1 billion of yen; this is the best
investment for Nissan to help them develop in future.
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SWOT analysis
After analysis internal and external factor which impact to the strategy of Nissan, the author use
SWOT analysis to show the overall picture of current strategy of Nissan to identify the strengths,
weakness, opportunities and threats.
Strengths
Nissan Motor Company is a global company, so their brand name is the advantages for Nissan
to expand their company in the new market.
According to BSC 2015, Nissan has very strong finance, so Nissan always has enough money
to spend for operation activities as well as invest many new project and industry.
Nissan has Cost Controlling Capacity which is very good, it makes company can reduce the
cost of the product. From that Nissan can set-up their product at the lower price than another
competitor.
From the BSC 2015, Nissan has a strong skilled workforce; it has 14,007 skilled employees
worldwide. This is an important factor of Nissan because this workforce not only supports
Nissan produce the product with the good performance, but they also give the good ideas for
Nissan develop the company in future.
Nissan has well in R&D process, so Nissan is easy to make the product special than their
competitor and get more competitive advantages for Nissan product.
Weakness
Nissan lack luxury products, it makes Nissan less attracts the customer. Although Nissan
produces the sports cars, they do not focus on the luxury cars, so they do not get more profit
from their cars.
Nissan also lacks of internal process, it mean Nissan does not more focus on the administrative
their products. Therefore, Nissan has many error products which make Nissan must recall them
to fix. It will impact to Nissan about profit as well as customer image.
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Opportunities
The automobile is a big market with the high profit, so Nissan has many opportunities to make
the profit. Besides, the growth of this industry increases year by year, so Nissan has many
opportunities to develop in this industry.
The economic development of some countries such as Vietnam, Singapore, etc. makes Nissan is
easy to expand the market in the new market.
Threats
The fierce competition from rivals such as Toyota, Hyundai, Tata and so on which Nissan has
to have plans to defeat them and become the leading company.
The regulation of each country is different, so Nissan needs to research carefully before
entering the new country to ensure they run and develop the company in this country.
Nowadays, customers have the high requirement of the vehicle, so Nissan needs to research
and develop their product which can meet the requirement of the customer.
Development of substitutes product is a big problem for Nissan, because of substitutes products
more and more convenience, so the customer may choose the substitutes product, it makes
Nissan do not sell their product. So Nissan needs to have plans to make their product more
attractive.
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RECOMMENDATION
From the result in SWOT analysis, the report shows that although Nissan is quite success with
the current strategy, there are many problems which impact to internal and external environment
of Nissan. Therefore, Nissan need to change their current strategy to adapt the change of market
and customer and so the report gives some recommendations to support Nissan achieve their
objective and goals.
Firstly, because Nissan is a global brand name, so they can expand company many developing
and developed countries like China, Singapore, Malaysia, etc. From that, they can be easy to
increase their market share worldwide and avoid some big competitors like Toyota. With the
strong finance, Nissan can apply Horizontal integration strategy; it means Nissan can use
their cash to buy their competitor to expand the market. Nissan has the strong skilled workforce
and good R&D process, so they can use them to develop many new products with high value and
reasonable price to attract more customers.
Secondly, Nissan needs to add more value into their product to attract more customer especial
high-class customers, because they are the main target of Nissan in future. Moreover, Nissan also
makes their differentiation products with the competitors and do not more focus on the
prices, because nowadays, customer wants to have the products with high quality and reasonable
prices. Besides, Nissan not only focuses on the R&D process but they also more focus on the
internal process to ensure all products which meet the standard of Nissan and do not have any
error products. From that, Nissan will attract more customers and build the good brand name in
customer image.
Finally, the demand of customer about vehicle more and more go up, so there are many
competitors enter into the automobile industry, so Nissan needs to have the good plans to face
with them. Besides, Nissan also control their R&D process well to make more diversity products
which can attract more customers and make Nissan become leading company in the automobile
industry. Moreover, Nissan can expand their company into many industries by applying
Related Diversification and Unrelated diversification strategy such as open new business in
the hotel, electronic and so on.
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CONCLUSION
In the report, we can see that although Nissan success with the cost-leadership strategy such as
reducing cost, set-up low price, etc. it does not make Nissan become the leading of industry.
After the report, Nissan should consider about the value of their product to attract more
customer. Moreover, Nissan must use their strength factors to develop their company and
improve their weakness. Besides, Nissan needs to use their opportunities to develop the company
in future and prevent the threats from the external environment. In addition, the author also give
some recommendation for Nissan base on SWOT analysis, it support Nissan develop company in
future.
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References
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APPENDIX
Appendix 1
Financial Perspective
It looks at the financial performance of the organization to know the ability to make a profit of
the organization. To measure, the manager considers the revenue, profit is an important goal, the
profitability indicator of capital and assets peaked.
Customer Perspective
It more focus on the customer satisfaction and the benefit of customer. From that, company
knows the service or product of company meet the requirement of customer and then they will
give the good plan to improve the product or service of company.
Internal Process Perspective.
The model emphasizes administrators must know how to exploit and use the power and
intelligence of personnel, scientific initiatives in our production creates high-quality products;
Learning and Growth Perspective
The model emphasizes the management and the entire staffs, employees often have to learn in
order to improve the level of expertise and exchange of practical experience in order to help
enterprises achieve the objectives of the model.
Appendix 2
For Financial Perspective
Net profit before interest , tax preference dividend
The return on asset=
*100=
Capital on employees ( Total capital )
589561
10,168,532
Return on Sales=
589561
Net income (before taxinterst)
100 =
11375207 *100= 5.18% (nissanSales
global, 2015)
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Cash and cash equivalents at end of the period= 802,612 millions of yen (nissan-global, 2015).
For customer perspective
Market share of Nissan in 2015 is 5.3% (statista, 2014)
Net sales in 2016 are 11375207 millions of yen (nissan-global, 2015)
Advertising expense are 289098 millions of yen (nissan-global, 2015)
For Internal process perspective
Administrative expense/total revenues=980340/11375207*100=8.62% (nissan-global, 2015)
Production capabilities are 4688344 products (nissan-global, 2015)
Recall products are 3.53 millions of products (Taboola, 2016)
Learning and Growth perspective
R&D expenditure is 506.1 billion of yen (nissan-global, 2015)
Skilled employees are 14,007 employees (nissan-global, 2015)
Employee turnover rate is 4.3 % (nissan-global, 2015)
Training hours per employee is 19.4 hours/ employee (nissan-global, 2015)
Trainee satisfaction is over 4.2 hours (nissan-global, 2015)
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