Nissan case

1) Why was Carlos Ghosn best

suited for
the task of reviving Nissan

Experience
multicultural academic background
successful turnaround implemented at Michelin and Renault
international background
Personality
Great Motivator pushed employees to their limits by getting in the surface the most
aggressive ideas and implemented an incentive bonus system rather than the old
fashioned seniority-based system
Natural leader in order to motivate the employees and to show his commitment to the
plan he promised he would resign if the project was not successful
Good communicator he was able to transfer his vision to his colleagues but he was also
able to listen suggestions from all people despite their position in the firm
Realist he was very commited to the plan, he focused on results and implemented the
ideas as quickly as possible
Culture his lack of cultural descendace resulted in not being influenced by other cultures
and while he respected them he could ignore them when tough decisions needed to be
made
As he colleagues said: He is not Japanese clearly. But he is not Brazilian or French,either.
He is a leader. If his personality reflected a strong nationality, he might have not been very
succesfull.

2) What distinct phases do you

see in
the process used by Carlos Ghosn
Observation/Diagnosis phase
In the beginning Carlos Ghosn needed to find the actual roots of the problems and
the only way to do it was by going very deep down in the companys structure to
identify the problems
After seeing some of the problems by himself he created the CFT (cross-functionalteams) to have a structured way of identified the problems
Then the CFTs had to report problems and provide aggressive solutions to the
problem
Implementation phase
After the problems were identified and solutions were proposed, the best ideas were
sorted out and then selected and implemented by the management team
The goals of the implementation phase were to
i.
Increase sales
ii.
Reduce costs
iii.
Reduce debt
. Those goals were achieved by the creation of the 3-3-3 programme to reduce cost,
the change in suppliers relationships, the closing of plants, the sale of keiretsu
affiliates, the relationship with dealerships and the employees salary
. Evaluation of NRP/Post-revival phase
. Synergy creation with Renault through the Global Alliance Committee
. Establishment of CCT (cross-company-teams) to overview collaboration between the
two companies

3)A The elements of the cost

reduction strategy: Structural cost drivers
Scale
Economies of scale generated by the reduction of suppliers, merge
small and inefficient dealerships into larger ones, joint purchasing
strategy with Renault.
Scope
Centralizing the treasury functions at a global level (relationship
with banks), creation of centralized purchase center, reduction of
participation in affiliated suppliers (Keiretsu).
Complexity
Developing common platforms through the collaboration with
Renault, reduce the number of car models proposed.

3)B Executional Cost Drivers

Work force involvement:
Involved middle managers into decision-making , the seniority reward and
promotion systems by linking them performance
Sales organization Gave dealers annual commitments and targets and
monitored their performance
Capacity utilization:
Reduced 30% capacity in Japan to save $250 million
Benefitied from the alliance with Renault Mexican plants excess
capacity
Plant layout efficiency:
Consolidated production through 5 plants closing
Product configuration:
Development of 28 new car models
New product development approach New design and entrance to new
segments (full-size pickup & SUV in the US)
Exploiting linkages with suppliers:
Benefited from the Renault alliance decreased its purchasing costs (30%
of components were from same suppliers)

4)Relationship between cost

reduction elements

The reduction of the number of suppliers higher volume and increasing

bargaining power reduce purchasing costs.

Alliance with Renault joint purchasing strategy reduce purchasing

costs.
developing common platforms reduction of
production cost.
sharing production capacity (plants) entering new markets.

Centralizing functions (banks)

Modification of employees remuneration reduction of costs (long term

employees)
increased motivation
higher productivity

Plants closing increased productivity of remaining plants lower fixed

costs
Reduction of participation in affiliated suppliers better allocation of

5) Elements specific to the case

Advantages of the strategic alliance with Renault

Nissan decreased its purchasing costs thanks to the alliance 30% of

components came from same suppliers so it benefited from low
purchasing prices for high volume orders; established a 50-50 owned
purchasing organization with Renault to define a joint purchasing strategy

Improved capacity utilization in Mexican plants

Leveraged Renaults strenght to introduce a limited line of vehicles in

Brazil

Integrated its back office operations in Europe with those of Renault