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Renault-Nissan: A Marriage of Desperation Turned Success Story
Renault-Nissan: A Marriage of Desperation Turned Success Story
Within both Renault and Nissan, there were significant issues facing the firms. Renault, a one time ‘losers league’ member, was able to turn itself into a $1.65 billion company. A distinctively French and European car maker, Renault had never run a global operation. At one point, the company sold no cars in the United States and only 2,476 units in Japan, the world’s two largest automotive markets. Nissan, on the other hand, was basically bankrupt prior to the joint venture with Renault. Nissan was losing money and market share continuously and car production had dropped by 600,000 units. The Nissan factories were running at 53% capacity utilization. The company had over $20 billion in debt, which was more comparable to that of a medium-sized developing country than of a large automaker. The marriage of the two companies, including efficiencies, competencies and resources, initially could have been predicted to be an automatic failure. There were cultural differences that the two were forced to work through and were able to do so, despite the challenges.

The most significant problem presented in the Renault-Nissan joint venture was ensuring that it was a successful one. Considering the history of the two firms, there could have been many clashes between the two. With both companies being in an “on the brink of failure” situation it was imperative that they worked together to make the “marriage” between the two work. The fact that the firms approached working together with an open-mind certainly was beneficial in the soon to be success that came out of the venture.

While the problems facing the two firms individually were significant, there were also problems facing them as a joint venture, which came from the baggage that each brought into the alliance. Possible solutions to these problems would be to forgo the possibilities of the joint venture, allowing both to work independently, utilizing their own efficiencies, competencies and resources. The other possible solution would be to work through the differences and history of the two firms, do the necessary SWOT analysis and make a sincere effort to make the joint venture run smooth and successful, despite the complete uncertainty.

If I was CEO of Renault or Nissan and was presented with this situation, I would choose to take the chance and join forces the other firm. There is always a component of risk associated with business decisions and while one may seem riskier than another, taking the easy way out and forgoing the opportunity will always produce a “what-if” result because you never truly know how things may have turned out.

In order to make the most sincere effort to ensure that the venture was successful, I would go through the due diligence process to determine the compatibility of both firms. In addition, I would also perform a SWOT (Strength, Weakness, Opportunity, Threats) analysis to ensure that I know as much as possible about the firm. I would also do as much as possible to full understand the culture as well as the values and integrity of the firm.
The problems that existed within the two firms were simply that each firm was missing a component, which was key, in allowing it to have a competitive advantage. My suggested solution for this would allow the missing component to be compensated for, through the joining of the two forces.

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