Write 5 page essay on the topic Nissan.Download file to see previous pages... It seemed like no one would be able to revive the company.In 1999 Renault has bought a 37% share of Nissan and announced t

Write 5 page essay on the topic Nissan.

It seemed like no one would be able to revive the company.

In 1999 Renault has bought a 37% share of Nissan and announced the merger between two companies. Investing $5,4 billion in Japanese manufacturer falling quickly into the abyss was taken as more than just unwise by skeptics. Nevertheless, executives of Renault were optimistic about the deal. Carlos Ghosn was sent to head the restructuring of Nissan by Renault in June 1999. "Ghosn slashed costs and laid off employees, but also instituted a sweeping reorganization of the entire company, announced an ambitious slate of new vehicles and promised that if Nissan was not profitable in 2000, he and his entire managerial staff would quit"2. Eventually Ghosn has kept his promise and became a CEO of Nissan in 2000.

Nissan had lost Japanese market share for 27 years in a row, and was operating at 50% capacity, with far too many suppliers, constant goal changes, poor accounting data regarding product line profitability (later found only 4 of 43 models were making a profit), and goals generally lacked quantitative specificity on amount (eg. "Build a quality product"), timing, or priority.3

The company was dying under the traditional Japanese management. ...

innovative and motivating technique. statistical quality control as the key to productive effectiveness. a long planning horizon. and consensus decision making, as a form of participative management4. The Japanese style of management is all about quality. Due to the fact that a lot of American and European companies have successfully implemented Japanese strategies it should be noted that quality is really important when it comes to competitive advantage. Nevertheless, the mistake of Nissan was behind the belief that quality is the only important factor. This mistake was uncovered by Carlos Ghosn.

Traditional Japanese management is based on the collective mentality. Individualism is valued less in Japanese companies than in European. Nissan needed drastic changes and cost reduction above all, however the Japanese mentality interdicted the implementation of extreme methods used by Ghosn. Additionally, overlapping net of distributors, which is also a typical feature of the Japanese management strategies, has played a mean joke to Nissan, forcing its distributors to compete with each other.

Resuming the subsection, it can be concluded that traditional style of management was ineffective in Nissan. It was like dozens of feuding board members were not able to make an agreement.

Changes made by Ghosn

The impact made by Carlos Ghosn on the performance of Nissan was great. This Brazilian manager of Lebanese origin used a simple philosophy: "Be transparent and explain yourself in clear, lucid terms. Do as you say you are going to do. Listen first. then think".5 It may seem really simple, however it helped Ghosn to perform greatly in South and North American divisions of Michelin, and then in Renault and Nissan.