1. The Challenge of Sustaining Strategic
Change

2. Criticism All Around
“….marriage of desperation for both parties…”
-Business Week
“….two mules don’t make a race horse…”
-CEO , Chrysler

3. History
Alliance with Nissan
Founded 1898 1999
Renault
Cooperation with
Volvo 1990
Alliance with
Founded 1911 Renault 1999
Nissan
Financial distress
1990
•Increasing competition in the automobile Industry by the year 1999
•Saturated Markets
•Globalization

4. Nissan Before Alliance
 $ 20 billion in debt
 Recession in early 90’s in Japan
 There was complacency and a lack of urgency in the culture
 The design of the cars was out of touch with the market
 A high degree of bureaucracy
 There was an emphasis on engineering culture rather than
managerial culture and promotions

5. Renault Before alliance
 Main source of revenue - small to medium size cars in Europe
 Lack of presence in the international market
 85 % of sales in Western Europe
 Limited Product line
 Bland styling and poor product quality

6. Internal Analysis
Strengths Renault Weakness Nissan
Less debt burden Recurring Losses
Lack of creativity and renewal of its
Highly innovative products
Products
Overall management practices Poor management capacity
Supplier relationships in
Privileged relationship with suppliers
mismatch with a globalization strategy
Capacity Management Slow to adapt change
Strengths Nissan Weakness Renault
Quality Products Too small to compete at world stage
High technological acumen Presence only in European market

7. Opportunities
Country China Malaysia Singapore Hong Kong Japan
Workplace
Cost of labor
Politic al
Stability
Taxes
Unemployment
Very Favorable Favorable unfavorable

8. Industry Dynamics
Buyer
power
High
Threat of Rivalry
Supplier
substitut among
power
es competitors Medium
Medium High
Threat of
new
entrants
Low

9. Strategic Alliance
 Agreement for cooperation among two or more firms
 Companies do not form a new identity
 Co-operate while remaining apart and distinct
The alliance between Renault and Nissan was signed on 27th
of March, 1999

10. Objectives of the Alliance
 Developing all potential synergies by combining the strengths
 Providing global reach
 Preserving each company’s autonomy and respecting their own
corporate and brand identities
 Improving quality and value of products
 Benefit from each other's key technologies

11. Individual Interests
Renault Nissan

12. Current Business Model
 Common platform sharing
 Joint research projects and exchange of components
 Further expansion in Europe and growth in Asia
 To draw on the strengths of complementary expertise
 in sales and technology
 in order to reduce costs
 In order to enhance performance

13. Goals Achieved by the Alliance
 Third largest global automaker
 Global market share of 9% (by volume)
 Significant presence in major world markets (United States,
Europe, Japan, China, India, Russia)