Strategy and Implementation for Nissan-Renault Alliance

2021-05-17 22:56:36
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The Renault-Nissan Alliance is a strategic partnership that brings together the two automobile companies with Renault based in Paris, France and Nissan operating from Yokohama in Japan (Lim, 2012). This alliance sells one in every ten cars that are sold all over the world. A strategic partnership/alliance is that cooperation agrement that is intended to benefit the two or more companies that form part of the alliance. According to Gill (2012), these benefits could be competitive advantages, research and development, as well as the minority equity participation. Strategic alliance has also been defined as that collaboration that involves two or more forms and that seeks to enjoy mutual benefits while still maintaining each companys autonomy in the course of their partnership. However, in the view of Lim (2012), not all alliances are strategic. In this regard, a strategic alliance is that which has been designed in a manner that enables the partners to pursue whatever they have agreed upon in the making of the decisions at the corporate level of the business strategies. Indeed, the objectives of the alliance are to achieve what they have agreed upon collectively by still maintaining their autonomy and processes.

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Nissan and Renault companies have been strategic partners for quite some time since they agreed to form the partnership in 1999. Since then, according to Daidj (2011), the Nissan- Renault alliance has over 450,000 employees, which have control over their nine major brands; the major two brands- Nissan and Renault, Renault Samsung Motors, Datsun, Dacia, Venucia, Infiniti, Lada, and Mitsubishi Motors (Wells & Nieuwenhuis, 2012). Compared to the other performers in the market, the company was in top five in terms of sales, selling over eight million cars worldwide. Specifically, Toyota, Volkswagen, and General Motors had surpassed the company. The company enjoys leadership in the automobile market in terms of the sale of all-electric vehicles having global sales of over 300,000 in 2015 (Daidj, 2011). Being in s strategic alliance, the partnership faces a variety of key issues that are at play in either the internal procedures or processes of the company or the external issues that affect the automobile industry as a whole. This paper will focus on those factors. Additionally, the current business model of the alliance will be deconstructed and comments made on the extent to which the model facilitates or hiders the current strategy of the partnership. More importantly, the opportunities that the alliance should be pursuing as well as the other strategies that the partnership should consider will be discussed. Finally, the implementation issues that are likely to arise in the implementation of the firms strategy as well as the contingency plans that would be appropriate for the issues will form part of this discussion.

Key Issues That Are At Play within and External to the Alliance

The partnership between Nissan and Renault faces factors that affect the firms operations from within (internal environmental factors) and those that affect the business externally (external business environmental factors). These issues have affected the way the alliance contacts its business and indeed, its profitability and sales. One of the internal factors that have been at play is the internal wrangles and mistrust that has existent in the two companies. In this regard, according to Weiss (2011), Nissan was concerned with the fact that the French government had shares in Renault and, therefore, had some voting rights, which were very high. Specifically, the interference of the French government in the management of Renault was a major concern for Nissan. As such, a meeting was called which was aimed at ironing out those issues. This mistrust and government interference was threatening to tear apart the alliance (Weiss, 2011). However, the French governments voting rights were capped to 17.9%, making their involvement with the operations of Renault minimal. Indeed, this was one of the issues that the company faces even up to date. In this regard, the wrangles were affecting the smooth operations of the company.

The issue of autonomy affects the way that the alliance operates. This is the second internal issues that Nissan-Renault alliance is facing and which is greatly affecting their strategy. In this regard, despite there being a partnership, Kumar & Das (2007) opines that each company has autonomy and the two are only intertwined when it comes to some aspects including research and development. In the agreement that the two made before they collaborated, it was greed that the activity of each company would be for the benefit of one another. However, according to Agrawal & Chen (2011), this is not the case as the two companies have separate managements who only come together to strategize but make their sales independently. Their shared product portfolio is great for their alliance; however, each management structure intends to see that their part of the company benefits from the sales (Kumar & Das, 2007). As such, a merger would have been more appropriate, as the synergies that would be brought together would not be wasted. Additionally, the two would not have any management wrangles and motives. Specifically, they would have collective strategies and processes that would be for the benefit of the alliance.

The last key internal issue that Renault-Nissan alliance has faced is the high investments that the alliance has channeled towards research and development. In this regard, the alliance has collaborated with other research centers in order to ensure that they keep developing other areas (Wells & Nieuwenhuis, 2012). Additionally, this has enabled them to improve on the existing brands so that they may be more exciting to the customers. This research and development partnerships have all spend lots of resources, from financial, labor and expertise in order to achieve their objectives of being the leader in research and development of new brands of vehicles (Agrawal & Chen, 2011). Indeed, this issue has hit the companies finances, as it has been core to the brands that the firm has developed over time.

There are some external issues that have not just affected the alliance but also those involved in the automobile industry. Accordinmg to Eberle, Muller & von Helmolt (2012), one of those is the legislations that have been passed and which have increasingly been restrictive on the fuel consumption properties of the vehicles that the citizens of those countries purchase. The concern for global warming and the reduction in the emission of carbon gases- most of which come out of the exhausts, that are released from the vehicles, is an issue that the alliance has grappled with. Most of the markets have passed tough legislations that require vehicles of particular models and mileages to be imported (Eberle, Muller & von Helmolt, 2012). This has negatively affected the already assembled vehicles. Although the company has handled that by developing all-electric models of vehicles, it has still not been enough.

The other external issue that has arisen is that of the hypercompetitive market. Many companies have emerged that deal with the same products and that offer just as good vehicles. Despite the advantage of the brands of the alliance, it has been very competitive considering that other companies such as Toyota, General Motors, among others have also devised ways of ensuring that they remain competitive (Wells & Nieuwenhuis, 2012). To be a step ahead of the rest, the company has engaged in research and development that has enabled it to make new and appealing products. However, the market has remained to be hypercompetitive presenting an enormous challenge for them. Every time that they have come out with new brands of vehicles, their competitors have followed suit while the other incoming companies have also added onto the competition. This has definitely been a nightmare for the company. Indeed, it ranks fourth based on the sales that the alliance makes worldwide.

Deconstruction of the Current Business Model and Comments on the Extent to Which Is Has Facilitated /Hindered the Alliances Current Strategy

The Renault-Nissan form has deployed a strategic alliance model. In their business model, the two companies intend to come together and synergize their strengths on the areas of technology, research and development, and other economies of scale (Kley, Lerch & Dallinger, 2011). Additionally, the model is based on trust, addition of value to their brands as well as commitment to what they engage in. More importantly, equity, fair dealing and profits for both companies are all parts of the business model that was adopted by the two companies in the formation of their partnership (Kley, Lerch & Dallinger, 2011). The mechanisms for close coordination as well as the involvement of each other in the design and production, and the sharing of resources have had several benefits that have accrued. These will be the subject of the following paragraphs.

The business model- that is based on collaboration, cooperation, and the sharing of resources and expertise has greatly benefited the alliance. In this regard, this synergy of the different strengths that each of the two companies has enabled the alliance to be successful in their areas of operation (Rall, 2010). Specifically, according to Rall (2010), the strengths of one of the companies have cancelled out the weaknesses of the other. Additionally, if one of the companies is able to assist in the provision of financial resources, the other provides the expertise that is required. The integration of the two great labor forces has ensured that everything is done accordingly and that the current technology is used in the operations of the alliance. Indeed, this coordination has enabled the two autonomous entities to reason and act together for the profitability of their individual entities.

The other benefit that has accrued out of the model is the development of great products in the area of research and development that has been a key pillar of the alliance. In this regard, the two entities have joined efforts in the areas of research and come up with brands of vehicles that have been liked by a majority of their customers. This has also been the case in their marketing programs, which has been combined such that their brands are advertised in an organized and cooperative manner. Additionally, their retention of autonomy means that each of the two entities can make their own decisions regarding their brands as long as they do not affect the success of the other. More importantly, the strategies that have been deployed in the alliance have ensured that there is continued growth that is based on mutual coordination.

The Opportunities That the Firm Should Be Pursuing and the Other Strategies That the Alliance Might Consider

One of the most important opportunities for the alliance to explore is the availability of new markets across the world. In this regard, the company should consider exploring new markets to increase their sales volumes. Most of the African and Asian countries provide good markets for their products since they are moving from the third world countries to the developing states category (Bohnsack, Pinkse & Kolk, 2014). Additionally, the increasing industrialization in those countries means that they require vehicles that the alliance will be able to provide. Additionally, Bohnsack, Pinkse & Kolk (2014) states that the competitiveness of the market requires that the alliance ensure that it moves a notch higher and becomes highly competitive in every market that it has presence. More importantly, diversifying their...

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