The Making of a Global Alliance

Claudia Stevian Edwin B. Indrawan Hermin Sirait Nina Fasichach Putu Mukunda P. Rinda Wulandary

Introduction
Renault
Founded 1898 Cooperation with Volvo 1990 Alliance with Nissan 1999

Nissan

Founded 1911 Financial distress 1998

Alliance with Renault 1999

By 1999, super competitive car manufacturers Globalization internationalization

Saturation of certain geographic areas for production and distribution Alliances with Nissan Joint Venture (Agreement, 27 March 1999)

Introduction
Joint Venture Purposes: The Success Leader in International Market By sharing 2 cultures & experiences

Renaults Expert in : Excellent Cost Control Formalized Global Strategy Innovative Style

Nissans Expert in : Quality Control, R&D Programmes, & Technology

Problem Statement
Did Renault have sufficient credibility to face

not just the industrial challenge but also the

financial and managerial challenge at

Nissan?

Analyze
Strategic Alliance

Definition
Co-operation agreement among two or more independen firms to work together towards common objectives Companies in a strategic alliance do not form a new identity to reach their aims but cooperate while remaining apart and distinct

Renault -Nissan alliance, on 27 March 1999

Aim of the alliance

Two principles
Developing all potential synergies: combining the strengths to deliver win-win results Preserving each companys autonomy and respecting each corporate and brand identities

Three objectives
Quality, value products & services in each region and market segment Technologies in engines, electronics and the environment Operating profit

Nissans problems before the alliance

Nissans problems before the alliance company was falling apart $ 20 billion in debt The reasons of the problems Recession in early 90s in Japan There was complacency and a lack of urgency in the culture There was no cross-functional and cross-regional communication 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 Sticking in the Keiretsu model

Renaults problems before the alliance

Renaults problems before the alliance Main source of revenue - small to medium size cars in Europe 85 % of sales in Western Europe -> go international

Problems

Globalization Adapted the culture:

Communication Organization Style (Keiretsu)

Financial Problem in Nissan Vehicle Design

The objectives of the alliance

Key success factors of the alliance

Quality between the relationships among the managers and engineers of Renault and Nissan Business experience Technical skills Core values:
Balanced relations between the two companies and the development of strong identities for each of the brands

Other factors:
Alliance charter Capital contributions and equity participations Management structure and exchange of personnel

Goals Achieved by the Alliance

Third largest global automaker (based on sales for the year 2008)
Global market share of 9% (by volume)

Significant presence in major world markets (United States, Europe, Japan, China, India, Russia

Conclusion