Renault-Nissan Strategic Partnership

Renault-Nissan
Strategic Partnership:
A Multicultural Analysis

Miles BENETASSE
Julien BERNARD
Bruno DE SALINS
Mehdi RAIS
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Renault-Nissan Strategic Partnership

Summary :

- The context of the Strategic alliance3

- Ghosns Leadership and skills in Multicultural

Management..8

- Corporate cultures of the players involved and

cultural challenges encountered..12

- The success of the Strategic Partnership between

Renault and Nissan...17

- Bibliography..23

Renault-Nissan Strategic Partnership

I.

The context of the Strategic alliance

The alliance between Renault and Nissan have been made in March 27, 1999, only four days
before the cloture of the Japanese fiscal year. It has saved Nissan from the inevitable
bankruptcy. As a matter of fact, during the 26 last years, Nissan had lost substantial market
share in Japan: from 34% in 1974 to 17% in 1999. It was the seventh annual deficit out of
eight years and the debt reached twenty billions of euros.
At this moment, Renault just got out of a difficult situation. In 1984, the fiscal year had been
catastrophic and Renault lost 12 billions of francs. The company avoided bankruptcy thank to
a big State intervention and to the working capabilities of the two CEO, Georges Besse and
Raymond Levy. During this period, to get out of the crisis, Renault sold AMC and Jeep to
Chrysler and unfortunately for the Company the alliance project between Renault and the
Swedish giant Volvo failed. In 1996, Renault's cars were too expensive for the market despite
the scenic success and the company lost market share.
In fact the two automobile constructor knew at this period that they were condemned if they
did nothing. They decided to share some core value in order to avoid bankruptcy such as
cooperation, serious work and the passion for the automobile.

The board executive

In this alliance, Renault was the motor and the CEO Louis Schweitzer was in charge of
the project. He launched a new plan "3000 Francs" with the purpose to reduce the cost price
of each vehicle and took a capital decision for the future alliance, to recruit a deputy CEO.
Carlos Ghosn was hired in 1996 and transformed the "3000 Francs plan" into a "20 Billion
plan". Consequently, when the big project started in 1998, Renault was a strong industrial
structure, with a negative debt and thank to the success of the scenic Renault, an increase of
its market share. The company was in good shape.
Renault realized only 15% of its sales out of Europe and looked for an international
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development. It has already a development in Turkey for the Europe market and in Argentina
for the Mercosur market but nothing in America and in Asia. Renault wanted to avoid the US
market and decided to focus on the South Korea and the Japan. Nissan was an interesting
choice because it was big company in difficulty. It had a pressing need to become an
international actor due to the merger of two competitors Daimler and Chrysler in 1998.
In July 1998, Louis Schweitzer and the Japanese CEO Yoshikazu Hanawa met and decided to
start a study on the economic valorisation in the purpose of a strategic partnership between the
two companies. During nine months, this work would mobilize one hundred people of each
company. This work would confirm the incredible complementarity between Renault and
Nissan. Renault specially built middle diesel cars whereas Nissan built all type of fuel cars.
One produce utility car and the other produce pick-up and 4X4. One was selling in Europe,
Latin America and Turkey and the other in Asia and North America. One was a manager
attentive to the marketing and supply chain whereas the other was focused on ethnicity and
quality. The objective of this study was to convince Nissan that a partnership with Renault
would be most reliable and safest in front of the other such as Chrysler and Daimler and Ford.
In March 27, 1999 Nissan chose Renault as partner. The main reason was that this alliance
was based on a high level of confidence, mutual recognition, honesty and respect.

Carlos Ghosns reforms

At the moment of the strategic partnership, Renault hold 36% of the Nissan shares and Louis
Schweitzer appointed as new COO. Carlos Ghosn was chosen to ensure the operational
implementation of the alliance. He chose a short team composed of thirty five people to
exchange some skills between the two companies. He selected some experts with the
instruction to integrate better than possible the new work fields and help the company to find
by hitself the solution to survive. The top level management were mainly composed by
specialists in the domain where Nissan was weak. In counterpart Nissan sent specialists into
Renault to work on the weaknesses of the French company.
The Carlos Ghosns reforms consisted in the application of new Plan named Nissan Revival
Plan . This plan affected all business at Nissan:
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Reduction of production capacity:

In 1999, the level of capacity utilization was reached only 53%, the NRP wanted to reach 82%
in 2002. To achieve this goal, the company intended to turn off three assembly plants and two
powertrains. Moreover they reduced the models of car from 24 to 15.

Staff reduction:
The decrease of production capacity impacted the employees. The NRP planned to reduce
4.000 employees in manufacturing, 6.500 in the Japanese dealer network, and 6.000 in selling
and administrative, 5.000 in spin-off, but increased 500 employees in Research and
Development. Those firing represented 21.000 employees and 14% of the Nissan staff.

Reduction of Purchasing costs:

The alliance between Renault and Nissan represented a huge advantage in term of common
purchasing. In fact, the NRP provided a reduction of purchasing cost by 20%, this objective
was important because the purchasing cost represented 60% of Nissan cost. This measure
reduced the material supplier from 1.145 to 600 partners and the equipment supplier from
6.900 to 3.400. Renault wanted to deal with less suppliers but deal more volume with the
others.

Revamp of dealer network:

The reorganisation of the dealer network was crucial for the Nissan futur. The NRP cut 20%
of the distribution and shut down 10% of the retail outlets. They were too many territorial
dealers and those generated a hyper-competition harmful for the company.

Investment in the future:

The strategy of the NRP was not only to reduce cost but also to increase investment. The
company had to be faithful to his nickname Gijyutsu no Nissan ( Technologically
advanced Nissan ). Nissan wanted to create 22 new cars until 2002 and focus on technical
effort to regain a strong position of innovator and a brand identity.

Clear comment:
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Carlos Ghosn announced during a public speech that the executive management of Nissan
should follow the Nissan Revival Plan: it was a cultural shock for the Japanese that the CEO
held a public announcement of the corporate strategy. The successful result of the NRP is
summarize in the chart below.

N e t S a le s
O p e ra t in g In c o m e
O p e ra t in g M a rg in
N e t In c o m e
T o ta l N e t D e b t
T o ta l A s s e ts

FY1999
5 .9 7 7 B Y
8 2 .6 B Y
1 .4 %
684 BY
1 .3 4 8 B Y
6 .5 4 1 B Y

FY 2003
7 .4 2 9 B Y
829BY
1 1 .2 %
503BY
13BY
7 .8 5 9 B Y

Sources: Nissan annual report

The Success
Despite the anxieties of the Prime Minister Obuchi Keizo regarding to the 21,000 employees
cut, the NRP reached the goal and changed the Japanese business way.
Carlos Ghosn said: The Nissan Revival Plan represented a revolution of sorts for the
Japanese economy. Not for its social effect, which were as moderate as implementation of the
plan would allow but for its effects on standards and practices that had been in place for
decades and were associated with the success of the Japanese economic model ( Ghosn and
Ris, 2005)

During this strategic partnership, all the eyes of the world were focus on Carlos Ghosn and
Nissan. At this time Ghosn promised that if the NRP failed, all executives would resign.
Hopefully the project was a success, and Nissan re-became a wealthy Multi-National
Company and Carlos Ghosn was congratulated by the employees and the media in Japan and
abroad.

Renault-Nissan Strategic Partnership

Carlos Ghosn became a star in Japan and in the business world. He demonstrated that it was
possible to break the traditional way of doing business in Japan and introduced the market
capitalism.
He was represented in a comic book series (Manga), The true story of Carlos Ghosn was
distributed 500 000 books. The new nickname of Carlos Ghons was seven-eleven in
reference of the same name of the Japanese super market because he worked earlier in the
morning and finished late.

Moreover, Carlos Ghosn knew a celebrity beyond the border because in 2001, he was named
Businesssman of the year by Fortune, Top CEO by Automotive News and Executive
of the year by American Industries.

II. Ghosns Leadership and skills in Multicutural

Management
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After analysing multicultural aspects and theories through the Renault-Nissan case, it seems
relevant to get our attention focused on the leadership of Carlos Ghosn, Nissan and Renaults
C.E.O in 2009.
Indeed, this charismatic businessman brought all of his cultural background and his particular
strategic vision of a company into this ambitious project.
Before analysing his multicultural management methods and his particular strategic vision, it
is important to point out Carlos Ghosns cultural background:
-

He was born in Brasil

He is from a family of Lebanese origins
He moved to Lebanon at the age of 6.
He was educated in France at Polytechnique and the Ecole des Mines, two very

prestigious Engineering Schools.

He became general manager of the Michelin Factory in France at the age of 27.
In 1985, he moved to Brasil to serve as COO of Michelin Brazil, in charge of all

operations in South-America.
In 1989, he moved to the United-States and became C.E.O of Michelin North-

America.
As C.E.O, he managed the acquisition of Uniroyal-Goodrich and successfully merged

the American and French cultures of the two companies.

In 1999, he became the first foreign C.E.O of Nissan.

According to these biographic information, we already notice an interesting multicultural

background and integration into Carlos Ghosn life as a student but also as a manager.
The most interesting point of these information as we will focus on the Renault-Nissan case,
is his success on merging Uniroyal-Goodrich and Michelin, when he was CEO of Michelin
North-America.

CEO of Nissan
This directly leads us to analyse his managerial approach through the Renault-Nissan project
and to examine how he could have implemented some of his relevant multicultural
background aspects to conduct a wise strategy.
First of all, according to the case study led by Koji Nakae at Massachusetts Institute of
Technology in 2005: Cultural change: a comparative study of the change efforts of Douglas
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MacArthur and Carlos Ghosn in Japan, The most important feature of his (Carlos Ghosn)
management approach seems to be his emphasis on Cross-Functional Teams .
Indeed, he took the maximum advantage of cross-functional teams by keeping employees
involved in this project by sharing a common goal, common instructions, and a common
deadline.
In this sense, Carlos Ghosn has been very clear, and wanted to get things done quickly and
with a good team spirit, which comes for sure from his North-American experience as CEO of
Michelin North-America.
Carlos Ghosn declared to employees the rule is: no sacred-cows, no taboos, no constraints,
and the deadline is the October 18th
Ghosns cross-functional teams were made up of ten middle-level managers with direct
responsibilities. These people were given rooms to think freely and creatively to find ways
to solve the Nissans problem (Magee, 2003).
This idea of space and creative thinking to solve problems is certainly not a North-American
nor a European way of management.
He might have chosen this functional way from his Middle-East origins, or maybe from his
South-American experience. But this certainly created a kind of destabilisation between the
employees who were certainly not used to such a managing method.
Tsuyoshi Maeya who led a study on this topic in 2004 confirms this suspicion: At first, there
was confusion among members of CFTs. They were at a loss as to what to do and how to do
it. They were not accustomed to doing things in such a fashion .
He was comprehensive with the culture of the company and he knew that his arrival to a very
different country than the ones where he directed companies could be a shock to him as to his
employees. He stated: I was non-Nissan, non-Japanese. I knew that if I tried to dictate
changes from above, the effort could backfire ()
Finally, after being motivated directly by Ghosn himself, the pilots of the CFT got the job
done within the deadline.
About Ghosn sense making, some studies such as Takarabes one, point out the fact that
Ghosn used to soak up the atmosphere at the early stage of his arrival at Nissan. He said
himself: To understand how the company had reached this point, I spent most of spring
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1999 examining Nissan from every angle: inside Japan and outside; in offices, factories and
so on ()
Although he was not a Japanese and didnt have any experience on the field in Japan, he paid
the most attention to establishing Nissans brand identity, which was quite a radical change for
Japanese who were not used to put as much importance on brand identity, and his emphasis on
this aspect brought some freshness to the Japanese business world.
He also implemented a radical change through his press conferences, and more generally, his
public relations management: he used to make long presentations and knew how to involve
Medias and arise their attention.
To illustrate this fact, his speech at the Tokyo Motor Show is a good example as it gathered
many international journalists for a 45 minutes length speech about Nissans future objectives,
problems, and how to solve them. It was a striking event for the Japanese media because
generally, Japanese CEO never made such long public presentations.
To put it in a nutshell, he wanted to be so familiar with the company, that he could become
himself a part of the company. This involvement impressed Nissans employees.
Ghosn way of conducting reforms seems to have implemented changes from the bottom-up,
without preconceptions, or master plans.
He tried to find solutions amongst employees and focused on commitment of the employees.
His overall behaviour seems to have embedded a new culture into Nissan, and may be a factor
of the firms success under his direction.

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III. Corporate cultures of the players involved

and cultural challenges encountered
The aim of this part is to highlight the main points of corporate cultures of both companies,
but also to insist on the importance for a country which want to enter a market in a foreign
country to understand and analyze it.
In our case, Renault which acquired part of Nissan in 1999, had to be aware of all these
components in Japan in order to be successful and compete well with autochthon and
international companies.
In fact, it is through Hofstede theories on cultures and organizations that we draw the
theoretical framework of our analysis. We also added some cultural dimensions that seemed
relevant to us.
A fundamental thing that need to be said is that this framework includes most of the
characteristics of national cultures. We decided to distinguish 7 major cultural differences that
have a strong influence over the strategic partnership Renault-Nissan:
1)Individualism Vs Collectivism
2)Power distance
3) Time perception and Uncertainty Avoidance
4)Religion (Truth Vs Virtue)
5)Masculinity (Achievement orientation) Vs Feminity (quality of life)
6)Decision-making process
7)Enterprise loyalty

Major cultural differences in the Renault-Nissan Strategic Partnership:

1) Individualism versus Collectivism:
Individualism refers to societies where the individual interests prevail over the interests of the
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group. The French company Renault as in most western countries has an individualistic
culture so far as each person is concerned and cares about himself. What is important is one's
independence and individuality in these societies.
Whereas the Japanese company Nissan developed a strong collective concept. Indeed, Nissan
as well as the Japanese society believe in the power of a group: it is thanks to solidarity and
mutual help of the group that the company can reach its goals and succeed. What is important
is that achievement can be developed only at the group level.
Example: Carlos Ghosn has implemented a new system reward when he arrived at Nissan that
promotes people who reach their objective, according to achievement of goals and
performance. This new policy has an important impact because it will encourage individuals
and encourage initiatives.

2) Low or High power Distance:

Power distance refers to the type of relationship that staff and management have; in other
terms it is all about hierarchy. Even if, there are some distinctions in details, both in France
and Japan, the power distance is high. The levels of hierarchy are known and strictly
respected in both Renault and Nissan. Managers take the important decisions by themselves
and employees just have to obey and follow orders. Besides, we can note that in France the
direct contact between top management and employees is easier than in Japan. Renault
members feel much closer to each other than Nissan members in their daily relationships at
work. In Japan, managers are considered as gods from part of the subordinate employees and
replying to them can be seen as an offense. High hierarchical managers don't usually discuss
and debate with simple employees.
Example: The new system reward set up by Ghosn in Nissan, can create high tensions and
conflicts because older managers can be upset seeing younger managers above them. What
determinates the hierarchy for Japanese is the time spent in the company and traditions
matters. However, even if there is a high a risk of conflicts and rebellion Ghosn top
management within Nissan tried to implement a certain kind of mentality, everyone should be
involved more when it comes to take decisions and will be allowed to speak with top
management directly. Ghosn strived to make people standing and supporting each other no
matter if they are managers or employees: "everyone is in the same basket", he said.

3) Time perception and uncertainty avoidance:

Depending on the culture, people have different attitudes toward risks and uncertainty. The
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way of managing uncertainty and dealing with risks are closely related to time perception. In
France, for Renault, time is an economic value and considered as a money. It is a scarce
resource because of their time perception: "Time is money" for most western countries. They
take more risks in order to get high short term profits. France as well as most western
countries tend to have a linear perception of time which does not reveal correlation with the
past and the future. We can say that Renault is short term oriented compared to Nissan.
Indeed, for Japanese people time is perceived as continuous so far as a Japanese in so far as
for us "the present is a temporal period that links the region of the past with the world of
future" (Makimono time pattern). For Nissan, time is not a scarce resource and their objective
is to study well all the macro-economical and environmental factors before taking an
important decision in order to avoid risks. They tend to have a long term oriented thinking
because they rather prefer to make big investments to get profits in a longer economic
perspective.
Example: Carlos Ghosn had established a survival plan to make Nissan's recovery as soon as
possible focusing on short term profit. Time orientation had to be changed: Nissan had to be
run in a short term perspective if the company wanted to survive in a fast changing
environment.

4) Religion (Truth Vs Virtue):

In western countries and particularly in France, the monotheist religions (Judaism,
Christianity and Islam), which have an important impact on the daily life of citizens are based
on a concept of truth. There exist a true, for example, when statement A is true and B is its
opposite then B is false. This is typically an analytical thinking and that is what is happening
in the head of members of the Renault Company who have for most of them a monotheist
religion and reason at the short term level.
Whereas in Asian religions and in Japan (Confucianism, Shintoism, Buddhism...), people
hypothesize that there exist a true. They are more based on the concept of virtue. For example
if A is true and B is its opposite, then it does not mean that B is false; B can also be true. This
is typically a synthetic thinking and that is what is happening in the head of members of
Nissan Company who reason at the long term level. They are not concerned about what is
wrong and what is true but what matters for them is the complementarity and the coordination
that work. This is shown by the yin and the yang in the Chinese philosophy, the duality is seen
as a complementarity much more than opposition. For them it is not difficult to apply Western
technologies in their company.
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Example: What is important for Renault in this issue of religion is that Japanese people within
Nissan must take important decisions. If Nissan employees have to make a choice between A
and B, (A and B being opposites for western religions), they must decide as fast as possible
and pursue its logic until the end. They don't have to make compromises and choose what is
the best in choice A and the best in choice B especially to reach short term profits.

5) Masculinity (Achievement orientation) Vs Feminity (quality of life

orientation):
Nowadays, in France the society tends to be equal between male and female. In fact, within
Renault, there is almost no discrimination between male and female workers. In the French
company, managers employees and workers are considered and judged according to their
efficiency and performance rather than by their gender. They favored equality at work and in
life. Caring for others in these societies are favored.
However, Japanese society is typically a masculine one. Males occupy the important positions
(manager, director...) in companies and they are not used to collaborate and communicate with
females. In fact assertiveness seems to be predominant in Japan: male employees would not
appreciate to be supervised and managed by a woman. A Japanese woman would encounter
difficulty to have access to important positions at work.
Example: Despite the masculinity conception of the Japanese society, Renault took some
important decisions in order to modify this state of mind, sending women managers to Japan
to collaborate with Nissan. Nathalie Gigandet is one of them. She said that: they (Japanese)
consider me a foreigner but not a women. Hence the communication is relatively easy". In a
way she recognizes that if she were a Japanese woman, communication would not have been
so easily established.

6) Decision-making Process:
Due to a fast changing environment and as we saw it earlier, with the concept of: "time is
money" Renault is used to make decisions quickly. This can be risky but it can also create a
surprise effect, effect that competitors had not expected and is crucial for the company. In
Japanese minds, people take their time, because a general consensus must be reached to
confirm a decision. Initiatives should be shared before their implementation and decisions
take much longer than in France.
Example: Renault also tried to find a solution within Nissan management in the decision
making process that was based on a consensus and take so much time. The number of
members of the Nissan's board were 37 before the alliance. And that what caused its failure in
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the past. When Carlos Ghosn arrived, it was a time wasted because of bureaucracy. That is
why Nissan transformed with a board of 10 members that enables the company to take fast
and thoughtful decisions.

7) Enterprise loyalty:
French in Renault seem to be less loyal to their company because they have a more
individualistic behavior than Japanese within Nissan. French people are looking constantly for
others job in order to satisfy their own interest. After all when the opportunity to improve their
wages and consequently their living conditions comes, French don't hesitate to grab it.
Whereas Japanese workers who are very loyal to their companies expect to remain in the
same enterprise for a lifelong period in exchange of lifelong job security. That is what we call
the concept of "Shushin koyo". It is the practice to hire workers directly out of school and
retaining them until the mandatory retirement age".
Example: An example of the application of the "life time employment system" is the closing
in 1995 of the plant at Zama. People who worked there have been transferred to the plant at
Kyushu because the priority for Nissan is to guarantee this principle no matter what happens.
In a larger extent labor unions laws in Japan forbid layoff. Although Japanese traditions on
employment are very important, Ghosn removed with principle saying that Japanese can not
be stuck by this old principle and had to adapt to nowadays management in order to stay
powerful in the automotive industry.

IV. The success of the Strategic Partnership

between Renault and Nissan

The partnership made between Renault and Nissan has created a successful global Company
in the Automotive Industry, the fourth company in the sector regarding volume of sales 8, 3
million cars sold in 2013-, selling more than 10% of all cars manufactured in the World. With
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450,000 employees, it is also a giant company, controlling also eight major brands. With
regard to the beginning of this strategic partnership, we can say that, more than ten years after
the beginning of the partnership, it has been a success. But how did it happen?
First of all, the man behind the partnership, Carlos Ghosn, has played a key role in this
success story by being able to conciliate the best practices coming from the two brands, in
constant effort to create a synergy between Renault and Nissan, thus shaping a common goal
vision. Second of all, the Partnership is in constant re-shaping, and good practicing from the
two partners are always studied and reinvested in order to have one company's success
profitable for the other side.

How Carlos Ghosn has changed Nissan?

Before Ghosn, Nissan was a typical Big Japanese company, with both assets and liabilities.
Nissan could not reform itself for several factors: first of all, executives and managers were
too tied to their personal relationship with their suppliers and dealers; moreover, they didn't
communicate with executives and managers of other departments. This attitude is known in
Japanese as Shigarami . Another basic assumption of Nissan, known as Okami-Ishiki ,
was the reliance toward the Japanese Government and the main bank, and on a more global
sense, relying too much on higher authority. The third basic assumption, called OyakataHinomaru , referred to a very bureaucratic way of doing business, in coincidence with
certitude amongst Nissan staff that the Company was too big to fail . And the last
assumption, was the necessity for the company to be present in all sectors were competitors
were, even when there was no profitability in it, or Oitsuke-Oikose .
The arrival of Ghosn has helped to move those basic assumptions that were damaging
Nissan's competitivity and management.

Toward the Shigarami assumption, Ghosn has drastically reduced commitment of

executives, and thus of Nissan, to non-essential suppliers and dealers. For instance, he
reduced the amount of steel purchased by Nissan to NKK, a member of the same
Keiretsu group than Nissan, from 25% of the whole steel purchased to less than 10%,
in order to reduce expenses, despite the traditional Japanese way of doing business.

Regarding the Okami-Ishiki , or reliance to authority assumption, Ghosn hasn't

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hesitated to shut down five domestic plant, despite Government's will, in order to
make Nissan more profitable. Moreover, by reducing Nissan's automotive debts, he
helped the Group to become less dependent on banks.

The Oyakata-Hinomaru assumption was one of its major challenges. Most of

Nissan's employees couldn't imagine to work in cooperation with foreigners, and were
even more reluctant to have a CEO that would be a foreigner. Moreover, the Ghosn's
nickname, Le cost-killer , was for them a threat: they were worried of seeing their
identity destroyed in the western's management way. But Ghosn's appearance, his
humility and assurance that the partnership wouldnt be a simple merger, were Nissan
would be absorbed by Renault, helped them to build a sense of urgency, thus
becoming more adaptive and reactive to changes.

Finally, the Oitsuke-Oikose , has also change thanks to Ghosn. Shortly after his
arrival, he convinced Nissan's executive not to pursue market shares in sectors that
were not profitable to the firm. In fact, by insisting both about brand identity and
attractive products such as the Z car-, Ghosn insisted to focusing on the value of
products, and not on increasing market shares.

The new basic assumptions

Since Ghosn' reforms, Nissan has changed its assumptions, in order to fulfil better to the
realities of a globalized market.
The priority was to find a common language for the two organization. Not surprisingly, the
English, the lingua franca of the business world, was chosen to answer to this task. As Carlos
Ghosn said himself: Weve made English an everyday language. It was a management
decisionwe gave ourselves a tool to help us communicate with people who work for the
same Company but come from different cultures.
As a result of this switch of language for business purpose, we can add that the corporate
language of Nissan has also known some drastic changes. In fact, the schemes of
communication have also changed a lot inside the company, and employees of the firm are
encouraged to communicate more directly than it is often accepted in traditional Japanese
cultural settings. The results are here: communication is more direct between staff, helping
reducing ambiguity and increasing the definition of responsibility for project management for
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instance.
As a result of this change, we may identify five new basic assumptions that shape now
Nissans management model.

Commitment: Following Ghosn's pace, commitment is now a key word inside Nissan,
in the day-to-day management. Mister Matsumara Norio, executive of Nissan, declares
for instance: In the past, we tried to put off the problem. Today, we are encouraging
everyone to put forth the problem immediately so we can solve it. This commitment,
which initially interferes with Japanese cultural background, is now shaping Nissan.

A clearer communication process: As mentioned above, it is the use of English that

brought this change. It is finally carried by the clear sense of responsibility, and vision
of job range. Coming from the principles Ghosn came out with during the creation of
Nissan-Renault Partnership, this led successfully to more transparency, and breaking
the ice between department, with better communication and collaboration.

Respect for other cultures: As a result of the partnership between two major
automotive companies, the biggest challenge was to implement a mutual respect
between two corporate cultures. This respect was succeeded by the happening of
multicultural working environment, where such a respect was essential. The fact that
both French and Japanese managers came in each other's society to work and give
sense to this new multicultural atmosphere.

The clear identity of both companies: As wanted when the partnership was constituted,
the Renault-Nissan alliance was concluded with the clear intention to respect and
maintain both company's identity, while creating in the same time all possible
synergies. And a positive result of this alliance for Nissan, as already mentioned, was a
shift in its strategy, from constantly trying to increase its market share to focus on
brand identity, in order to enhance Nissan's attractiveness for its customers.

The sense of urgency: This was probably the problem that urged Nissan's changes: the
necessity to adopt inside company's business model, by having employees excited and
happy about their work. Motivating employees was the key success factor for Nissan's
necessary reform, and this was maybe the most important change brought by Carlos
Ghosn.

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How both companies have been impacted by each others good practices?
The good practices of Nissan applied at Renault:
The strategic partnership has allowed Renault to increment two good practices coming from
the Nissan's side: manufacturing and quality processes.
In terms of manufacturing, changes have been very rapidly accepted by employees of Renault,
mainly because there was no competition between the two companies. Thus, there has been a
lot of technological transfers between Nissan and Renault. Those transfers notary helped the
Partnership to become the first automotive company in the sector of zero-emission vehicles
for instance.
In terms of quality, changes were implemented in two times. There was first a refusal from the
employees of Renault, at the time were Carlos Ghosn was appointed at Nissan, partly due to a
bad management from the new Director of the quality. During his three years, quality at
Renault has been constantly decreasing, as shown by all indicators at the time. This led to a
strong crisis and to the appointment of a new Director, Jean-Louis Ricaud, which came to
Japan and brought back with him all the good practices he had learnt over there -including
stronger quality analysis for instance.
Another Director, Japanese this time, was then appointed, a situation that led to important
improvement in the field of quality for Renault, in both fields of management and
manufacturing -in terms of motor engineering for instance.

Finally, Carlos Ghosn also brought back in 2005 some implementation he had learnt in
Japan. He created for instance the function of Regional Directors they are five now-,
in order to have Renault's senior management closer to the field, an innovation that
was not at all in Renault's corporate culture. Thus, senior management have moved
closer to customers and profits over the past years. Management by profits as well as
focus upon customers need were also implemented at this time by Carlos Ghosn.

The good practices of Renault applied at Nissan

The strategic partnership has also fed Nissan with good practices:

The concept of stretch target , that consists in making the difference between
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realistic and unrealistic objectives,

The strong planification, both in the fields of managements and production,

Employees empowerment, that helps employees taking decisions and assuming

responsibility for them. This point feeds the sense of commitment and urgency at
Nissan. But the employees are not left alone, and this stress upon empowerment is part
of the global structure, in order to avoid staff feeling stressed by those constant
decision making process.

The concept of learning company, which means that the company is constantly
learning and implementing processes that are found to be interesting and applicable to
Nissan.

The Performance driven management that seeks profitability in all sectors, and is
tied to a constant benchmark of sectors and activities, in order to develop better
strategies.

This new management philosophy is expressed by Nissan with its Management Institute, open
to corporate staff as well as people from outside the company. By seminars, it seeks to
develop a sense of transversal cooperation and multicultural collaboration, in order to help
people tackle new challenges of a globalized market.

The appearance of a new type of management:

But the strategic partnership has also brought types of management that were new to
both firms. This is for instance the case of the management by profit, which was not
applied, by Renault nor Nissan. This meant for those two companies a constant
comparison between constant and variable cost on the one hand, and the real prices of
transaction on the other hand, thus countries by countries as well as cars by cars. This
management has the interest to re-put customers and profits in the heart of RenaultNissans business models, by returning its corporate management and culture: one
starts by interrogating the sales, and following this path until the conception, in order
to analyse in which area it is possible to generate profits. This fact has led to modify
profoundly the two corporate cultures, by adding to the technical and commercial cult
of two old giants of the automotive industry, the new paradigm of profitability.

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The consequence is interesting: the two companies, that have made an alliance based
on the principles of respecting each others corporate cultures, have finally seen their
own roots changed by the new paradigms that had to accept in order to adapt to the
sector. This is not made without any problems, because among employees many
people are interrogating about the possible loss of values. The cultural diversity
brought by the partnership is a key asset for Renault as well as for Nissan, but it is a
burning point not to see this diversity destroyed by old habits, and it is more than ever
the challenge for Renault and Nissan.

Bibliography
http://www.nissannews.com/site_library/coporate/news/1999speeches/2_25_2000.shtml (Jan.
12, 2005)
http://dspace.mit.edu/bitstream/handle/1721.1/32114/63201635.pdf : Koji Nakae MITs MBA
thesis 2005
http://www.tokyo-motorshow.com/show/history/history-01.html, Mar. 19, 2005
Nissan's annual report 2003
http://www.nissan-global.com/EN/
http://www.nissan-global.com/EN/IR/MESSAGE/index.html
The true story of Carlos Gohsn (Togashi;2002)
Cultural change: A comparative study of the change efforts of Douglas Macarthur and Carlos
Gohsn in Japan. by Koji Nakae (June 2005)
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www.cairn.info
gupea.ub.gu.se

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