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Managing the cultural

issues of merger and


acquisition
The Renault - Nissan
case

Presented by:
Kuldeep Singh
000853425
Nakrit Sisookkham 000847913
Usman Al Amodi
000870400
Shelina Thobani
000882986
Mohammed Suhail 000882429
Mohammed Rahoof 000868794

Criticism all around


. A marriage of desperation for both parties
- Business Week

two mules dont make a race horse


- CEO Chrysler

Nissan before alliance


Recession in japan in early 90s
$20 billion in debt
There was complacency and lack of urgency in
culture
Design of cars was out of touch with the market
A high degree of bureaucracy
There was an emphasis on engineering culture than
managerial culture than promotions

Renault before alliance


Main source of revenue from small and medium size
cars in Europe
Lack of presence in international market
85% sales from western Europe
Limited product line
poor styling and poor product quality
Limited product line

Nissans Struggle
Focus On Production Rather Than Customers
Weak Product Portfolio and lack of sense of urgency

Japanese Management
Keiretsu system / cross-shareholding
Employee advancement based on time spent in
company
Risk avoiding attitude of management.

Japanese Cultural Issues


Consensus decision making
Informal meetings
Promotion for the most
knowledgeable and experience
Finger pointing rather than
acceptance

Major Cultural Differences and challenges between


Renault and Nissan
Main cultural differences between the Japanese and the
French cultures based on the Hofstede center website

Major Cultural Differences and challenges between


Renault and Nissan

Individualism Vs Collectivism
Nissan

Renault

The group as the most efficient

more individualistic culture

instrument, decisions are taken by


consensus
Promotions based on results and objectives achievement, this change in
Nissan aims to increase individualism in a way that facilitates finding new
talents.
Individuals were empowered in decision making process

The new management system in Nissan now encourages individual


initiatives and advancements in contrary to the former system

Major Cultural Differences and challenges between


Renault and Nissan

2 Power Distance
Nissan

Renault

Strong, lower than Renault, hierarchy is Strong hierarchy


strong.
What determines the hierarchy is the
time spent in the company.
Commandment of managers by
someone younger was forbidden
New system of promotion that is based on performance was
implemented.
To minimize the high risks of conflicts Carlos Ghosn had established a
double hierarchy system.

Major Cultural Differences and challenges between


Renault and Nissan

Masculinity Vs Femininity
Nissan

Renault

Higher masculinity within society

French culture tends to support


equality between males and females

Renault is sending women managers to Nissan as part of their collaboration

Major Cultural Differences and challenges between


Renault and Nissan

Time Perception
Nissan

Renault

cyclical perception of time


More long term oriented

linear perception of time, Time is


money
More short term oriented

Time orientation in Nissan had to be changed, Carlos Ghosn set the survival
plan to make Nissan able to recover as soon as possible by focus on
regaining short term profit

Major Cultural Differences and challenges between


Renault and Nissan

Decision-making
Nissan

Renault

Making decisions take much longer

They make decisions quickly

time
because general consensus
Number of Nissan's board members reduced from 37 before the alliance with
Renault to 10

Major Cultural Differences and challenges between


Renault and Nissan

Enterprise Loyalty
Nissan

Renault

Employees are very loyal because of

Employees are be less loyal because

the concept of lifetime employment

of the individualistic culture

Carlos Ghosn eliminates this principle lifetime employment mentioning that


Japanese cannot stuck with this old principle, and they had to adapt to
current management systems in order to keep their powerful in the auto
industry

Solution to Nissans cultural issues


CFTs (Cross functional teams)
Promote the individual according to their performance
Develop a short-term orientation within Nissan organisation
Create a strong family atmosphere with more social activities
Make the organisation flatter to speed up the decision making process
Use other methods such as anticipated retirement instead of layoff
Reduce Nissan keiretsu system, less suppliers and sub-contractors, Use
the international competition among suppliers to save money

Solution to Nissans cultural issues

The success of Renault-Nissan strategic alliance


The strategic alliance between Renault and Nissan has created a successful
giant car producer in the global Auto Industry market, ranked No. 4
8.5 million cars of sales in 2014, about 10% of cars manufactured all over the
world, expectation for 2016 is to sell 10 million cars
Combining the best practices coming from the two companies
Constant synergy between the two companies and common goal vision
After 15 years of the alliance, the two companies still seeking more
convergence (strategic alliance is a constant process of re-shaping and good
practicing )

Thank You

Questions