Nissan's Turnaround Story|Business Strategy|Case Study|Case Studies

Nissan's Turnaround Story

            
 
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Case Details:

Case Code : BSTR073
Case Length : 18 Pages
Period : 2003
Organization : Nissan Motors Ltd.
Pub Date : 2003
Teaching Note : Available
Countries : Japan
Industry : Automobile

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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EXCERPTS

Decline of Nissan

Nissan started showing signs of decline from the early 1990s. Its market share in the US automobile market declined to 4.7% in 1991 from 5.5% in 1980, while during the same period other Japanese automakers increased their share in the US market from 17.7% to 28.5%.

In Japan also, Nissan's market share declined from 34% in 1974 to below 19% in the late 1990s. In 1992 fiscal its pretax profits were $615 million - a 50% decline when compared to its 1991 pretax profits. Many analysts were of the opinion that in the early 1990s, the top management at Nissan failed to take notice of changing trends in the customer tastes especially in the US, its biggest export market. Commented David Magee, "Management once hailed as progressive and trend-setting was now a part of Japan's old boy network, arrogant and oblivious to market changes and customer needs." According to analysts, over capacity, high production costs, and unrelated investments were major weaknesses of Nissan during the 1990s...

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Attempts to Resuscitate Nissan

Nissan took various steps during 1992 - 1998 to turn the company around. However none of these efforts were successful. The first restructuring plan announced in 1993 aimed at reducing over capacity but failed to achieve its objectives due to strong opposition from the labor unions to shutdown plants.

Nissan launched another restructuring plan in 1995, when the manufacturing plant at Zama island was shut down, but the workers had to be transferred to other manufacturing plants due to strong resistance from the labor unions. The 1995 restructuring plan also failed to turn Nissan around. In FY 1998, another restructuring plan - Global Business Reform Plan - was announced. It aimed at consolidating operating profits of the company, concentrating on increasing profitability rather than sales. It planned to introduce high profit margin models, focusing on global markets especially the US market. But even before this plan could be implemented, Nissan had to borrow $708 million from state-owned Japan Development Bank to remain operational...

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