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 : Auto and Ancillaries

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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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"Nissan was in a difficult situation not only for the short term but for the future."

- Carlos Ghosn, CEO & President, Nissan Motor Corp, November 2002.1

"It shows Nissan's cost-cutting efforts have really worked in parts procurement, and the profit margin has improved in the home market."

- - Tsuyoshi Mochimaru, Auto analyst - Daiwa Institute of Research, Tokyo, October 2001.2

"They keep on calling it a revival plan but I'm sure they'll admit it's just as much a survival plan as well."

- Peter McCutcheon, Reporter - www.abc.net, October 1999.3

Nissan Turns Around!

It seemed like a corporate fairy tale. In March 2001, Nissan Motor Co (Nissan) announced profits of 331 billion4 after posting losses for eight consecutive years.

(Refer Exhibits I & II) In 1999, when French automobile maker Renault S.A (Renault) took a controlling stake of 36.8% in the ailing Nissan, it met with criticism from all quarters. Many pointed out that Renault was taking a huge risk by investing in Nissan, as Renault itself had managed a turnaround in its own operations only in 1997. It was also felt that the future of Renault would depend on turning Nissan around. The man given the important task of turning Nissan around was Carlos Ghosn (Ghosn), executive vice president of Renault. Ghosn was known as a turnaround specialist in corporate circles. He had the distinction of turning around Michelin's5 South American and North American operations and Renault itself (Refer Exhibit III).

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But analysts were still skeptical and felt that it would be very difficult to achieve the same with Nissan as it was facing myriad problems.

In early 1999, BusinessWeek wrote, "But for a recently turned-around Renault, the Nissan link is a dangerous liaison.

Auto-industry experts figure it could be 8 to 10 years before Renault saw a real return on its investment, if all goes well. Meantime, potential conflicts over everything from management control to cost cutting loom large--even though Renault's stake would enable it to veto decisions it doesn't like.

And if Nissan's makeover fails, the wasted investment could kill Renault's chances of remaining independent."6

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1] Nissan Motor CEO Carlos Ghosn is Turnaround Hero, www.gsb.stanford.edu, November 11, 2002.

2] Nissan Revival Plan on Track, www.clarionledger.com, October 19, 2001.

3] Nissan Slashes 21,000 Jobs, www.abc.net, October 18, 1999.

4] As on June 16, 2003, 1$ = 117.660

5] The Michelin group was established in 1832. The company manufactured tires. It expanded its services to mobility assistance systems, travel assistance services. The company's product line includes - passenger car & light truck tires, aircraft tires, tires for earthmover, agricultural products, two-wheelers, and the components.

6] Dangerous Liaison: Renault and Nissan, BusinessWeek, March 29, 1999.

 

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