Chapter III: Forming the Alliance
3.1 Structure of the alliance and fit 3.1.1 Structure of the alliance Nissan-Renault
The negotiations between Renault and Nissan started in Fall 1998. The two main players in the negotiation were Schweitzer, the President of Renault and Hanawa the President of Nissan.
Nissan had no other choice than doing an alliance because of its financial situation. It had been warned in February 1998 by Moody’s Investment Service and Standard & Poor ratings services that its credit rating would be reclassified as junk bond in 90 days. However, it would stay as it is if an another automobile manufacturer would agree to make a cash infusion into Nissan.
In order to have leverage, Nissan also started negotiations with Ford
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The Renault-Nissan Alliance was signed on March 27, 1999. The 2 companies jointly announced that three French executives would be appointed to Nissan’s board of directors:
1. Carlos Ghosn, the executive vice president at Renault was named Nissan’s COO
2. Patrick Pelata, the senior vice president of vehicle development at Renault was named executive vice president of product planning and strategy
3. And Thierry Moulonguet, the senior vice president of capital expenditure controller at Renault was named Chief Financial Officer (CFO).
Exhibit “Ownership Structure” shows the structure of the alliance in 2001. After the company’s turnaround from near-bankruptcy, Nissan bought a 15% equity of Renault. Renault increased its equity in Nissan to 44.4%, reaching the maximum equity specified in the agreement.
3.1.2 Analysis of the fit of the alliance Renault-Nissan
In order to evaluate if there is a fit and a possibility of synergy creation between the two companies, Renault and Nissan, we compared the strengths and weaknesses from each
Have you ever done something you knew was wrong? You felt guilty afterwards, didn’t you? Macbeth, too, feels guilt after he murders his friend and King, Duncan. Guilt haunts him until death. Even his wife, who did not actually kill anyone, was guilty because she’s a part of the plan.
After several failed attempt of internal diversification, they realized the lack of knowledge of their management about businesses outside the automotive area. so acquisition brought them quick fix where it brought already knowledgeable people in respective areas in their payroll.
Ghosn’s plan to combine, centralize, and globalize Nissan and Renault’s parts procurement would cut costs by 20 percent! Before this change, Ghosn estimated Nissan’s parts procurement costs were around 10 percent higher than Renault’s. To accomplish his goal, Ghosn had to prove that the precious keiretsu system of Japan was promoting
Because every problem almost always has more than one solution, the question of whether or not a joint venture between Sakari and Nora would be the best option for either of the companies is difficult to assess. However, there are certain benefits, which are mentioned in the case, that clearly outline the initial motivation for forming the join venture. From the Sakari side, the motivation came in the form of a new market in Southeast Asia, while Nora was motivated by Sakari’s telecom technology and the possibility of acquiring it and/or replicating it in the future. The forming
Nissan focuses on maximizing its auto manufacturing operations through flexibility and efficiencies by maintaining a
However, in 2002 the announcement was made by Louis Schweitzer by then the CEO of Renault that Carlos would take the responsibility as the CEO for both Nissan and Renault. In spite of the critics which arose due the cultural differences which were seen as the biggest obstacle for him in managing both French
Comparison and Contrast of General Motors and Toyota Motor Thomas Hong, Ph.D. The Impact of Technology on Organization University of Phoenix November 12, 2007
George Orwell’s work Animal Farm portrays human society and its blemishes. Although Orwell wrote the book to expose Communist Russia and its flawed ideology, the fairy story depicts the world and society as a whole. While the tale details the self-indulgence and greed that political leaders -- most commonly tyrants and dictators -- exploit, it also features inspirational figures and teachings. It describes the effects of propaganda and the danger of ignorance and naiveté. Animal Farm is a novel with a lesson about society and its dangers; it represents the cycle of revolutions, often started with noble intentions, and its consequences.
By 1999, Nissan had tied up over $4 billion in the stock shares of hundreds of different companies as part of this keiretsu philosophy. These investments, however, were not reflected in Nissan’s
Cooperation between the two firms had begun in 1990 when Renault took a 25 per cent share in Volvo cars and a 45 per cent share in their truck division. Volvo, for its part, took a 20 per cent share in Renault. The early collaboration took the form of an exchange of engines, the joint purchasing of components and joint developments in quality control. The cooperative arrangements between the two companies were a constant source of internal criticism, which focused on
The book animal farm is about a farm full of intelligent animals who are tormented by an unjust farmer, and how they strive for a better life found in, Animalism, (All animals are equal; “Four legs good, Two legs bad.”). When Mr. Jones, the farmer, goes days without bothering to feed the livestock, they take matters into their own hooves, paws, and wings. Sneakily, the escape their pens. They break into the room which stores the animal feed, and indulge in the fruits of their labor, quite literally. Consequently, their criminal action wakes up Mr. Jones. When he realizes what the farm has done to the door and the food, he grabs his whip and has at it. His inexorable deeds ignite a deep loathing feeling inside of all the animals and a ludicrous
GM has a dreadful strategic alliance with Daewoo Company (GM Daewoo) in South Korea as far as the Asian Pacific market concerned like the case indicated. GM Daewoo has started to increase sales, yet, it needs way to go. GM Daewoo is the low cost production base with its facilities in South Korea and Vietnam for some GM brands such as Hummer and Saturn and Opel of European Operations. The subsidiary made some moves to expand its operations in Europe by purchasing former Uzbekistan and Romania plants of Daewoo and Polish car maker Fabryka Samochodów Osobowych (FSO) (GM Daewo Company overview, Hoovers website, 2010, December 5).
3. What are the risks to each company in the alliance? Are there risks to the shareholders of the company? Do you think a three-way merger is possible?
Like most multinational corporations, the shareholders own the company and they may also be the board of directors. A Chief Executive Officer (CEO) will be appointed to nominate and manage the operation of the company as a whole. A Chief Operating Officer (COO) will be managing the company’s day-to-day operations and reports them to CEO. The Chief Financial Officer (CFO) will be managing the finance and account together with the
Some of the alternatives both airlines can use is understanding each airlines’ knowledge and skill base. They can also balance collaboration and competition with the alliance, and maintain loyalty among their airlines. Trust is essential to their relationships. There has to be a clear understanding of how funds will be disbursed and how each company can go about individual pursuits and how it affects the other. The idea of joint ventures are to gain a competitive advantage over others. Each company benefits in joint ventures because they get to expand their market by gaining new routes, and they share revenues and costs. According to Appendix 3: Air France/KLM Income Statement, from 2006-2011 revenues increased from 21,452 million Euros in 2006 to 23,622 million Euros in 2011, with a decrease from 2008-2010. Appendix 4 shows Air France/KLM Key Ratios. There is a pattern of deceases from 2008-2010 which is evident through its profitability ratios. According to Appendix 6: Delta Air Lines Income Statements, there was significant growth from 2006-2011 with an operating income of 17,532 million USD in 2006 and 31,755 million USD in 2011, with a significant decrease from 2006-2007. It’s also true that their customers enjoy benefits such as a more varied choice of destinations with more frequencies and adapted schedules, frequent flyer programs and competitive fares. The