1. INSEAD EURO-ASIA CENTER
A Marriage of Reason
INSEAD EURO-ASIA CENTER
Group : NTU Rangga
Aditya Nandi WP
Danang Widhi Witoko
Kresna Nandhityo
Frederika

2. AGENDA IMPLEMENTATION CONCLUTION BACKGROUND RENAULT NISSAN ALLIANCE
Global Automotive Industry
Company Profile
Main Issue
IMPLEMENTATION
Corporate Structure for the Alliance
Carlos Ghosn Contribution
Management Structure of the Alliance
Value Chain Renault-Nissan
RENAULT NISSAN ALLIANCE
Strategic Alliance
Objective Aim for the Alliance
Renault and Nissan Alliance
Analysis Strategic Alliance Renault-Nissan
CONCLUTION
Key Success Factors The Alliance
Result of the Alliance

3. GLOBAL INDUSTRY AUTOMOTIVE
1999
2000
2001
55 million vehicles ware sold worldwide
32 million were passenger cars
90 % demand from the “triad”, USA (26%), Europe (40%), and Asia (24%)
After crisis , Asia had largely growth 5,1 % , follow by South American market
In term of market share, General Motor and ford accounted 15 %, follow with Toyota 10 % and Renault Nissan 9 %
The US market stagnant and tend to decrease 5 %, this scenario could be aggravated by rising oil prices and interest rate ( most American use credit to buy cars )
Europe, where the effected of cycles are usually less strong
While Other market is tend to stagnant

4. INTRODUCTION TO NISSAN
Established in Originated merger between Kwaishinsha ( founded in 1911 ) and Jitsuyo Jidosha ( founded in 1919 )
Was a pioneer in the manufacturing automobiles
Product : Automobile, Trucks and Forklift
Main Market : Japan, United States and Europe
Revenue : 80, 92 billion USD
Profit : 460 million USD ( 2009 )

5. INTRODUCTION TO RENAULT
Established in 1898 by Louis Renault
Is a French Automaker
Product : Automobile and Commercial Vehicles
Main Market : Europe, Turkey, Argentina, North Africa and Brazil ad Rusia
Revenue : 38,97 billion USD
Profit : million USD ( 2009 )

6. CAN OR CAN NOT MAIN ISSUE
Renault – Nissan Alliance merger ( 1999 ) between French auto manufacturer and Japanese auto manufacturer.
RENAULT
( Expanding Company )
Full capacity
High concentrate in western Europe
High profile
Intend to be global
NISSAN
( Declining Company )
Failed to materialize to compete Toyota
54 % capacity utilized
Overall economic stagnation
Poor internal communication
A lack of urgency & strategic future
Lack of cost control
Nissan failed to materialize to compete toyota karena loyality supplier kurang dan market share kurang dibanding pemain seperti toyota dan honda
Kapasitas pabrik Cuma kepake 54 persen karena modal yang kurang, sehingga skala produksi tidak maksimal
Overall economic stagnation dikarenakan global financial krisis yang menyebabkan daya beli dan daya jual menurun
Poor Internal communication, secara komunikasi antara pembuat strategi dan implementasinya tidak maksimal sehingga karena strategi yang diterapkan tidak maksimal mengakibatkan cost yang terbuang percuma banyak
CAN OR CAN NOT

7. STRATEGIC ALLIANCE Definition Advantages Disadvantages
Agreement for cooperation among two or more independent firms to work together towards common objective.
Companies in a strategic alliance do not form a new identity to reach their aims but cooperate while remaining apart and distinct
Advantages
Economies of scale and scope
Increasing international competition
Penetration into new markets
Access to new design, tech and processes
Supporting a declining company
Disadvantages
Culture clash between company
Leadership disputes
Layoff from either company

8. OBJECTIVES AND AIM FOR THE ALLIANCE
Reach Partnership to global market
Business synergy, which is still under top 10 automaker
Keep brand identity of both brands
Clear product position
Manage culture conflict
aim alliance
Objectives alliance
Two principles
Developing all potential synergies by combining the strengths of both companies through a constructive approach to deliver Win-Win results
Preserving each company’s autonomy and respecting their own corporate and brand identities
Three key objectives
Quality and value of products and services in each region and market segment
Key technologies in engines, electronics and the environment
Operating profit

9. RENAULT AND NISSAN ALLIANCE
Because of the these problems of companies, the alliance between Renault and Nissan was signed on 1999.
Renault contributed $4.86 billion to the capital of Nissan $76.6 million to the capital of Nissan Diesel. Renault acquired a 36.8% equity stake in Nissan Motor and a 2.5% stake in Nissan Diesel. In addition, Renault acquired Nissan’s five financial subsidiaries in Europe for a total of $305million. Renault has invested a total $5.2 billion.

10. Competitiveness in an Industry – Automotive Vehicles
FIVE FORCES ANALYSIS
Competitiveness in an Industry – Automotive Vehicles
Domestic rivalries
High, many automaker in Japan and Franch
Industry Rivalry
New Entrants
Buyers
Substitutes
Suppliers
Threats from the new entrants
Low, due to high cost production and innovation
Subtitution Threats
Medium, consider with price of vehicle market has an alternative such as motorcycle or public transportation
Buyer’s Purchasing Power
High, Buyer can switch the supplier for getting the competitive rate
Supplier’s Power
Medium, depend with commodity and loyalty between supplier and buyer

11. SWOT ANALYSIS Strengths Nissan Weakness Nissan Strengths Renault
Access to Asia and US Market
High Technology
Weakness Nissan
USD 2,1 billion in debts
Japan’s economy in recession
No shared common vision on Nissan future
No cross functional & cross regional communication
Cars were out of trend
less emphasis on managerial culture
Money looked up in Keiretsu partnership
Strengths Renault
Strong management practice and strategic long term vision
Cost control – debt reduction
Resource optimization
Good supplier relation
Innovation & creativity
Weakness Renault
Too small compete in world stage
Access only to European market
No access to world market
Strengths for Nissan are weaknesses for Renault
therefore the complementary in many respects
Nissan weakness are mainly due to mismanagement of their resources
To say competitiveness, Renault needed to diversify geographical in Asia and US
While Nissan has resouch to meets this criteria
Technological and design exchange between Nissan and Renault gave them strength respectively

12. CORPORATE STUCTURE OF THE ALLIANCE
Renault-Nissan BV
strategic management company
Alliance Board of Directors
Carlos Ghosn
Renault-Nissan Purchasing Organization
Renault-Nissan Information Services

13. CARLOS GHOSN CONTRIBUTION
Born on 9th March, 1954, in Porto Bello, Brazil
Spent 18 years with Michelin in Brazil and North America
Joined Renault in 1996 as Executive Vice President of Advanced R&D, Manufacturing and Purchasing
Chairman and CEO of Renault Group (1996 – Present (18 years))
Chairman, President and CEO of Nissan Motor Corp. (1999 – Present (15 years))
Ghosn joined Nissan as Chief Operating Officer in 1999, and was named President in 2000 and Chief Executive Officer in 2001
Chairman and CEO of Renault-Nissan Alliance BV (2002 – Present (12 years))
Ghosn has headed the Renault-Nissan Alliance since 2002.
Ghosn maintained his roles at Renault while being dispatched to Nissan as its Chief Operating Officer. He was named President and CEO of Renault in 2005 and added the title of Chairman in 2009.
As the other Japanese companies, Nissan has been supplied by keiretsu which is long- term purchasing relationship, intense collaboration and the frequent exchange of personnel and technology between companies and select suppliers.
Most of the Japanese automakers depend on the keiretsu and it is very unusual for a Japanese firm to not be part of it.
However, when Carlos Ghosn arrived as CEO of Nissan, he didn’t want to follow these Japanese traditional rules.
In his Revival Plan, he states that purchase costs, which represent 60% of the total cost, should be reduced by 20% in a three year period, and the number of suppliers, which totals 1145, should be decreased to no more that 600 companies (Ikeda, M. & Nakagawa, Y. 2000) The CEO actually dropped all of the keiretsu suppliers, keeping only four of them. Although many people in Japan disagreed with this idea of ending so many long-term business relationships, Nissan prevailed. Ghosn claimed that the keiretsu system resulted in higher costs when purchasing automobile parts. Also, it is difficult for keiretsu suppliers to have the most advanced technology developed independently which decreases the competitiveness of Nissan in the global market. Also the collapse of the keiretsu led to increased competition among suppliers. As a result, Nissan has been able to select better quality supplies at more affordable prices (Okamura, 2005).
Carlos Ghosn: Le Cost Killer
Ghosn named new COO, announced “NRP: Nissan Revival Plan” on 10/18/99
Goals of NRP:
Return to financial stability within one year
Within 3 years, reduce debt by 50%
Within 3 years, operating margin rise to 4.5% of sales

14. MANAGEMENT STUCTURE OF THE ALLIANCE
The links between Renault and Nissan would allow each partner to derive maximum benefits from each partner’s strengths. The Global Alliance Committee(GAC)is the governing body of the Alliance and meets on a monthly.
It determines the strategy of the Renault-Nissan Alliance, reviews the projects presented by the joint operational teams, gives specific guidance on every project and authorizes their implementation. The International Advisory Board(IAB)provides advice and makes recommendations with respect to the evolution of the Alliance.
The operational organization’s core consists of joint working teams(Cross Company Teams which are supported by Functional Task Teams)that are structured around six main activities: Product planning and strategy, power- train, vehicle engineering, purchasing, manufacturing and logistics, and markets.
Their mission is to draw up specific common projects, present them to the GAC and monitor their implementation.
These common projects are of three main types: pooling of expertise and technical resources to develop joint components(platforms and powertrain); joint growth in markets where one of the two partners has a strong presence; harmonization of processes and standards would be achieved through the creation of common production platforms. The alliance created an organization, the Alliance Coordination Bureau(CB) to supports the CCTs and CFTs with an office in Paris and an office in Tokyo to facilitate long-term cooperation at the operational level and to promote a bet- ter mutual understanding. The two groups are implementing employee- exchange programs to this effect. The freshly created cross-functional teams drove reforms in various functional areas such as the harmonization of the IT systems or the definition of quality and reliability standards. The CFTs gener- ated over20ideas, which were later incorporated into the NRP.

15. VALUE CHAIN RENAULT - NISSAN
INFRASTUCTURE : Main head office back up & administration office internationally
HRM : Mainly Nissan executive exchange across the board
PRODUCTION Decrease number of plant to save extra overheads
DISTRIBUTION Use of common distribution channel
MARKETING Separate brand names
MARGIN
TECNOLOGY : Faster production development, joint product development & economies of scale
PROCURMENT : Coordinated procurement and improvement in NiSSAN supply chain
MANAGING COOPERATIVE STRATEGIES
1. Cost minimization
Relationship with partner is formalized with contracts
Contracts specify how cooperative strategy is to be monitored and how partner behavior is to be controlled
Goal is to minimize costs and prevent opportunistic behaviors by partners
Costs of monitoring cooperative strategy are greater
Formalities tend to stifle partner efforts to gain maximum value from their participation
2. Opportunity maximization
Focus: maximizing partnership's value-creation opportunities
Informal relationships and fewer constraints allow partners to:
take advantage of unexpected opportunities
learn from each other
explore additional marketplace possibilities
Partners need a high level of trust that each party will act in the partnership's best interest, which is more difficult in international situations

16. ALLIANCES KEY SUCCESS FACTOR
Key Advantage:
- By taking advantage of economic of scale
- Tecnological inovation
- This also allowed the two firm to expand the product mix
- Increasing revenuw by appeling to wider customer based
Key Decision Factors :
- Deciding on the foreign market
- Timing of entry
- Scale of entry and strategic commitments
- Quality between the relationships among the managers and engineers of Renault and Nissan
- Business experience
- Technical skills
- Core values:
Balanced relations between the two companies and the development of strong identities for each of the brands
- Other factors:
Alliance charter
Capital contributions and equity participations
Management structure and exchange of personnel

17. RESULTS OF THE ALLIENCE

18. RESULTS OF THE ALLIENCE
The Alliance is also the only carmaker to offer a large range of all-electric vehicles. In 2013, global sales of Alliance vehicles producing zero emissions in use jumped to 66,809 units, up 52% on The Alliance’s share of the zero-emission vehicle market reached 63%
Third largest global automaker (based on sales for the year 2008)
Global market share of 9% (by volume)
Significant presence in major world markets (United States, Europe, Japan, China, India, Russia)

19. THANK YOU