The Curious Case

of Nissan
Strategic Management Analysis

Group 10
Section B
Sagar | Madhurmeet | Pankhuri | Shubhangi | Shreya
Background
Nissan is a Japanese car brand based in Yokohama and was founded in 1933. Nissan’s products range
from compact cars like the Leaf, the electric version of which is the most sold electric car worldwide,
to pickup trucks like the Navara model. Nissan and Renault formed an alliance in 1999. New models
and engines of both makes are based on the same engineering platforms. In May 2016, Nissan
bought a controlling stake in Mitsubishi Motors after going public with their discovery that
Mitsubishi had manipulated emission numbers of some diesel models, some of which had been
produced for Nissan. In the last couple of years, Nissan increased its reliance on sales to rental
companies. In 2017 alone, Nissan’s rental sales increased by 37% year on year.

 Nissan realized a total revenue of US$79.1 billion worldwide, while the total market revenue
amounted to US$1.6 trillion in 2018.
 The largest passenger cars segment, Small SUVs, accounted for 34% of Nissan's revenue in
2018
 Nissan's second largest segment was the Medium Cars segment. It accounted for 34% of the
makes revenue in 2018.
 In the market share by revenue category, Volkswagen (6.9%), Toyota (6.8%) and Ford (6.3%)
take the lead worldwide. Nissan had a 4.95% market share.
Porter’s 5 Forces Analysis

Competitive Pressure for the Rival Sellers: STRONG

 Competition in the global auto industry is quite fierce

 Many competitors with similar makes and models, and even better pricing in some markets
 Entry into new markets is also tough, since most of the geographies already have makers
with large market shares (Maruti in India has 60% market share)

Competitive Pressure from the Buyers: MODERATE

 Excess capacity keeps consumers in charge of price and quality

 Dealership are willing to price match
 Rising consumer debt
 Consumers are picky with high expectations as it is usually the second or third largest
household spending after real estate and education

Competitive Pressure from the Suppliers: WEAK

 Low power in the auto industry

 Auto part suppliers cannot afford to lose their biggest clients

Competitive Pressure from the New Entrants: WEAK

 Huge start-up costs

 Brand loyalty amongst consumers
 Former R & D knowledge creates a heavy learning curve effect

Competitive Pressure from the Substitute Product: LOW

 Cars are the only way to travel in most of the cities in the west
 Alternative modes of transportation such as carpooling, public transit, bicycles, subways are
available only in big urbanized cities in most cases
 Fuel cost increase the possibility that consumers will use a substitute though
 Emergence of electric cars like Tesla also pose a threat of petrol/diesel vehicles observing a
reduction in market share

Core Competency
The following factors set Nissan apart when it comes to the competitive landscape in the category,
with the cognizance of the fact that the customer is changing with time and competitors will
continue to innovate and create.
  Since April 2006, they started combining their red and blue stage outlets. They agree that in
a growing market, multiple channels of sales are required. But a mature market requires
more of customer satisfaction.

 Their chief operating officer says, “Our sales network has historically been built on regions
and channels. Now we offer customers the full lineup of Nissan products and life-long
service support through our rationalized outlets. “

 They are working on a sales revamp strategy because they believe that will set them apart:

Diamond Framework
 Arenas – Automobile category (4-wheeler passenger vehicles) across the globe. New
counties to explore further – India and China
 Vehicles – International growth, Alliance with Renault and Mitsubishi
 Differentiation – Unique product design, cutting-edge technology, name value
 Staging – Aggressive, as evident by large market share in multiple markets
 Economic logic – Premium pricing + Economies of scale

10-Box Framework
Systems
This involves the business and technical assistance that employees make use of on-daily basis.

 Regular meetings
This ensures that any kind of resistance to change is tackled. People are made aware about the new
technology that is brought in. Also, regular departmental meetings are held to keep people updated
with the organizational goals.

 Team catering to quality control

Because of deteriorating quality, the affected customers were reporting the issue. This affected the
sales. Mr. Ghosn established a quality control team to look into the quality check of each and every
step of the production line.

 Nissan Revival Plan

For easy monitoring of activities, this system was put in place which addressed the timing, plan
schedules and committed to the targets. Targets would keep people in touch with the company
objectives.

Style
This reflects the management style of the organization.

 Transformational Leaders

Mr. Ghosn brought with him the English culture that changed the organizational culture. He thinks of
new talents as the engines to the aircraft that helps it to fly and reach new heights.

 Facilitate team work

Team work was facilitated across the organization. This was done across functions that facilitated
harmony, coordination and unity in the organization.

 Democratic Leadership style

Mr. Ghosn had a democratic leadership style which allowed employees to go and discuss the issues
they face with him openly. This would make the process more open and remove bureaucracy

Innovation
Mr. Ghosn brought with him the engineering expertise of Renault to Nissan. He also introduced new
models of vans and SUV. He brought about process changes and combined teams across functions,
similar to that of Mitsubishi.

Open mindedness – Mr. Ghosn worked with an open mind and was always ready to learn. This was
done through hearing the thoughts of the employees. This made the employees feel more involved
and generate new ideas in the organization.

He brought about new processes and products such as Nissan Z. This helped Nissan achieve brand
awareness in the organization and differentiate themselves from the competition.
Strategy
Strategy is basically the course of action that the company decides to take in order to meet the
organisation’s goals and objectives.

 Cost cutting
This aids in cutting down losses if the company isn’t generating enough revenue or increase
the profit margin. This further cuts down debts that the company owes. Nissan closed down
plants which weren’t functioning to cut down capital investments. Also called divestments.

 Alliances
Nissan entered an alliance with Renault, a move which no one in the industry could have
foreseen. This alliance resulted to be one of the most important factors for Nissan’s success.
It helped to solve the short-term problems that the firm was facing with the sophisticated
manufacturing technology and culture of Renault. This alliance also helped Renault for
international exposure as a brand.

 Low Cost strategy

Nissan adopted a low cost strategy by new supplier acquisition, they levered the brand value
of Nissan and thus reducing the supplier bargain value. The suppliers offered them discounts
of up to 30%!

 International Penetration and Expansion

Opening new plants in places like North America, where the brand was facing a lot of
competition from Japanese car manufacturers. This was a strategy to fend off competition
and to customize their makes to the region specific demand of that area. This would give
them an edge over the competition.

Structure

A clear defined structure tells you how organised the company is and the hierarchy in which it
functions.

 Decentralisation
Nissan revamped the structure in which it was functioning earlier, it now facilitated the
participation of its employees in the decision making process. More functional teams were
formed, which made their own plans and executed them single-handedly. Tactical decisions
were decentralised.

 Clarity of Objectives
Teams in Nissan were given clarity on the objectives that they had to achieve in the given
time frame, were given the liberty to decide the course of action that they feel will help
them do so. This brought out maximum efficiency out of the employees since they had
decided these actions on their own and were accountable for the results of the same. This
also eliminated any confusion on the understanding of the objectives from departments.

 Cross-functional integration
Nissan encouraged integration of different expertise teams to function together which we’re
not from the same department, cross-functional. In this process, the employees were more
 involved than usual, since they got to learn something new and also could teach others what
they knew best.

Shared Values

This is the value belief system of any organisation. The current and incoming man-power should
have their values in-line with that of the organisation or else they are not considered a good fit.

 One common language

Communication becomes the spine of the organisation, it cannot function normally unless
employees communication with their own team and with other teams. Hence, to have a
common language for communication was a must. Nissan made that possible with the
implementation of having English as the common language to address the cultural
disparities among the employees from different backgrounds.

 Identifying the needs of major stakeholders

The first and foremost task is to identify the major stakeholders of any decision for an
organisation, following which, the organisation needs to keep their needs in mind before
finalising on anything. Nissan made sure every stakeholder is felt valued by asking for their
input at every step.

 NRP
Nissan implemented NRP through the organisation as a collective effort, involving all the
personnel at managerial position. This ensured that all the Nissan employees worked with a
common vision and objective of reviving Nissan as a brand. Each stage of NRP had a mission
and objective which kept the efforts streamlined and employees’ morale high.

Staffing

 Nissan has very employee-oriented policies in terms of rewarding and compensation. The
company follows a merit-based system to reward the competent employees so that their
motivation levels are always high. They earlier had a system where merit based system
rewarded only the older employees implying that age and not hardwork was the deciding
criteria but this changed after the organization underwent the merger.

 Carlos Ghosn also cultivated the habit of participation by motivating employees to make
their own plans and implement them. The employees would be posed with new challenges
which would keep them on their feet and make them feel empowered.

 The Golden Handshake and Retirements were introduced to lay off people in a softer and
more Japanese way. The idea was to respect those who were laid off in the cost cutting
initiated by Ghosn and end their term by giving them retirement packages and insurance
under Golden Handshake. At the same time, it made the existing employees feel safer and
more confident about the organization.
Skilling
Nissan focussed on the following skills during and after its revamp:

 Cross functional skills amongst engineers and financial department - this meant both the
functions had some knowledge about the other and there was a synergy between them.

 Ghosn recruited more design engineers from Japan to make products which were cutting-
edge, cost effective and differentiated

 The quality team was increased to 220 engineers to address the issue of defects, process
and quality enhancement.

 Their skills were more focussed on innovation as can be seen by the new models and mini
vans Nissan came out with to increase sales and competitive advantage.

Governance

The following is a snapshot of the company board:

With the above set of eminent leaders from diverse backgrounds, the accountability and
responsibility systems have developed an internal protocol for themselves that revolves around
Communication

Nissan’s promise is the develop its internal employee communication and all of its external
communication keeping in mind the key values of Nissan Company. They believe in sharing
information with their employees on a regular basis so the employees can themselves act as
“ambassadors” for Nissan.

Initiatives for dialogues with employees

The latest development with Nissan is the new M.O.V.E initiative for communication, which requires
all employees to embrace the core vision and mission of Nissan company. The project is based on
the concept that effective internal communication boosts trust and motivation. This is Nissan’s
explanation:

Enhancing Communication Channels

Nissan introduced a corporate intranet system called WIN (Workforce Integration at Nissan). It
involves all Nissan’s major employees as well as some external C level stakeholders such as business
partners as well.

BILATERAL ANALYSIS OF THE ELEMENTS IN THE 10 BOX FRAMEWORK

1. Communication and Systems

The internal systems were designed in such a way that they required regular communication,
constant updates and a free flow of information. To support such a process, they developed the
intranet system as well as the latest and upcoming MOVE initiative.

2. Innovation and Strategy

With international expansions and partnerships with Renault, the door to innovation opens up wide.
Thus, the strategy is feeding innovation here at Nissan.
3. Systems and Style

For any organisation to prosper and grow through hard times, the leaders must be able to gel their
style with how the organisation itself operates. The key information to note here is that the
democratic leadership style promotes the kind of communication that the systems have been able to
sustain only because of the style. Consistent communication and regular reporting can only happen
when the style promotes interaction.

4. Governance and shared values

When the sense of accountability and responsibility develops within an organisation, the values also
gain a certain pedestal. In the case of Nissan, the Plan-DO-Check-Act framework involves the NRP
and decision making elements of key stakeholders, when it comes to values.

5. Structure and Communication

The decentralised and cross-functional structural elements make way for increased
touchpoints in inter-level communication which helps all employees maintain the same vision and
mission and churn out effective results.

Conclusion
The 10-box framework can be used to analyse the efficiencies and competencies of any organization.
In the case of Nissan, we see how after the revamp almost all the major elements went through a
change and were either changed or updated. This also helps us understand how Nissan dealt with
change, what was its strategy and how firms usually tackle such changes. In all, changes in leadership
drove Nissan to change its staffing, core values, communication and skills. The leadership style
changed with Ghosn and from there was a domino effect affecting each element. But the transition
went smoothly thanks to Ghosn’s efforts, the well thought-out policies and the support of the staff
and everyone involved.