The name NISSAN Motor Co. appeared for the first time in 1934 from a company called Jidosha-Seizo Kabushiki-Kaisha, a combination of several automotive ventures and the Brand DATSUN. Nissan was the pioneer of the development of new automobile technology in the 1970s. It knew a very fast growth thanks to a global program, and by 1991, Nissan was operating very profitably. Nevertheless, in the 1990s, the situation completely changed. And in 1999 the position of the company was described as a catastrophic one: $22 billion of debts, its market shares keep declining, its losses are recurring, its stock exchange vaporization broke down… Three years later, Nissan has taken up benefit again, and the highest values for its stock options were recorded. How have Nissan managed such a turnaround? What were the problems that the company faced in 1999? How Nissan was saved? Which kind of changes did appear in the company?
[...] And finally, Nissan faced also a lack of Management and cost control systems, and no global security policy was undertaken. Nissan was in a disastrous situation in 1999. The company faced problems in every part of its business. After recording a negative net income of $ 5.6 billion in 1999, a drop in its market shares and a debt of $22 billion, Nissan President and CEO Yoshikazu Hanawa decided to react and found an alliance opportunity with Renault to get out of the crisis. [...]
[...] In addition, Nissan only developed a short-term strategy. It emphasizes short term market share growth, rather than profitability or long-term strategic success. Then, no investment and innovation were realized. Nissan was also the victim of the Japanese business custom of Keiretsu, that is to say as for Nissan a tangle of 1,400 companies (banks, subsidiaries, suppliers, customers ) all linked by cross holdings. The car manufacturer tied up over billion in these stock shares, and this does not really help the company to decrease its purchasing costs. [...]
[...] Moreover, Carlos Ghosn was sometimes obliged to break down with the cultural Japanese habits: For instance, Nissan broke away from the Japanese cultural norms of Kereitsu, changed the traditional system of career evolution, laid off employees while lifetime job are lauded in the Japanese culture, broke the traditional structural bounds in the company In order to overcome these cultural barriers, Carlos Ghosn gave high importance to communication. He tried to be closed to people and available for them. He lauded transparency and justified each of his actions, by showing they are logical, rational, useful and consistent, and did not hesitate to give more details. [...]
[...] In order to overcome these criticisms, Nissan had to increase transparency internally but also externally and improve its public relations. The hierarchy importance in Nissan was also a huge barrier for Carlos Ghosn. Indeed, too much structure is to my mind the enemy of change. Then, he had to break the boundaries in the company thanks to CFT etc , and this was really not easy in the Japanese culture. Conclusion The turnaround strategy of Carlos Ghosn was very successful for the company: Three years after his arrival in the company, Nissan performance and results reached a record high. [...]
[...] Moreover, Nissan broke away from the Japanese cultural norms of Keiretsu investment. The company managed to maintain its customer-supplier relationships and regained billions in tied up capital. The number of suppliers was reduce from 2,000 to 600 which were easier to handle and enables Nissan to take advantage of economies of scale. In addition, Nissan made high investments in and tried to be more customer-oriented in the designs of its products new models were created in few years, and efforts were made in advertising to improve Nissan's brand image. [...]
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