Nissan Motors Company: Cultural Change

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Table of Contents

Introduction
Background of the Case Study
Problems Encountered by Nissan Motors
Issues of Leadership and Management
Realistic Solutions to the Case Problems
The Relevance of the Article to the UAE
Conclusion
References

Introduction

This paper involves the analysis of the case of Nissan Motors, and specifically about the company’s cultural change. The paper examines the company’s situation based on aspects of leadership and management as presented in the case study. The fundamental objective is to establish any issues that arise from Nissan’s cultural change and how the case presented is relevant to the UAE. At this point, the primary objective is to establish how the case would play out in the case of the UAE culture. Therefore, the paper relates the presented case to the UAE, with the aim of finding out the similarities and differences expected if those involved were the UAE nationals and residents.

Background of the Case Study

The presented case study is about the change in culture at Nissan Motors, a company that was started in 1911 following the introduction of Kaishinsha Motor Car Works. Later, this company entered into a merger in 1933 with some firms specializing in motor vehicles, after which the name changed to Nissan Motors. The initial years of Nissan’s operations were exceptional as far as its performance was concerned (Evans & Lindsay, 2013). Such performance earned the company a title as the second largest automobile maker in Japan before the start of World War II. However, the productivity of Nissan was affected by the war, though the company was able to stay in business amidst the challenges brought about by the war.

Problems Encountered by Nissan Motors

The company has encountered some challenges since it was started to date. For example, following the occurrence of the Second World War, Nissan’s growth and development in several countries, especially those that were adversely affected by the war became stagnant. In spite of this, empirical evidence shows that the success of the company during the tough times after the war was enhanced by the availability of effective leadership. For example, the postwar recovery process was achieved through the recreation of the Japanese auto industry as far as Nissan was concerned. This included the introduction of technical assistance that involved foreign firms like Willys-Overland, Hillman, and Renault (Chou, Liao, Wu, & Wee, 2015). Such approaches ensured that the company could continue the production of efficient but small cars which were used as the background to the entry of the United States’ auto market (Barmeyer & Mayrhofer, 2015).

Secondly, after the recovery from the impacts of World War II, the company expanded tremendously to oversea countries. In spite of the significance associated with such growth, Nissan’s productivity was adversely affected by extraordinary growth. Such a problem linked to the growth of any company is often brought about by the increase in the chain of command. As a result of such challenges, it was hard for the company to make effective decisions, and subsequently, its performance stagnated. This was attributed to the fact that the accuracy and efficiency of Nissan at the board level were reduced.

The rapid growth of Nissan Motors led to an increase in specialization, parochial decision-making, sectionalism, as well as departmentalization in the organization. These challenges implied that it was significantly hard for Nissan Motors to achieve its goals and objectives. As such, there was a need for the company’s leaders to adopt appropriate measures that would ensure that there was a strong culture that the employees followed to remain productive in their work.

In addition, the challenges of workers’ unions were also witnessed in the operations of Nissan Motor. In spite of this, the company was fast to adopt a hardline stance regarding its strong leftist union during the year 1953. In this case, various approaches including lockout techniques alongside other measures were employed to deal with the challenges brought about by the unions. Following the implementation of such measures, the company suffered a 100-day strike. A great percentage of the problems encountered by Nissan Motors in the seventies and eighties were attributed to the fact that the labor union and the management had constant disputes following the lack of effective working relationships between the two parties.

The problems faced by Nissan, especially the lack of accuracy in decision-making and the union challenges forced the leaders within the organization to think about the importance of internal and external environment scanning in an organization. Such realization required the management to put a lot of emphasis on the inside of the organization as opposed to the needs of the customers, as well as the change in the automobile market of the word.

The review of the problems that Nissan Motors encountered shows that the majority of the challenges were encountered following the decline of the company’s market share, as well as the flattening of its net income. During this period, the productivity of competitors increased as shown in the case of Toyota’s increase in domestic market share from 39.6% to 42% between 1972 and 1985. Evidently, the challenges that the company suffered affected its competitive advantage within the auto industry.

The challenges at Nissan Motors were incremental though slow and eventually affected the company’s market share significantly. Following the increase in the intensity of such problems, Nissan lost its reputation as a potential employer, as well as its customer base reduced considerably especially after the failure of Nissan’s Stanza in 1981. Resultantly, criticism of the organization regarding its design and style was high, with a lot of blame on the company’s corporate culture. A lot of concerns indicated that the culture at Nissan Motors was inward-based, autocratic, and bureaucratic and hence, adversely affected its growth and development amidst the changing business and market environments. Such concerns included the possibility of the company changing its culture for the better, as well as whether or not the future of Nissan Motors was guaranteed because the auto industry was becoming increasingly competitive (Intarakumnerd & Charoenporn, 2015). In addition, the majority of the critics noted that a change of culture as possible in Nissan if the right leadership was in place.

Issues of Leadership and Management

A lot of concerns were raised over the leadership and management of Nissan Motors and its ability to be successful in the highly changing and competitive automobile industry. The review of the initial leadership at the company indicates that there was a need for change in the management and leadership styles used in the organization. This is attributable to the fact that the original leadership style in the company was bureaucratic and autocratic. The autocratic leadership style refers to the model of leadership where the people in power have excessive control overall organization’s decision-making process. Therefore, such a leadership style often allows little contribution from other members within the concerned organization. The decisions of autocratic leaders are based on their judgments as well as their own ideas (Evans & Lindsay, 2013). As such, it becomes quite hard for other people such as the followers to offer advice to autocratic leaders. This explains why the situation at Nissan Motors worsened as the leaders relied on their judgment to make decisions regarding the company’s operations.

Even though there are benefits associated with the autocratic leadership style, its application has several downsides that tend to have adverse impacts on the productivity of any organization (García-Morales, Jiménez-Barrionuevo, & Gutiérrez-Gutiérrez, 2012). As evident in the case of Nissan Motors, an autocratic leadership style when abused can be problematic. This is based on the fact that authoritarian leaders tend to exercise much control than it is necessary. In most cases, such an approach often leads to resentment of the leaders among the followers. For example, Nissan suffered from numerous strikes in its early days because the leadership style adopted did not promote effective work relationships between the leaders and the employees.

On the other hand, bureaucratic leadership refers to the style of leadership where a close set of standards are followed. Such an approach ensures that the activities in any organization are based on a specific and strict methodology. The advantage of using this style of leadership is that it lays out the steps that other followers need to adhere to in their daily tasks (Evans & Lindsay, 2013). However, there are downsides associated with this style of leadership. For example, in the case of Nissan, the overreliance on set procedures of operations was not appropriate given that the automobile industry is rapidly changing. Therefore, there was a need for leaders to be flexible based on the changing business environment.

According to the case of Nissan Motors after the change of leadership, it was evident that the bureaucratic leadership style was not effective as far as the auto industry was concerned. For example, the case study indicates that such a style of leadership adversely affected the productivity of the company. This was attributed to the fact that the majority of the employees spend most of their time in the coordination of the organization’s activities as well as pushing papers around as required by the leaders instead of putting a lot of emphasis on the production of a good car. The implication from such a scenario is that there was a need for a change in the leadership and management of the organization to adopt a strategy that would ensure that the employees had some level of autonomy, while at the same time developing the environment to encourage the delegation of authority, as well as responsibility. Such an approach would do away with any challenges and fears among the managers at the lowest level of the organization regarding their concerns about any rules that might have an impact on the employees, as well as ensuring that there is open communication in the organization.

Based on the above assertion, it can be inferred that employee independence, as well as open communication, are vital aspects of any organization as far as the achievement of the set goals and objectives in a company is concerned. This is attributed to the fact that open communication and employees’ independence allows them to provide their feedback about any issues within the organization that can be improved for the purpose of enhancing the productivity of the organization in general (Singh & Useem, 2016).

This was evident in the efficiency of the operations of the organization after the introduction of organizational change that involved the independence of the employees and encouraged open communication among the employees and the leaders. For example, following the development of the task force, various ideas were implemented, such as the call for a scheme whereby there would be an annual event aimed at showcasing the company’s products, as well as offer demonstrations. In addition, the problem of the autocratic leadership style was addressed through the abolishment of serial numbers that each employee wore to indicate their ranks in the company. Such an approach was appropriate in that it served to reduce the status differences between managers and their juniors. This was also followed by giving the employees the chance to decide when to wear the organization’s uniforms as a means to promote innovation and creativity among employees.

On the other hand, there was a notable difference between the new management and leadership style after Kume took over. Evidently, the management allowed open communication, as well as the involvement of all organization’s stakeholders in the operations of the organization (Wu, Wee, & Lee, 2016). For example, in 1986, the chairman engaged all the company’s employees and emphasized the need for a change in the operations of Nissan Motors. At this meeting, the chairman focused on the requirement to take care of the customers by being sensitive and considerate of their needs, as well as ensuring that they were satisfied at all times. In addition, Kume encouraged all the employees to put a lot of effort into the trends within the global automobile industry for a chance to ensure that the global standards were met.

Realistic Solutions to the Case Problems

A review of the operations and productivity of Nissan based on the case study indicates that the majority of the problems encountered by the organization are closely related to its management and the leadership style. The implication from this realization is that to solve the case problems; the organization ought to change its leadership and management approach. First, during the eighties, the leadership style employed in the organization was unilateral and hence, had adverse impacts on the productivity of the organization since it led to the breakdown of the relationship between the employees, unions, and the management as evident in the occurrence of a 100-day strike at Nissan Motors.

Based on this, changing the unilateral approach to management would help solve the problem of relationship breakdown between the employees and the management for a chance to ensure improved performance in the organization. One of the important leadership styles that the company can adopt to increase its productivity is the transformational leadership style (García-Morales, Jiménez-Barrionuevo, & Gutiérrez-Gutiérrez, 2012). This style of leadership can help reduce the challenges associated with the unilateral style of leadership because the transformational leadership approach is important in enhancing the development of a team and an efficient decision-making process (Singh & Useem, 2016). In addition, such a leadership style focuses on the followers and the organization’s process, as well as has an intuitive appeal.

Secondly, the management of Nissan Motors ought to have efficient measures aimed at solving the problems associated with its growth. This is due to the fact that the tremendous growth of any company comes with its problems as evident in the case of Nissan where, after the recovery from the impacts of World War II, the company expanded tremendously to oversea countries, increasing its chain of command. Such a scenario made it hard for the leaders to makes.

A long chain of command in any company results in slow decision-making, limited initiative, as well as high compensation costs. As evident in the case of Nissan, the company’s performance dropped. This was attributed to the fact that the accuracy and efficiency of Nissan at the board level were reduced. Therefore, the company should adopt ICT-based strategies for the purpose of ensuring effective communication (Singh & Useem, 2016). In addition, decentralizing the operations of the company can be an appropriate approach to the problem of an increased chain of command. Such an approach has the potential to improve the flow of communication between subordinates and the top managers.

The Relevance of the Article to the UAE

A review of the article shows that it has some significant relevance to the case of the UAE. For example, the article presents a case of changing business and industry environments. The growth and development of the UAE into a regional and international hub for business have revolutionized many aspects of business-enhancing competition. Such a state of affairs resonates well with the case presented in the article. Nissan undergoes rapid change brought about by internal and external factors. As in the case of the UAE, external factors that affect the operations of businesses are many.

According to the UAE culture, the majority of individuals are known for their hospitality. The implication is that if those involved in the case of Nissan Motors were the UAE nationals and residents, appropriate strategies would have been put in place to enhance the productivity of the employees and hence, improve the performance of the entire organization. This is based on the fact that Emiratis care about one another implying that the leadership and management styles adopted would be centered on the employees. As such, a lot of differences would be noted in the management of employees, the chain of command, as well as the autonomy of the employees, while similarities would be observed in the approaches adopted to ensure that all the customers were satisfied. The reason for this assertion is that Emiratis put a lot of focus on delivering quality products to the customers according to their needs and demands. In addition, they understand that employees are vital in any organization and hence, they ought to be managed well.

Conclusion

According to the case study of Nissan Motors, it is evident that the company has had positive and negative growth. For example, while the company’s growth was significant, it was accompanied by numerous challenges including increased specialization, parochial decision-making, sectionalism, as well as departmentalization. In addition, poor leadership styles affected the productivity and competitive advantage of the company. As such, for the Nissan Motors to regain its growth and market share there was a need to change its culture and develop an environment that is focused on the development of employees by enhancing their independence and open communication within the organization. However, such objectives can be achieved if the company adopts a leadership style that is employee-centered.

There are a number of important issues that can be learned from the case of Nissan. However, the most significant one is that employees are very valuable in any organization. Secondly, the management style adopted in any organization determines the success rate as far as achieving set goals and objectives is concerned.

References

Barmeyer, C., & Mayrhofer, U. (2015). Case study III Renault–Nissan– Daimlar. International Business Strategy: Theory and Practice, 2(3), 348.

Chou, C. W., Liao, W. C., Wu, S., & Wee, H. M. (2015). The role of technical innovation and sustainability on energy consumption: A case study on the Taiwanese automobile industry. Energies, 8(7), 6627-6640.

Evans, J. R., & Lindsay, W. M. (2013). Managing for quality and performance excellence. Boston, MA: Cengage Learning.

García-Morales, V. J., Jiménez-Barrionuevo, M. M., & Gutiérrez-Gutiérrez, L. (2012). Transformational leadership influence on organizational performance through organizational learning and innovation. Journal of Business Research, 65(7), 1040-1050.

Intarakumnerd, P., & Charoenporn, P. (2015). Impact of stronger patent regimes on technology transfer: The case study of Thai automotive industry. Research Policy, 44(7), 1314-1326.

Singh, H., & Useem, M. (2016). The strategic leader’s roadmap: 6 Steps for integrating leadership and strategy. New York, NY: Wharton Digital Press.

Wu, S., Wee, H. M., & Lee, S. B. (2016). Technical innovation vs. sustainability: A case study from the Taiwanese automobile industry. Transportation Research Part D: Transport and Environment, 48(1), 20-30.

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