Nissan Motor Company responded to the 2011 earthquake disaster using several actions. These targeted actions presented numerous benefits and costs to the corporation. Such actions presented unique benefits and costs. The main focus after the disaster was to use a powerful emergency-response strategy.
The first action was to improve the level of information sharing. Many experts from different regions came to Japan in order to solve the targeted problem in a holistic manner (Schmidt & Simchi-Levi, 2013). This effort made it easier for the firm to deal with the disaster. The firm was on the right path towards recovery. However, the effort affected the performance of other subsidiaries in different parts of the world. This was the case because every manager concentrated on the disaster.
The second practice was the allocation of supply (Schmidt & Simchi-Levi, 2013, p. 6). This approach brought together different teams in order allocate various supplies. The firms resources were allocated in a proper manner depending on the targeted demands. This effort supported the firms supply chain. This strategy was critical towards supporting Nissans business model.
The third approach was to manage Nissans production. The firm considered in-transit and in-stock inventory within its networks (Schmidt & Simchi-Levi, 2013, p. 6). This approach addressed the bottlenecks that might have affected the firms recovery process. These actions made it easier for the firm to recover from the disaster.
The fourth approach was to support a rapid action (Schmidt & Simchi-Levi, 2013, p. 6). Every person in the firm was part of the decision-making process. A Global Disaster Control Headquarters (GDCH) was created a few minutes after the disaster (Schmidt & Simchi-Levi, 2013). This team formulated the best strategies in order to restore Nissans operations. The company was forced to incur more costs in order to support the above actions. The important thing was to support the firms business goals.
These four approaches encouraged the firm to restore its global activities. The main goal was to optimize the companys supply chain. Nissan used its production plants in Europe to supply the required spare parts. The European team collaborated with different counterparts in Japan. This action made it easier for the firm to support its business strategy. The action also supported the needs of the companys customers.
What else could Nissan have done to prepare for and respond to the disaster?
It is agreeable that Nissan used a powerful strategy to respond to the disaster. However, the existing supply chain could not support the companys recovery efforts. Nissan had always maintained a simple product line. The firm also used a build-to-stock approach for its SKUs (Schmidt & Simchi-Levi, 2013, p. 4). The companys supply chain philosophy was characterized by extreme vigilance associated with single point responsibility (Schmidt & Simchi-Levi, 2013, p. 4). That being the case, Nissan should have implemented a Disaster Management System (DMS) before the earthquake took place. The DMS model would have ensured more facilities were in place across the country. Such facilities should have been constructed in the mainland. The facilities would produce different supplies, spare parts, and critical components. The targeted supplies would support Nissans business model even after the disaster.
The DMS model would have made it possible for the firm to respond effectively to the disaster. The firm would not have undertaken the above actions after the disaster. Nissan would have used the right resources to deal with the disaster (Schmidt & Simchi-Levi, 2013). The firm should have also established a powerful Disaster Response Team (DRT). Such DMS models are usually expensive to implement. However, it would have supported the firm throughout the crisis period. The above GDCH would not have been created after this earthquake.
What could Nissan have done to assess the risk of disruption in their supply chain?
The recovery process did not assess the risk of disruption in the firms supply chain. A proper strategy could have made it easier for Nissan to assess this risk. The firm should have collected relevant data from different departments. The sales and marketing department would have presented the best information (Schmidt & Simchi-Levi, 2013). The finance department should have analyzed the risks associated with this disruption. A proper inventory would have highlighted most of the disruptions in the companys supply chain. Nissan should have also interviewed different customers in order to assess the level of disruption. The managers should have used the gathered information to make the best decisions.
How did Nissans product line strategy help or hurt its ability to respond to and recover from the disaster?
Nissans product line strategy had produced the best goals for many years. However, the strategy hurt the companys ability to deal with the disaster. To begin with, the firm could not have reproduced the strategy after the disaster. It also paralyzed the companys operations because most of the supplies were obtained from Japan. The strategy made it impossible for the firm to support its consumers in different parts of the world. This disaster forced Nissan to identify new actions (Schmidt & Simchi-Levi, 2013).
The process of recovery was also affected. For instance, Nissan had to collaborate with many managers from different parts of the world. The corporation identified new responses that had never been tried before. The level of interdependence in the supply chain affected the expectations of many customers. The firm decided to stop its local operations for two months (Schmidt & Simchi-Levi, 2013). This move eventually affected the companys goals. The next step was to undertake a new path towards recovery. The lessons learned from the disaster encouraged Nissan to embrace new practices.
How will the operational changes announced in 2012 affect Nissans exposure to future disruptions?
The operational changes announced in 2012 affected Nissans exposure to any future disruption. The first approach focused on seismic reinforcement of its production facilities, disaster simulation trainings, and improved Business Continuity Planning (Schmidt & Simchi-Levi, 2013, p. 4). These strategies would have insulated Nissan from the existing constraints in its supply chain. Nissan also decided to maximize the production of its quality products in North America (Schmidt & Simchi-Levi, 2013). This strategy was critical towards reducing reliance on Japanese-made components in different foreign plants (Schmidt & Simchi-Levi, 2013, p. 8). These efforts would ensure the company maintained its steady-state operations.
The important goal was to reduce the level of interdependence in Nissans supply chain. A powerful Business Continuity Plan (BCP) was also required in order to produce an effective supply chain. This approach would eventually make Nissans business more sustainable. The proposed changes would also support Nissans steady-state operations. Such changes would also minimize the risks associated with similar disasters. The managers at the firm also made several trade-offs. For instance, the managers were focusing on different countries in Europe and North America. The approach could support the needs of every foreign customer. The firm should also develop a powerful supply chain supply (Schmidt & Simchi-Levi, 2013). This effort is relevant towards producing a powerful Risk Management Plan (RMP). The strategy will eventually make Nissans business model more sustainable.
Reference List
Schmidt, W., & Simchi-Levi, D. (2013). Nissan Motor Company Limited: Building Operational Resiliency. MIT Sloan Management, 13(1), 1-12.
A. When discussing the Nissan case study, it is important to mention that the company placed emphasis on diversity, with offices including employees of numerous cultures and nationalities and extensive experiences in the overseas operations. Moreover, Nissan implemented a build-to-order and build-to-stock approach in order to streamline the processes and simplify the products manufactured. According to the beliefs of the management, the adoption of the build-to-stock and order strategy made a positive influence on the increase in sales.
Compared to key competitors, Nissan introduced a simplified line of products with a view to compliment the key strategies (Schmidt & Simchi-Levi, 2013). Therefore, this allowed the company to overcome unpredictable challenges and change the way Nissan usually responded to emergencies and risks.
Nissan also focused on the importance of the supply chains within the context of increased globalization of the automotive industry. Importantly, Nissan leveraged a decentralized structure of supply chains and later imposed central control and coordination in cases of crises (Schmidt & Simchi-Levi, 2013). Apart from contributing to the developing of the corporate culture, the flexible organization of the supply chain was efficient in the process of management of the major global operations through the valuing of the executive team.
One of the critical components of operations management functions is the production of vehicles that are of high quality but reasonably priced. In addition, it enables the company to ensure the rewarding customer experience by furnishing considerate customer care and manufacturing reliable and environmentally friendly cars that correspond with clients needs (Schmidt & Simchi-Levi, 2013). Moreover, the enterprise cherishes and promotes the diversity. The multi-nationality that characterizes its workforce allows meeting the requirements of the diverse markets in which Nissan functions.
Trying to become more competitive in the automotive market that offers very vast competitive opportunities is hard for many companies. According to the research conducted by Toma and Marinescu (2013), Nissan used 13 cross-functional areas that represent the core of the companys functional spheres. Following the logic of the cross-functional areas, Nissan focused on the global strategy that accounts for the quick expansion of the process of globalization. Therefore, Nissan has to be a proactive multinational and transnational company that has considerable resources (Toma & Marinescu, 2013) for sustaining a competitive advantage in the automotive industry where every manufacturer is faced with great struggle and thus the requirement to implement global strategies for competitive advantage to at least survive.
Service operations and manufacturing operations have both similarities and differences. The main distinction lies in the tangibility of the output. In the first case, the output is intangible (for instance, purchasing a vehicle from Nissan and its maintenance). In the second case, operations produce physical goods (for example, car manufacturing). Nissan brings value to the clients by addressing all the customers needs so that they do not have to turn to other companies for service provision (Pyzdek & Keller, 2014). The main similarity between the two categories is that labor and location are needed for both of them.
To achieve the competitive edge, Nissan has decentralized the supply chain structure. At the time of the natural disasters, the company was already prepared to mitigate the possible disruptions through strong central control and coordination (Hill, Hult, Wickramasekera, Liesch, & Mackenzie, 2016). This strategy enabled the enterprise to recover from the crisis faster than the rivals and bring the value to the clients rapidly. As stated by the company CEO, most of the steps we have taken in response to the March 11 disaster have been continuations of strategies priorities and plans that were already in place (Schmidt & Simchi-Levi, 2013, p. 7). Therefore, the emergency response strategy was centered on the decentralization of supply chain.
Theories and Techniques
MRP calculations must be accompanied by the development of product structure, building a gross requirement plan, as well as building a net requirement plan. MRP is a dynamic system that changes according to how company changes. The calculations for gross to net for MRP is the following: Gross Requirements On Hand Inventory = Gross Requirements. The input files needed for a successful MRP are master production schedule, production cycle, bill of materials, customer focus, and supplier lead times.
It should be noted that PERT (Program/Project Management and Review Technique) places emphasis on timeframe and planning. CPM (Critical Path Method) centers on the cost (OBrien & Plotnick, 2015). In terms of the company under analysis, the first system would be more advantageous since the occurrences that took place were unpredictable. In addition, this approach enables determining the minimum amount of time needed to furnish the task as well as the activity in general. Regarding CPM, Nissan could utilize it in everyday occupations or when cutting down the expenses in particular project parts.
The steps of forecasting can be concluded to the following: defining the operation that needs it, determining the items, and specifying the timeframe (range of the forecast). Then, Nissan could choose the approach and utilize a qualitative method to produce the new commodity. Regarding top-selling product line, the enterprise will be able to address clients requirements better. It will be achieved through ensuring supply chain visibility. The major risks and reduction practices can be concluded to two main categories. They are currency fluctuations and financial risks (Abe & Ye, 2013). The company could employ flexibility in manufacturing decisions and decentralization to remit the possible negative manifestations (Mahutga, 2012).
Priority rules usually dictate the sequence in which jobs are works. Priority rules make job-processing times and due dates crucial information pieces. There are four types: first come, first served (FCFS), shortest processing time (set), the critical ratio (CR), and earlier due date (EDD). Earlier due date can be the most effective priority rule for Nissan since it implies that jobs are processed in accordance with due dates, with the earliest due dates first. Because the company is trying to become more sustainable and operate within the just-in-time framework, it can be useful to fulfill tasks that have the earliest due dates to ensure that customers remain satisfied.
Theory of constraints (TOC) is associated with the process of mitigation and identification of bottlenecks within systems. The five steps of the TOC process include the following:
Identifying constraints within the system finding the part within the process that limits the goal from being achieved;
Deciding on how to exploit the identified constraints using improvements to get the most out of the existing resources (Dettmer, 2000);
Subordinating other components to the decision adjusting the rate of activities to support the decision;
Elevating the constraints considering further actions for eliminating the constraint;
Going back to the step 1 in the case if the constraint has been broken at previous steps avoiding the constraint in the future (Goldratt, 1999).
According to the case study by Schmidt and Simchi-Levi (2013), Nissan experienced some financial difficulties in the process of risk management, which suggests that this area could benefit from the application of the theory of constraints. However, supply chain management is the most challenging process, with which Nissan has to deal, so it is important for the company to identify the constraints within the process and decide how to elevate them for achieving maximum performance.
There are seven steps that companies can use for developing a cohesive forecasting system: identifying the utilization of the forecast, selecting items for the projection, determining the timeline, choosing a forecasting model, gathering data, forecast creating, and implementation. In the case of Nissan, it can use quantitative prediction that is based on the history of sales to input into the forecast. A forecasting system can bring positive results with regards to reducing waste and only producing as many products as customers will be willing to buy.
Risks associated with the effectiveness of the supply chain are differentiated into two categories: internal and external risks. With regards to external supply chain risks, there are the following types:
demand risks, which occur when there is unpredictable or misunderstood demand of customers;
supply risks, which are caused by the interruptions in product flow within the supply chain;
environmental hazards that occur externally in the supply chain and are usually associated with social, governmental, or economic factors;
business risks, which are caused by factors such as the processes within supplier companies and their stability with regards to management or finance;
plant hazards, which are caused by the circumstances within the physical facilities (Identifying supply chain risks, n.d.).
Internal supply chain risks are easier for companies to manage because they are usually within the control of the business. Five types of internal supply chain risks are the following:
manufacturing risks, which occur as results of processes and operations disruptions;
business risks, which take place due to the disruptive changes in personnel or management as well as the shifts in the ways suppliers and purchases communicate;
control hazards, which occur due to the inadequate planning procedures and the lack of effective management;
risks of mitigation and contingency that are caused by the absence of alternative solutions in cases when something does not go the right way;
cultural risks, which occur as results of the cultural tendencies of businesses to delay or hide negative information, which contributes to the slower reactions of companies to emergencies ( Identifying supply chain risks, n.d.).
Supply chain resilience is targeted at risk reduction and can be used by companies even in cases of natural disasters. With regards to resilience, a company should regionalize. Regionalization is often effective in helping a company reduce costs and contain the impact of natural disasters to a specific geographic region (Chopra & Sodhi, 2014). By implementing the regionalization approach towards the distribution of manufacturing facilities of Nissan, the company will be able to design a cohesive plan for the mitigation of natural disaster risks since usually one region is more prone to such incidents than others. For example, through identifying the most disaster-prone areas on the map, Nissan will give more priority to those regions to respond to risks as quickly as possible.
Just-in-time (JIT) is a manufacturing and inventory strategy that companies use for increasing efficiency and decreasing waste by receiving goods only when they are needed in the process of production ( Just in time JIT, n.d.a). Toyota Production System (TPS) is based on making vehicles that customers order in the most efficient way for delivering them as quick as possible (Toyota, 2017). TPS aligns with the ideas of just-in-time inventory and lean.
Lean manufacturing is an approach that is based on finding the most efficient approach for removing any wasteful steps that do not add value to the end product (MT Team, 2017). All three concepts are related in a way that they enable manufacturers to focus on efficiency and removal of waste without compromising the quality of the end product. On the bright side, JIT, TPS, and lean reduce inventory costs; on the downside, it requires manufacturers to be extremely accurate when forecasting demand.
With regards to Toyota, just-in-time, TPS, and lean encouraged the company to pull materials forward when they were needed, with components produced and received in small lots. On the other hand, the overall system was not risk-free (Schmidt & Simchi-Levi, 2013). For instance, if there were disturbances in the information or material flow, the manufacturing stages can be significantly undermined.
Total quality management (TQM) is an approach towards management for achieving long-term success through ensuring customer satisfaction (ASQ, 2017). Seven TQM tools include check sheets, scatter diagrams, cause-and-effect diagrams, Pareto charts, flowcharts, time-function maps, value-stream maps, and process charts. In the case of Nissan, the management can use time-function maps to identify processes that limit the company from achieving an effective just-in-time framework of manufacturing. Process charts, on the other hand, can be used by Nissan to distinguish between processes that add value to the just-in-time framework as well as those that only produce waste.
Data Analysis
The process map for the new model of X-trail SUVs is presented in the diagram below. The process map can be used for multiple purposes. First, an operations manager can use this value map for checking the current state of the production process. Second, it can be used for assessing the future possibilities. Third, it can be used for complying with the requirements that arise during the process.
X-trail SUV Process Map
Causes of partners struggle are shown in the diagram above; the most prominent are complexity, high costs, and lack of available resources. The constraints partners experience can be mitigated when Nissan addresses the mentioned causes.
Mexico City
Columbia, SC
Political Risk
17.5
20
Transport Costs
8
18
Labor Productivity
17
15
Rental Costs
13.5
8.25
Labor Costs
8
5
Taxes
9
5
Total
73
71.25
According to the calculations above, the two locations got almost equal scores. Although, since the rental and labor costs as well as taxes are lower in South Carolina, it will be a rational decision for Nissan to open a plant there because labor productivity is lower only by two points.
D. Using the ABC inventory classification can allow a business regular its cost control of the materials stored in warehouses. Within the model, materials that make up 70% or more fall under the A category, 20% and below fall under the B category, while materials that are 10% and below in total value fall under the C category. Thus, the framework suggests that even though there are more of some materials, they have less quality compared to those of greater need but of less stock available.
The application of the ABC inventory matrix will allow Nissan to generate a cohesive framework for determining on which materials to focus and on which to not. The calculations for the annual dollar volume, percentage of annual dollar value, and the assigned category for each item are presented in the table below:
Sustainability
Triple Bottom Line (TBL) is an accounting framework that includes tree performance dimensions: social, environmental, and financial (Slaper & Hall, 2011). Three Ps are the dimensions of the TBL: people, planet, and profits (Slaper & Hall, 2011). To enhance operations management in Toyota, the management should address its three dimensions. First, there should be a shift of focus on the fair treatment of employees by enacting favorable practices. Second, Toyota should implement sustainable practices and reduce its environmental impact. Such practices can range from recycling programs to the usage of only sustainable materials ( Triple bottom line, n.d.). Third, the company should align its financial bottom line with the sustainable practices and social responsibility since the largest consumer demographic is willing to pay for sustainable goods ( Triple bottom line, n.d.).
The ISO 14000 standards provide manufacturers with measurements for dealing with their environmental impact by integrating the environmental considerations into the production process. With regards to Toyota Motor Corp., the company identified hundreds of substances and chemicals that the suppliers must not use in their manufacturing process (Gilbert-Miller, n.d.). The alignment with the ISO 14000 standards allows the company to follow the Triple Bottom Line framework to promote the agenda of sustainability and social responsibility to show customers that Toyota cares about reducing the environmental impact associated with the process of vehicle manufacturing.
Integration of corporate social responsibility in a technology-oriented company comprises of knowledge exchange with customers, maintaining sustainable agreements with suppliers, developing employee code of conduct concerning ethics and knowledge dissemination, protecting the interest of the company with regards to protecting the corporate government decisions, and creating a social action plan to benefit local communities (Guadamillas-Gomez, Donate-Manzanares, & Skerlavaj, 2010). Among the mentioned principles, exchanging knowledge with suppliers and customers is the most effective since it will allow the company understand the demands of the public with regards to vehicle manufacturing and get an idea about what suppliers can and cannot do to adhere to the practices of environmental sustainability and social responsibility.
References
Abe, M., & Ye, L. (2013). Building resilient supply chains against natural disasters: The cases of Japan and Thailand. Global Business Review, 14(4), 567-586.
ASQ. (2017). What is total quality management (TQM)? Web.
Chopra, S., & Sodhi, M. (2014). Reducing the risk of supply chain disruptions. Web.
Dettmer, W. (2000). Constraint management. Tuscon, AZ: Quality America Inc.
Gilbert-Miller, S. (n.d.). ISO 14000 becomes a prerequisite for suppliers to stay in the game. Web.
Goldratt, E. (1999). Theory of constraints. Great Barrington, MA: North River Press.
Guadamillas-Gomez, F., Donate-Manzanares, M., & Skerlavaj, M. (2010). The integration of corporate social responsibility into the strategy of technology-intensive firms: A case study. Proceedings of Rijeka School of Economics, 28(1), 9-34.
Hill, C., Hult, T., Wickramasekera, R., Liesch, P., & Mackenzie, K. (2016). Global business today. New York, NY: McGraw-Hill.
Identifying supply chain risks. (n.d.). Web.
Just in time JIT. (n.d.). Web.
Mahutga, M. (2012). When do value chains go global? A theory of the spatialization of global value chains. Global Networks, 12(1), 1-21.
MT Team. (2017). Lean manufacturing: Working more efficiently. Web.
OBrien, J., & Plotnick, F. (2015). CPM in construction management (8th ed.). New York, NY: McGraw Hill.
Pyzdek, T., & Keller, P. (2014). The six sigma handbook (4th ed.). New York, NY: McGraw Hill.
Schmidt, W., & Simchi-Levi, D. (2013). Nissan Motor Company Ltd.: Building operational resiliency. Web.
Slaper, T., & Hall, T. (2011). The triple bottom line: What is it and how does it work? Web.
Toma, S-G., & Marinescu, P. (2013). Global strategy: The case of Nissan Motor Company. Procedia Economics and Finance, 6, 418-423.
Determining the roles and characteristics of a leader and a manager.
Highlighting the differences between them.
Application of relevant theories, concepts, and approaches.
Nissan Motor is one of the leading global company founded in Japan and engaged in the automotive industry, offering a wide range of automobiles and spare parts for them. To meet ever-changing market requirements, not only should Nissan implement various plans and strategies to achieve particular goals, but also have both competent management being able to realize the outlined policy. In this regard, the company should hold a precise idea about the roles and functions of both management and leadership, their differences, and main tasks. Therefore, this presentation aims at determining and comparing the different roles and characteristics of a leader and a manager with highlighting the differences between them. In addition, for better understanding and explanation of roles of management and leadership, relevant theories, concepts, and approaches will be applied.
Functions of a Leader and a Manager
Manager:
Planning;
Organizing;
Leading;
Controlling;
Leader:
Motivation of employees;
Team-building;
Link between management and workers;
Suggesting;
Representing.
In many business environments and companies, the concepts of leadership and management are often confused and used interchangeably. However, although these concepts are interrelated, there is a clear distinction between their functions and characteristics. In this context, the primary roles of a manager are planning, that is, setting goals, organizing, that is, delegating tasks and coordinating the work process, and controlling, namely, supervising and implementing mechanism for achieving objectives. Besides, being a manager should influence workers, that is, lead them toward realizing tasks. On the other hand, the leaders central roles are motivating employees, team building, namely creating a conducive work environment and the sense of collectivism, and being intermediary between the top management and workgroup. Additionally, a leader should propose ideas and solutions, consult the members of staff about work-related issues, and be representative of a company or a particular group.
Abilities of a Leader and a Manager
Manager:
Decision-making;
Technical, administrative, and interpersonal skills;
Scheduling;
Leader:
Learning and understanding;
Communicating;
Problem-solving;
Commitment to a goal;
Awareness.
Regarding the skills that a manager and leader should possess, it should be indicated that there also dissimilarities. Management is related to the ability to coordinate and organise different companys resources, including labour force, material and human resources to realise the objective in a due manner. More precisely, a competent manager should have such abilities as decision-making, technical, administrative, and interpersonal skills, and scheduling. At the same time, leadership is mainly attributed to the capability of creating an ambience that stimulates others and makes them passionate towards a shared aim. More specifically, leadership is characterised with skills such as learning and understanding technical issues, communicating, problem-solving, and influencing on others. In addition, a leader should possess a commitment to a goal and awareness, that is, the ability to evaluate the significance of own and others actions, situation, and event.
Market Price Fluctuations
Functions of a manager:
Develop a relevant strategy;
Delegating task on middle management;
Enlisting and allocating all necessary resources;
Roles of a leader:
Outline a clear vision;
Represent the plan to employees;
Create a favourable environment.
Since Nissan deals with manufacturing automobiles, its revenue significantly depends on tendencies occurring in the fuel market; for example, an increase in the oil price can result in falling demand for cars. According to the contingency theory, there is no universal best way that can handle a particular situation and the success of the organisation is determined by appropriate managerial responses to internal and external changes. In this context, the role of top management is to develop a relevant strategy that adequately responds to market price fluctuations. The senior management also may bring specific adjustments in the current policy to make the company resistant to price jumps in oil. To implement changes, the CEO should delegate all the necessary tasks to the middle management and draw and allocate the required resources.
The situational leadership theory states that there no best style of leadership, and thus, the leaders success is contingent upon the ability to adapt their behaviour to a specific situation. According to this theory, a leader should outline a clear vision about potential risks, solutions, and tasks and represent this to his or her employees. Besides, a leader should create a favourable environment that stimulates workers for excellent results, facilitates the relationship within the staff, and enables employees to mature and develop in their professional field. It also should be added that one of the possible solutions in this situation may be designing and producing new fuel-saving car models or electric cars.
Severe Competition
The companys management should:
Build a healthy corporate culture;
Develop a robust relationship among workers;
Provide their employees with all the needed means;
A leader should:
Involve stakeholders who share a common goal;
Provide comprehensive cooperation and mutual accountability;
Promote learning, trust-building, decision-making among stakeholders.
In the conditions of cut-throat competition, Nissan corporation always faces various challenges and intense pressure from its main rivals, including Honda and Toyota. According to Mayos behavioural management approach, the employees performance, and hence the productivity of a company, depends more on the social setting, in which workers take place, and human relationship than economic incentives. In other words, the better employees are valued and concerned, the better they fulfil their duties. Therefore, to withstand aggressive situations, the companys management should build a healthy corporate culture with a robust relationship among workers and opportune atmosphere. Moreover, a manager should take care of providing their employees with all the needed means that facilitate the working process and ensure safety.
In a competitive environment, the business has to develop new methods to improve its performance. According to Dreier et al. (2019), the systems leadership is a contemporary instrument, the central focus of which is placed on collaborative leadership that catalyse and sustain the process of systems-level change. In other words, this approach implies building unions of diverse stakeholders around a shared vision for an objective, providing comprehensive cooperation and mutual accountability to ensure sustainability. Thus, Nissan should promote the involvement of all stakeholders, who share a common goal, in the process of learning, trust-building, decision-making to address a particular challenge.
Conclusion
The presentation has discussed:
The differences between the roles of leadership and functions of management;
The abilities and skills that both manager and leader should possess;
Recommendations for the future:
Involve all stakeholders in working process;
Provide appropriate treatment towards its employees.
In summary, the presentation has discussed the differences between the roles of leadership and functions of management, applying different theories such as the contingency theory, situational leadership, Mayos behavioural management approach, and the systems leadership. In addition, the abilities and skills that both manager and leader should possess have been defined as well. It should also be added that a manager can impact an organisation via right planning, organising, and coordinating corporate resources, while a leader should focus on stimulating employees and formulating the right vision. Finally, it can be recommended for the company to involve all stakeholders in working process and decision-making and provide appropriate treatment and respectful attitude towards its employees to ensure excellent performance
Reference
Dreier, L., Nabarro, D., & Nelson, J. (2019). Systems Leadership for Sustainable Development: Strategies for Achieving Systemic Change. Harvard Kennedy School.
Product positioning refers to the marketers abilities to arrange or distribute a range of products or services in a manner that arouses interest of consumers in a company at the expense of its competitors. When Nissan transferred its operations from South Korea to Japan, it also made major changes, including the appointment of a new CEO, Carlos Ghosn.
In reference to Nissans recent performance in the automobile industry, the company seems to enjoy much consumer attention because of the electric cars, fuel saving engines, and high-tech designs among other features. According to the paper, Nissan underwent a radical change in terms of production, design, and leadership, a process that is very difficult to undergo (Simchi-Levi & Schmidt, 2012).
Though the companys headquarter is in Yokohama, Japan, it manufacturers most of its latest cars like Nissan Bluebird in South Korea. The alliance is not new since Nissan has enjoyed partnership with Renault in South Korea from 1999. Common Nissan brands include Infiniti, NISMO, and Datsun manufactured in Japan and South Korea concurrently under the leadership of Ghosn.
The intention of the paper is to explain how change had a positive impact on Nissans ranking in the world since 2013. Recently, the company enjoyed sixth position behind major vehicle manufacturers in the world such as Toyota, Ford, and Volkswagen.
History
Nissan is a multinational company that uses the selling philosophy of marketing orientation in capturing the attention of the growing consumer base. The company acquired prominence in the 1930s even though the Datsun brand existed since 1914. Under the name Kwaishinsha Motor Car Works 103 years ago, Nissan had the DAT as the first innovation.
After 7 years of operation, the company changed its name to DAT Jidosha and Company Limited for purposes of branding and easy identification with the companys products. In the same year, the company transformed from a manufacturer of the renowned Nissan Model 70 Phaeton (1938 model) to Datsun vehicles that could carry passengers (Nissan Motor Company Global Website, 2014).
The change attracted commercial car owners who also required heavy-duty trucks for production, and military cars fitted with defense facilities. Among countries that imported the Nissan cars, the US preferred the Japanese manufactured vehicles to trucks from other companies. After a merger with Jitsuyo Jidosha Company in Osaka, Japan, Nissan rebranded to DAT Jidosha Seizo Company Limited Automobile Manufacturing Company Limited.
By the 1920s, the strategy was to reduce the physical size of Nissan cars while increasing their capabilities. The company came up with Datson to indicate a small version of the original DAT. A decade later, the company became Nissan Motor Company; it has retained the name to date.
However, the company underwent a series of changes in leadership as indicated by the presence of 13 Japanese CEOs from 1933 to 2001. Today the company has a Pilipino CEO who records an immense history of success in the company.
Change
Change refers to a visible event that leads to the recognition of an organization in a positive or a negative manner. Normally, organizations measure change by assessing the duration taken and effort made towards the achievement of the change. Nissans change concept included a focus on its leadership structure, the models, organizational culture, and marketing (Nissan Announces Management Change in the Philippines, 2014).
The congruence model of change concerns identification of a problem and seeking of long-term solutions in an interconnected manner. David Nadler and Michael Tushman came up with the congruence model that explains that organizational success is an outcome of people, culture, task, and structure. Nissan had to transform its organizational culture as illustrated in the following illustration.
(Nilakant & Ramnarayan, 2006)
Nissan took a demographic outlook of its business procedures in 2001, and it considered employing a foreign CEO who would run both the South Korean and Japanese Nissan firms concurrently. Arguably, the process would save costs for the firm while ensuring that Nissan had a team and not a group of employees by the time it underwent a complete overhaul (Nilakant & Ramnarayan, 2006).
Since the people cannot change an organization without a transformational structure and culture, Nissan had to incorporate a culture of inclusivity in 2013. Through the culture, it incorporates the ideas of other team members willing to draw different automobile designs from trucks to luxury vehicles and passenger vehicles.
Structurally, Nissan is a mechanistic organization whose operations aim at improving previous innovations in order to meet the growing automobile demands. Driving forces towards the change included the ability to create a demand that would meet the aesthetic needs of the diverse consumers.
Culture of the organization
The original culture of the organization under Yoshisuke Aikawa for six years since 1993 displayed a dictatorial approach to issues. Prominent leaders including Takashi Ishihara, Souji Yamamoto, Takeshi Murayama, and Taichi Minoura among other company leaders used dictatorial approaches to govern Nissan since its inception.
To date, the influence of the first company CEO is obvious since most charity organizations and sports sponsorship programs seem to take an interest in the East instead of other parts of the world. Aikawa mostly incorporated the American culture in which the company had to improve its innovations after particular period.
Nissan supplied the Graham-Paige Company in the US, and its designs had to match the set threshold for machinery used in the US between 1985 and 1992, Nissan underwent a major leadership change under Yutaka Kume who emphasized on a strict laissez faire structure of governance (Brown, 2007). Content-driven change is a model that explains how organizations use particular programs to maintain excellent customer relationships.
Kume provided a laissez faire environment through which consumers could relate freely with the marketers and customer care departments. Even though people operated within a non-controlled environment, they had to account for their performances through a scorecard (Nilakant & Ramnarayan, 2006).
Customer relation is not a new concept at Nissan, which started to market its Datsun 16 in 1937. About the same period, the company opened a showroom in Austin even though its British branch spearheaded the marketing procedure. The 1950s saw Nissan introduce patents to protect its inventions ahead of competition from prominent firms such as Toyota and Volkswagen.
Through investor and customer relations, Nissan came up with the Nissan L engine resembling the OHC (cylinder overhead cam) of the Mercedes Benz. The invention meant that the customers wanted an advanced machinery from an automobile that served them for a long period since 1914 (Nilakant & Ramnarayan, 2006). Later, the Sedan, Tina, and the sports Datsun range of vehicles surfaced in an attempt to respond to consumers requests.
Carlos Ghosns reign followed the leadership of Yoshikazu Hanawa equally characterized by a laissez faire structure and culture. The current culture is very robust, and Ghosns democratic leadership style enables Nissan to enjoy the requisite competitive advantage (Adair, 2006).
The Change effort itself
When William Bridges came up with transition change model, he developed three major change stages that companies or individuals can embrace. The conduits represent the support mechanisms that help organizations to make a transition from one stage to another. Ending, losing, and letting go is the first stage that Bridges adopted; he mentioned that it is very difficult to forget initial practices prior to embracing new ways of doing things (Specto, 2010).
Some companies undergo a state of fear, denial, frustration, and uncertainty among other drawbacks that prevent change. Empathy and open communication channels form the basis of embracing change in a state of confusion. The neutral zone represents the second phase in which all people within the organization undergo confusion for inability to comprehend the best step of action to take in order to deal with the transformation (Edwards, 2000).
The stage characterized by high levels of confusion and impatience creates an environment of resentment from austere policies. Taichi Minoura and Yoshisuke Aikawa were examples of pioneers of Nissan that mostly supported their personal designs and market destinations for Nissan vehicles. In the end, the two targeted the wrong markets with the right products, which created a marketing dilemma.
Resentment towards change in the 1950s became obvious as the CEOs strived to concentrate on Russian, Chinese, and African markets, instead of the Austin market in Texas. For a long period, Nissan found comfort in North America while forgetting the significance of other emerging markets in transforming Nisan. It was until recently that Ghosn took a bold step in expanding to parts of Africa and Europe in order to premier its new collection of luxury cars, trucks, and sports vehicles (Nilakant & Ramnarayan, 2006).
The new beginning incorporates many channels of feedback because it represents a stage in which people accept change. Since it is the last transition, people have to come up with strategies that appear unique from the competitors in order to create the least possible leeway for the competitor to gain an advantage. Yoshikazu Hanawas transition to Ghosn was an excellent growth opportunity for Nissan.
Contrary to the common Japanese makes, Ghosn opted for both South Korean and Japanese designs (Brown, 2007). The negative impact of the change is that Ghosn does the work of executives in two rival companies. Such workloads often overwhelm CEOs, especially when they have a record of great performance.
South Korean-Renault and the Nissan Motor Company need proper management, and assuming that a single executive can achieve the objective might not be right. Changes in the 1960s signified by the sequential change model were equally obvious (Specto, 2010). Its first stage discusses the prevailing strategy, which includes the roles and relationships of the incumbent leaders.
Secondly, it deals with the training and mentoring projects as signified by the patent units introduced within Japan. The third step includes talent management that mostly involves recruitment and promotion of respective individuals in preparation for different job vacancies. Finally, the sequential model deals with the structures and systems of organizations. It includes the ability to motivate employees and ensuring that they perform excellently within a competitive environment (Chan & Drasgow, 2001).
Kume and Ghosn extensively used communication to promote cultural integration within the Nissan Company. They supported previous mergers such as Nissan and Prince Motor Company, Nissan and Fairlady, and Nissan and Dongfeng Motor Corporation among others. Under Yutaka Katayama, Nissan Sedans were exceptional, and Datsun Fairlady expanded to the US and other parts of the world.
Leadership of the change effort
Change does not come easily as explained by Kotters model. According to the theory, the ability to create urgency that change is necessary remains very significant for transformation. The state of urgency as supported by a SWOT analysis was obvious in the way Nissan participated in many mergers. With Infiniti, the company came up with luxurious vehicles.
The same happened with the merger between Nissan and Fairlady. Datsun and the Z-car were very important innovations that linked Fairlady with Nissan, especially during the manufacture of sports utility vehicles. Formation of powerful coalition is a second stage for the change model. Arguably, people need support since growing alone strains a company brand wise and economically.
A third element of the model that helped Nissan realize itself in the rivaled market during the era of Ghosn was creation of a common vision for purposes of change (Pinder, 2008). Common values and an all-inclusive strategy incorporated with vision and mission statements bridge the communication gap between clients, investors, employees, and supervisors.
At Nissan, a clear channel of communication might not be inexistence, but the chain of command is obvious. The CEO receives information from other managers in charge of marketing, PR, finance, and logistics among other areas of concern. Like Steve Jobs, Ghosn is at the center of most business operations while constantly intervening in case of any problems in diverse departments within the company. Removal of obstacles, creation of achievable and realistic goals, and building a positive attitude of change within the organization are the key priorities for Ghosn in creating change.
Recommendations
As at 2013, Nissan Titan was the most popular Nissan vehicle in the history of the brand. The corporations logo changed in 2013 marking an era of rebranding for the company amidst the battle to become the best car manufacturer in the world ahead of Toyota. Datsun, Infiniti, NISMO, and other brands also show high optimism or increased sales in the next half a decade of operation in South Korea and Japan.
According to the CSR Steering committee, Nissans electric cars attract Russia, Mexico, and other parts of the world than other gasoline driven cars from the company (Nissan Motor Company Global Website, 2014). Following a joint venture with RenaultNissan Alliance in 2012, the company came up with good models such as Nissan Bluebird, Primera, and Naeta among other luxury vehicles that people can use for motorcades.
The Kurt Lewins change model insinuates that change is a three-step process. The unfreezing stage is the most difficult as people have to adjust to a completely new system, and uncertainty is very high. According to Grojean, Resick, Dickson, and Smith (2004), the change process remains very difficult, but through motivation people learns to embrace change until they reach the state of comfort, which experts refer to as freezing. Notably, the current CEO strives at convincing the consumers that Nissan does not only focus on good bodies for the cars, but on quality engines.
References
Adair, J. E. (2006). Leadership and motivation: The fifty-fifty rule and the eight key principles of motivating others. London: Kogan Page.
Brown, M. G. (2007). Beyond the balanced scorecard: Improving business intelligence with analytics. New York: Productivity Press.
Chan, K., & Drasgow, F. (2001). Toward a theory of individual differences and leadership: Understanding the motivation to lead. Journal of Applied Psychology, 86(3), 481-498.
Edwards, T. (2000). Innovation and Organizational Change: Developments Towards an Interactive Process Perspective. Technology Analysis & Strategic Management, 12(4), 445-464.
Grojean, M. W., Resick, C. J., Dickson, M. W., & Smith, D. B. (2004). Leaders, Values, and Organizational Climate: Examining Leadership Strategies for Establishing an Organizational Climate Regarding Ethics. Journal of Business Ethics, 55(3), 223-241.
Nilakant, V., & Ramnarayan, S. (2006). Change management: Altering mindsets in a global context. New Delhi: Response Books.
Nissan Announces Management Change in the Philippines. (2014, July 25). Web.
Stock valuation refers to the processes involving the determination of the current monetary worth of a given company based on its projected future cash flow. This is done by comparing cash flow patterns associated with the company, by analyzing its book value, Market value and intrinsic value otherwise referred to as economic value.
In Stock valuation, there are two categories of valuation models; absolute valuation model which reflects the intrinsic value of the stock and the relative valuation model which compares the company to other comparable companies. The comparison variations among the market value, intrinsic value and the book value enable one to determine whether the stock is overvalued or undervalued. Only after this can one decide on whether to purchase the stock or not. In this case, we seek to conduct a fundamental analysis of the Nissan Company with a focus on the possibility to purchase its stock (Johnson, 86).
Nissan Motor Company was established in the year 1933 as the pioneer in automobiles with its headquarter is in Yokohama, Japan (Fahri and Johnson, 32). It was then called Jidosha Seizo Company Limited. It changed its name to Nissan a year later after the completion of the Yokohama Plant and thereafter transformed into an integrated factory for automobile manufacture, the first of its kind in Japan.
The company has spread its subsidiaries worldwide over the past seven decades. Currently, it is the world’s second automobile producer after Toyota Company. It makes an annual production output of approximately 4.9 percent of the global automobile output. Fahri and Johnson explain “As an automotive firm, it deals with the design and manufacturing and of course sales of automotive products as well as related accessories, services and parts.
With the global recession and the fall in Dollar value against the Japanese Yen in the 1990s, Nissan Company began to realize financial depression since their sales in the American Market drastically dropped (102). Nissan Motor Company Limited registered its stock in the Tokyo Stock Exchange in 1951; nonetheless, its stock has not been consistent in growth due to fluctuation in levels of profitability since its registration.
The fall prompted the discontinuation of vehicle production in some of its subsidiaries such as the Zama and Murayama Plant. Investors’ confidence was reduced due to the fluctuation of its share prices. This study undertakes to determine its current Market position by comparing its value investment and growth investment perspectives, and the rationale of buying its stock.
Different categories and styles are used do distinguish between the mode of investment of a particular stock. It is however, misleading to imagine that classification of any stock can be accurate and consistent. Miller and Larry defines Value investor as an investor who lays more emphasis on the price of a stock and gets attracted to the lower prices to establish the preferred stock. In essence, these investors are speculators, who rely on high cash flow stocks (86).
Growth Investor on the other hand, focuses on the legacy of growth a company has and the average growth rate per annum. There is little concern over its current market price for a growth investor. They capitalize on the notion that the stock has exhibited above average growth in the past. They then assume that there is high prospect of it growing in the future thus guaranteeing high dividend return. Nissan Motor Company would be classified as value oriented stock rather than growth investment and would be preferred by short term speculators.
This is because Nissan Motor Company has deteriorated in its profitability and cash flow, repeatedly recording enormous losses for example, in 1994 it recorded a loss of USD 2.0 Billion and USD 3.2 Billion in 1996. Only after merging with Renault in 1999, did Nissan regain its cash flow and increase sales volume thus benefitting from leverage (Miller and Larry, 130).
We find in Eades et al that, intrinsic value of a stock is the actual asset value with respect to its current true value of the enterprise. Since it is based on both real and virtual factors, in many cases it differs from the market value of business at any moment (48). Intrinsic value of a stock varies from time to time therefore; it is never constant at any one time (Eades et al, 102). For Nissan currently will be computed using Dividend Discounting Model DDM as stated below:
Intrinsic Stock (P) =D/ (K-G)
Where P is the intrinsic stock value, D is the expected dividend per share in one year’s time from now, K is the required return for equity Investor and G is the perpetual dividend growth rate. Now for Nissan currently, K=13.8%, G=1.6% and D is USD 213.99 per share.
P= 213.99/ (13.8-1.6)
P= 213.99/12.20
P= USD 17.54 per share.
This value is only based on the current variables. This is bound to change depending on the investors’ perspective from time to time. Anything is possible; it may grow higher or even diminish further.
Fundamental analysis is usually used to determine whether a particular stock is under or overvalued. It follows standard criteria as illustrated below:
When Market value exceeds intrinsic value then the Stock is overpriced
When Market value equals to intrinsic value then the Stock is normally priced
When Market value is less than intrinsic value then the Stock is underpriced
The current market price for Nissan Stock is at USD 18.98 per share. It is therefore, clear here that the intrinsic value is less than the market value so the conclusion is that Nissan stock is overvalued (Miller and Larry, 136). A speculator would in this case be advised to study the variation between these two values before making a move purchase this stock. Conversely for a growth investor, this does not determine his or her decisions.
Following the realization of the stock value of Nissan Motor Company stock, I hold reservations about a value investor willing to buy stock at such an overpriced value. As a matter of fact, it is advantageous to the seller than for a buyer. In my perspective, this is not the preferred stock currently until the reverse happens or unless one is a growth investor. This is because the stock has a hidden growth potential with long term dividend return.
Nissan has survived in much economic turmoil. At sometimes, the company’s growth declines, and sometimes it grows. The company grew and started trading in stock market. Its stocks perform averagely in the market. The computation of stock value is done using a combination of multiple models. This is to ensure that all avenues are exhausted in determining and making comparisons of ratios generated by the various m models. This would ensure accuracy because one model would act as a control tool for the other in order to produce realistic figures.
Works Cited
Eades, Kenneth, et al. The Portable MBA: Nissan Shares Trading. New York: John Willey & Sons, 2010. Print.
Fahri, Stephane and, Johnson Richard. Renault, Nissan to cut dealer. South America: Trade Publication, 1999. Print.
Johnson, Richard. Nissan Loss Widens to Nearly $2 Billion. Tokyo: Automotive News. 1994. Print.
Miller, Lowry and, Larry Armstrong. Will Nissan Get It Right This Time? After a Decade of Trouble. The Carmaker Is Making Major Changes Business Weekly, 1992. Print.
The Renault company best known for its innovative and design was to undergo a turnaround with the Japanese motor giant, Nissan. The Nissan has a prolonged fame of producing quality engine systems. The two companies agreed to form a major strategic alliance. This alliance would be the fourth largest car making company across the globe. The Renault was to assume $ 5.4 billion of Nissan’s debt.
This alliance made sense for both sides since the Nissan Company’s strengths would cover the gaps of the Renault company and vice versa. The Renault was to reduce the much debt owed to the Nissan industry. The success of the alliance would purely depend on the conversion of the Nissan of the Nissan industry into a profitable and rising business as proposed by Schweitzer. An earlier attempt by the Renault Company to merge with Volvo was not successful due to the traditional state control of the player countries.
Before the idea of turnaround had emerged, Nissan Company was really struggling to earn the estimated profits. The cost of making a Nissan vehicle was extremely high hence; its market price for its products were high compared to other firms in the industry. The company stock had to accumulate since it would pile more than million more cars each single year. This made the company accumulate more and more debts.
In order for the company to protect its identity and maintain self-esteem for its people merger was the most appropriate option as at that time. Currently, the turnaround has achieved more success beyond its imagination. Nissan is very profitable, and its identity has been on the upward growth.
The successful turnaround of the two companies is due to the mobilization of the Nissan managers through cross-functional teams meant to spearhead radical changes and maintenance corporate culture by the Renault Company. The Nissan Company made new culture by dramatically breaking its past traditional culture. This enabled it to save money and alienate form the persistent loss making habit associated with the former method.
The company had to dismantle the Keiretsu investments to realize its capital locked up in these in this real-estate investment. In a close analysis, the major problem of the Nissan Company was not only financial constraint but also cultural difficulties. Its older employees stuck down more money and power than they did actually perform breeding complacency to the company hence undermining its competitiveness.
This culture made the company realize more loses, as its customers did not consider how the company undertook the process. However, what the customer required was well-designed and quality products at affordable prices. The company had no choice but to drop this culture and ditch the seniority rule. The company also revamped its compensation system and focused on performance. The company also had another culture of blame where in the case of failure it was due to another persons fault.
The success of such turnaround is ensured by building a trust through transparency within the operations of the two parties. In this alliance, building transparency was through keeping promises and providing totally clear and verified reports. The transparency was through ensuring each party knew what the other was doing and had a record the expected outcome. The alliance has moved form cross-function to cross company.
The two companies had to set up series of joint ventures and formed legal structures that effected the cross-company plan. The companies set respect as the motivating factor for their combined dealings. Since the Renault was not the Nissan’s preferred partner bestowing respect was an important aspect for long-term friendship.
Generally, Nissan’s identity and culture have been the main cause of its success. The relationship between the two companies has grown greatly despite the fact that at the inception Nissan was more of a leaner than the Renault.
In marketing strategy, myriad of companies have adopted the use of product concept whereby additional value and features are added to existing products. In terms of characteristics, quality has been viewed as a competitive marketing strategy in Nissan-Renault alliance.
Besides, quality products have made Renault and Nissan companies to be among three top most automotive groups leading in the market. Their brands have become popular worldwide due to competing quality and reliability.
The commitment to quality service towards sustainable development is driven by responsibility of the two automobile companies to their stakeholders. This essay presents a case study of Nissan and Renault and how they use product concept to achieve synergies.
The alliance between Nissan and Renault has been a unique partnership joined by cross -shareholding and unity to accomplish high performance levels. The two companies have over the years, combined their strengths geared towards developing potential synergies.
The alliance attains this through constructive approach towards achieving better results. It is imperative to note that the growth of this alliance has been through respect to unique brands and corporate identities as well as preserving autonomy of each company.
Research and development (R&D)
Innovative activities as well as research and development (R&D) that the alliance conducts in terms of products to achieve synergies has been a common shared platform for both companies. It is instructive to note that both platforms deal with vehicle parts such as air conditioning, gearboxes and other invisible car parts.
The alliance has used common parts and shared platforms as tools to reduce production and development cost and creates economies of scale.1Besides, in 2008, it managed to sell over 50% of Nissan and Renault through main common platforms such as C platform for Nissan Qashqai and Renault Megane/Scenic, and B platform for Renault Clio and Nissan Versa/Tilda.
Besides common and shared platforms, another area of research has been on powertrains. It is imperative to note that the powertrain of Nissan is gasoline while that of Renault is diesel. As such, the Renault-Nissan alliance deemed it fit to establish common gearboxes and engines such as the V6 diesel engine and the six-speed manual gearbox that would facilitate sharing common powertrains and exchanging powertrains.
The latter has led to creation of Renault products used by Nissan Qashai such as the Renault 1.5-litre diesel engine as well as Nissan product used by Renault Laguna called Nissan 3.5-litre gasoline engine.2
Finally, to expand and advance their technologies, the alliance has embarked on corporate research on strategy and engineering based on dynamic performance, life-on-board, environmental CO2 emission and safety. Concerning the latter, Renault and Nissan have turned their focus to electric vehicles as a strategy on zero-emission technology products.
Product concept
In the market segment, products and services produced by Renault-Nissan alliance have been recognized by consumers in terms of value and quality. The 15% improvement on productivity by Renault Production System (RPS) has borrowed extensively from the production system of Nissan.
As such, the alliance has come up with an Alliance Integrated manufacturing System (AIMS) that has been used by Nissan to assemble Renault’s Trafic, Clio and Sander vehicles in Spain, Mexico and South Africa respectively.3
On the other hand, Renault has produced Nissan’s Livina and almera classic in Brazil and Korea respectively.4 Other products line-ups that the alliance has improved and expanded include Renault’s Koleo advanced and developed by Nissan 4×4 technology, Nissan Primaster/Renault traffic, Nissan Interstar/Renault master and Nissan kubister/Renault kangaroo.
To recap it all, continuous improvement of products and progressive quality of service are some of the product concept marketing strategy tools that Renault-Nissan alliance has used to attract and retain customer loyalty. It is imperative to note that a good market segment relies on the quality of the offering issued by a company.
The alliance has created a well designed customer and market satisfaction platform through innovation as well as research and development on its products.
Bibliography
Renault and Nissan. Alliance facts and figures. Retrieved from
Stanford graduate school of business.The Renault-Nissan alliance in 2008: exploiting the potential of a novel organization form. Retrieved from .
Footnotes
1 Stanford graduate school of business. The Renault-Nissan alliance in 2008: exploiting the potential of a novel organization form. Retrieved from < hbr.org/…renault-nissan-alliance-in-2008-exploiting…/SM166-PDF>. p. 10
2 Ibid p.12
3 Ibid p. 20
4 Renault and Nissan. Alliance facts and figures. Retrieved from p. 12
Ghosn was a shrewd manager nurtured at Michelin and Renault. Notably, he had extensive proficiency in operations management. This made him the best candidate to reverse Nissan fortunes since the entity central was in operations. Consequently, Ghosn instituted measures aimed at streamlining the operations of the entity thus shielding Nissan from international fiscal risk.
Ghosn began terminating the operations of certain plants. The closure of five depots reduced the entity cost extensively (Business week, 2004. This undertaking denotes the basic strategy utilized in streamlining an entity finances. This measure influenced constructively on Nissan’s stock. Investors interpreted the closure as a step towards prudent management that previously lacked. The prior management had a perception that Nissan could not fail despite the evident financial rot.
Additionally, they displayed reluctance to undertake decisive action that would culminate in layoffs. Thus, the entity adopted a path that culminated in liquidity hurdles. Nonetheless, Ghosn adopted ruthless measures that barred the financial rot from spiralling to catastrophic levels. Nissan depended sizeably on the financial sector to finance considerable proportion of its core operations. As such, the entity has enormous liabilities. Debt represents one of the countless means that entities adopt in financing their operation.
However, debt escalates an entity’s risk levels. Debt rendered Nissan’s stocks unattractive to investors hence, poor returns in the exchange market. Overall, Ghosn commenced a rethinking of Nissan overall financial strategy (Nissan-global, 2011). Japan automobile sector benefits from the weak yen comparative to other denominations like the Euro and the dollar. Ghosn distributes production in and out of Japan. Moreover, the entity began ordering sizeable quantity of its components from other states.
This shrewd move allows the entity to utilize the cheaper option when there is instability in worth of key denominations. This means that Nissan switches to foreign production when the yen gains worth. Conversely, the entity boosts local production when the yen weaken. This represents a shrewd option of managing financial risk that fundamentally entails variation in a currency’s worth (Takahashi, 2011).
Ghosn changed the product portfolio of the entity fundamentally subsequently redefining the philosophy. Nissan’s models generated minimal returns due to poor artisanship. This was unacceptable to Ghosn, an engineer and a keen logistician. Hence, Ghosn pioneered the development of model that embraced the fundamental requirements of the clientele and the environment.
As such, Ghosn redefined the entity philosophy, which is the initial phase of risk management. Evidently, the entity identified the uncertainty in its revenue owing to the volatility of the legal tender. Evidently, Nissan faced substantial risks and Ghosn mitigated this by establishing foreign depots and terminating the operation of the inefficient once in Japan. The above details disclose that Nissan adopted the second and third phases of controlling financial risk.
The entity adopted the fourth step since Ghosn stipulated the strategies that would facilitate management of financial uncertainty. This is a vital aspect of adoption of the fourth phase. The consequent phase reflects the measures adopted in the previous juncture. Nonetheless, this juncture stipulates precisely the action required to diminish financial uncertainty to acceptable levels.
Nissan commenced by diminishing the proportion of debt in its capital. Consequently, value of its stock improved due to prudence as the entity paid minimal interest required to service any liability. Visibly, the entity failed to embrace the seven and sixth phase of the Napoli procedure of controlling financial uncertainty. Fundamentally, the two phases skipped entails evaluation hedging adopted. Finally, the terminal stage assesses the accomplishment of the measure instituted to manage financial risk. In sum, Ghosn management enabled Nissan to realize it fiscal aspiration thus reversing its fortunes (Napalo, 2005).
References
Business week. (2004). Nissan’s boss Carlos Ghosn saved Japan’s No. 2 carmaker. now he’s taking on the world.
Napalo, D. (2005). Managing FX risk: An eight-step plan to establish a corporate foreign exchange policy.
Nissan-global. (2011). Toward a new chapter in automotive history.
This paper is aimed at discussing the interview of Carlos Ghosn who discusses his work at Renault Nissan and the trends that are likely to affect the automotive industry in different ways. Many of his answers can be related to the learning materials covered in the first three chapters of the textbook. In particular, it is possible to argue that this corporate leader makes very insightful comments about the role of leaders, their responsibilities, and some of the attributes that these people should have. To some degree, his responses can throw light on some peculiarities of strategic management. Furthermore, Carlos Ghosn demonstrates how businesses can become more agile by responding to external trends and minimizing internal weaknesses. These are some of the issues that are examined in the textbook. Overall, these issues play a critical role in the work of many business administrators who may occupy different positions in the workforce hierarchy. Furthermore, suggestions offered by people like Carlos Ghosn can warn students against various pitfalls such excessive focus on organizational effectiveness and negligence of customers’ needs. These are the main questions that should be discussed more closely.
Strategic management and leadership
Among the main concepts discussed in the first chapter, one can distinguish strategic management and leadership. In his turn, Carlos Ghosn attaches importance to the role of leaders who should be able to interact with managers and employees representing different cultures or ethnicities (Stanford Graduate School of Business). Additionally, this person should display empathy to people who he/she guides (Stanford Graduate School of Business). This attribute is important for the implementation of any strategy that a leader wants to implement. This is one of the points that Carlos Ghosn stresses during his interview. To a great extent, he can be regarded as an executive leader who champions changes and creates opportunities for learning (Jones 26). Additionally, such leaders may go against the conventions which emerged in the organizations. For example, Carlos Ghosn departed from the tradition according to which the positions of leadership had to be occupied by people who have worked in the company for a long time (Stanford Graduate School of Business). This practice can be observed in various Japanese companies, including the automotive sector. Yet, Carlos Ghosn adopted a more democratic approach to HR policies of Nissan. To some degree, this step was critical for the implementation of the long-term goals.
Furthermore, the first chapter includes the discussion of such a concept as ambidextrous behavior. This notion incorporates such elements as alertness to new opportunities, ability to work on several tasks, and willingness to cooperate with other people (Jones 2). These issues are also of great importance to Carlos Ghosn. Admittedly, this corporate leader does not use this specific term, but the examples that he provides are closely related to ambidexterity which is a critical component of strategic management. Overall, Carlos Ghosn is able to identify those leadership qualities which are vital for the development and implementation of a strategy.
Admitted, Carlos Ghosn does not discuss some of the critical issues related to strategic management. For example, researchers pay much attention to such issues as corporate governance or mission statement. However, one should bear in mind that at the time when he became the CEO of Nissan, he was primarily concerned with organizational effectiveness and the need for cost-reduction.
Internal environment
A significant part of Carlos Ghosn’s discussion is related to internal environment because this question was critical for the success of Nissan and its long-term sustainability. It should be mentioned that this corporate leader is renowned for his ability to optimize the internal operations and reduce costs. For instance, he attached much importance to the efficiency of procurement since a significant part of the costs could be attributed to this particular activity (Stanford Graduate School of Business). At the time when Carlos Ghosn took control of Nissan, this company was on the verge of bankruptcy. Furthermore, its return on investment was very low, and it was important for addressing this problem. The only way to address this problem was to focus on organizational effectiveness and optimize value chain. Therefore, it was necessary to review many workplace procedures and production processes. Overall, Carlos Ghosn highlights the importance of minimizing internal weaknesses which could undermine the work of any organization, even if it manufactures the most innovative and high-quality products.
External environment
Additionally, this person attaches importance to the external environment of the organization. In particular, he focuses on the idea that the management should be responsive to the new trends emerging in the market. For example, Carlos Ghosn speaks about the transformation of infrastructure in different countries. In particular, the increasing number of charging stations can generate demand for electric cars. This issue is particularly important for the senior executives of automotive companies (Stanford Graduate School of Business). Additionally, he attaches much importance to aging population. Many clients may lose their driver’s license as they grow older, and in the future, there can be an increased demand for the so-called autonomous vehicles which can function without a driver’s control (Stanford Graduate School of Business). This is one of the points that can be made.
While discussing external environment, Carlos Ghosn also notes that it is important to consider the changing needs of clients. The problem is that some companies focus only internal efficiency, but they overlook the new trends in demand. As a result, their products cannot serve the needs of potential buyers. This is one of the pitfalls that should be avoided by the management. The author does not mention the use of different analytical techniques such as SWOT analysis. Nevertheless, he eloquently demonstrates why it is important to consider a wide range of external influences and remain responsive. These are the main details that should be distinguished.
Conclusion
On the whole, this analysis indicates that the daily practices of corporate leaders reflect the theoretical concepts outlined by researchers. Admittedly, they do not always follow specific guidelines developed by researchers. The examples offered by Carlos Ghosn can be of great use to business administrators, especially if their work is related to the automotive industry. By focusing on leadership, internal environment, and external stressors, they can strengthen the agility of businesses and their long-term sustainability. To a great extent, their ideas can help people understand how various factors shape the work of businesses. Furthermore, this interview is worth attention because Carlos Ghosn gives several important insights into the work of leaders who need to motivate employees and display empathy for them. These are the main details that can be singled out.
Works Cited
Jones, Gareth. Organizational Theory, Design, and Change, New York: Pearson, 2013. Print.
Carlos Ghosn understood that Nissan employees were predominantly Japanese nationals who had a different perception of management. Ghosn had an interest in understanding how Nissan employees viewed social, cultural, and personal competencies. For example, social competencies that influence employees’ interrelationships implied a lack of proper communication channels (Millikin & Fu, 2005).
In this regard, Ghosn made his presence among junior and mid-level managers known by socializing with them. This was against the company’s culture of manager-employee interactions. From this perspective, Ghosn prioritizes intuition and empathy among employees who developed an interest in understanding others. In this regard, employee development and self-awareness prompted people to communicate freely without fear.
From Nissan’s employees, Ghosn understood that leadership and teamwork followed an ineffective channel of communication that allowed senior managers, the elderly, and educated the privileges of making decisions. From this context, Ghosn motivated junior employees and included them as members of the cross-functional team (Millikin & Fu, 2005). This strategy was instrumental in creating bonds among employees who positively influence each other without intimidation.
Also, Ghosn diffused the previous communication channels that promoted departmental anonymity. This was done by understanding departmental policies protected by respective managers and consequently prioritizing collective company goals. Since Nissan senior and mid-level managers existed by heading operations and protecting their careers, Ghosn influenced them to become change catalysts among the employees.
Nissan employees’ competencies were questionable before Ghosn became the Chief Executive Officer (COO). This predicament was initiated by a lack of self-awareness, regulation, and motivation. Initially, Nissan employees did not conduct self-assessment since they were shelved from accountability by senior and mid-level managers (Millikin & Fu, 2005). Supervisors and mid-level managers had low confidence during decision-making processes.
In this regard, Ghosn ensured that personal contribution during the decision-making process was appreciated through cross-functional teams’ activities. This made employees with various capabilities and competencies stand out among the rest — consequently, this increased confidence among employees who felt appreciated. Also, Ghosn ensured that senior and mid-level managers were accountable through pre-determined goals.
This gave employees independence and flexibility of executing responsibilities in a bid to realize personal and organizational goals. Also, employees became open to ideas by adapting other people to contribute to developing and adapting innovations. On the other hand, Ghosn promoted employee commitment in realizing organizational goals through promotions and other rewards (Millikin & Fu, 2005). This increased optimism among employees who now consulted each other in a bid to pursue a common goal.
Cross-functional teams
Ghosn insisted on using cross-functional teams for various purposes. To establish change at Nissan, Ghosn had to use employees in achieving the same. This was to be done using cross-functional teams (CFTs) that drew members from various departments. The nine CFTs with ten members were to initialize Nissan revival plan and subsequent new company culture (Millikin & Fu, 2005).
The CFTs were fundamental in improving communication in the company. In this regard, high ranking managers were to establish communication with mid-level managers. This developed was to be replicated across company structures as a matter of understanding company issues. From the CFTs, Ghosn expected managers and employees to make recommendations about existing problems. Therefore, CFTs were to acts as decision-making forums instead of using external consultants for the same.
From Nissan’s case study, it is evident that motivation was low before the establishment of the CFTs. In this context, CFTs are credited with fostering motivation, innovation, and employee relationship. In additional, CFTs improved horizontal communication across the organization. Fundamentally, an employee gains a sense of ownership and responsibility in making organizational changes. To employees, such improvements are viewed as career achievements.
Moreover, Ghosn perceived CFTs as integral in protecting Japan’s cloture within the company. In this regard, Ghosn used the CFTs to achieve the most critical elements of Japan’s culture, such as resilience, competitiveness, and collectiveness. Japan’s culture is maintained through CFT’s leaders, who play a critical role in influencing other employees to embrace radical organizational changes (Millikin & Fu, 2005).
An element of critical thinking is achieved among managers and CFTs members who are obliged to be responsible for their decisions and resolutions. The CFTs role as an oversight body for a revival plan implies the significance in monitoring and effecting improvement. Also, this oversight role of the CFTs encouraged self-assessment among employees, managers, and the organization. This shows the impact of CFTs concerning responsibility and standard measures of success.
It is imperative that any plan of change provides an opportunity for managers and employees to experience challenges of learning from a different perspective. Ghosn ensured that such experiences had a positive impact on managers who viewed the automobile industry from a different perspective.
For example, Nissan managers changed their perception about the government taking responsibility to bail financial crumbling companies. Nissan managers and employees embraced new practices and used profitability as the standard measure for competitiveness.
Sharing of skills and perspectives are the core objectives of CFTs. At Nissan, Ghosn attributes harnessing of diversity in culture, skills, age, and competence in solving company problems. Gathering valuable data through CFTs as a source of information, as well as a discovery platform, is necessary for reducing departmental redundancy.
Also, CFTs ensures continued partnership among stakeholders, such as suppliers and customers, is maintained. The fundamental principle behind CFTs is to engage many stakeholders as possible. This is to ensure that the success of Nissan’s revival plan is guaranteed through a consensus before its implementation.
Conclusion
As a COO of a company undergoing financial challenges, I would seek to understand the employees’ emotional reaction to existing problems. In this regard, I intend to understand whether the employees are using any problem-solving mechanisms about the problem. From this perspective, I will require a leadership structure that has the same views of instilling change in the organization. This is intended to instill hope and motivation among the employees.
I have decided to use team-building activities like sports to encourage horizontal communication across organizational structures. In a bid to understand organizational problems, I have noted employees are not motivated in their work. This can be evidenced by the lack of proper communication structures in the organization, low productivity, and increased employee turnover. However, I have initialized a plan that ensures decision-making processes are developed from CFTs before they are finalized by a committee of experts.
This is to ensure employees feel appreciated in the company. As the company COO, I have authorized an open-door communication policy to ensure employees get friendly with the management. Also, a reward system that promotes employees through promotions and monetary has been established. The reward system is to improve employee productivity and realization of the company goals.
Reference
Millikin, J. P & Fu, D. (2005). The global leadership of Carlos Ghosn at Nissan. Thunderbird International Business Review, 47(1), 121-137.
