The case with the Nissan Company shows the significance of the changes at all levels of the organization to improve the work of the entire process. It should be pointed out that every project needs to be in progress to accomplish all the goals that were set. However, sometimes, because of wrong management choices, the consequences may be dreadful, namely the decrease in the popularity or sales of the product, and that is every possibility, environment, and the customers’ needs should always be taken into account while creating a plan for the changes.
For the company to work better usually, two main approaches of changes are used, namely economic and organizational ones. However, the combination of the stated above methods contributes to the better development of the organization and future success. The main insight that draws attention from the case with the Nissan Company is that hard decisions should be considered as an essential part of the progress as it is impossible to make the difference having the same points of view and opportunities that were used before. The total reduction of costs and the number of factories in Japan were significant for the positive outcome.
Although the actions of Ghosn were criticized, he defended his viewpoints and assured the public that if his Renewal Plan would not work, he will take responsibility. Moreover, it should be stressed that the guiding power in the Ghosn team was honesty and respect towards employees. According to Ghosn, everyone deserves to know the truth, and it helps people to understand the real picture of the problems, to be better involved in the working process, and to feel that they are valued, respected, and trusted.
It should be highlighted that the case with the impressive development of the Nissan Company proves the significant role of implementation of changes as it is impossible to reach the progress and save it forever. The ideas that I have learned from the discussed case are inspiring and show that everything is possible if the right choices are made, and correct decisions are taken. The provided information can be applied in future life while working as no one should forget about honesty and respect as a positive attitude contributes to success. Hard decisions are essential for the progress, and that is, should always be taken into account.
I do not profess to be an expert concerning the subject, but I am strongly convinced that the deep listening tactic works for the overall good of every organization and connects employers and employees, proving that trust and ability to listen can make a difference. The employees will do their best if they feel respected and trusted.
In conclusion, it should be stated that the successful implementation of the approaches while working on the Renewal Plan contributed to the experience and aimed to show the significant power of organizational and economic changes. It should be highlighted that the case with the Nissan Company proves that every organization can succeed due to the talented leader and ability to make the needed decisions. The discussed topic is significant for the development of personal points of view and provides a deeper understanding of how the theory works in practice as it is important to understand how perspectives and different approaches support the process of making a difference.
Defining perspective of organization development
The defining perspectives of organizational development usually involve the following types, namely systems, alignment, participation, social capital, and teamwork perspectives. For a better understanding of the issue, it is significant to take a closer look at every perspective that impacts the improvement of the company.
The systems perspective is focused on the interaction between all the people that are involved in the process, their values, structure of their working process, and the way the company collaborates with the environment. Ghosn, working for the prosperity of the company, was sure that the stated above perspective of the development should be considered as one of the most significant. According to the talented leader, the communication with the employees, the deep listening tactic, and the values based on trust, honesty, and respect contributed to the positive results of the changes made. The understanding of the environment and the needs of customers allowed Ghosn to implement certain changes that worked for the good of the company, namely the cost and number of plant reduction.
The alignment perspective was significant for the Nissan Company. The understanding that every team member is essential to the success was the reason for Ghosn to base the work of the company on the moral values and highlight that people and process they make influence the improvement and that is, should work as the united organism.
The tactic of the participation perspective was typical for the Renewal Plan as Ghosn, as the leader of the Nissan Company, and the other team members took the responsibility of the Renewal Plan implementation and the consequences that it may have. However, it should be stated that not everyone took part in the problem-solution process.
The orientation towards trust and honesty supported the implementation of the social capital perspective that improved the cooperation and working conditions of the workers who felt valued and respected. It should be pointed out that the creativity, ability to find the way out of the comfort zone proved that the best results could only be achieved by critical thinking, making not popular decisions and taking responsibility for the independent tasks.
The teamwork was seen as one of the most powerful approaches to omit the crises and to bring the company to prosperity and success. Changing the official language in the company for English was nonsense during the first years of Ghosn as the leader of the Nissan Company. This change contributed to the flexibility of the company. Nowadays, non-Japanese people can get high positions, women are allowed to work, and the English language is spoken fluently at all levels of the organization.
In conclusion, it should be stated that the talented management, critical thinking, and the ability to make not popular decisions are essential for the progress to be made. Moreover, trust, respect, honesty, and ability to listen to the employees should always be taken into account while working on the improvement plan as these elements can bring even not successful companies to the new level of development. The case with the Nissan Company shows the significance of making an accent on the perspectives of the development. Teamwork, systems, alignment, participation, and social capital approaches should be implemented to every level of the organization for the company to succeed as such elements have the highest priority while making a difference.
Human population across the globe has attempted to develop close relations with each other over the past centuries. The close contact has been necessary for promoting various social and economic developments, resulting into interdependency among different regions in the world, which is important for economic growth and social integration (Global Policy Forum, 2011).
This has been accelerated by better policies and the technological developments that have been recorded in the past; for instance, information technology such as the internet has made access to different parts of the world easier, faster, and efficient (The Levin Institute, 2011). The coming together of different social, economic, and political systems across the globe can be termed as globalization (Global Policy Forum 2011; The Levin Institute, 2011).
According to The Levin Institute (a division of the State University of New York providing professional education and public engagement) (2011), globalization is a “process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade, and investment aided by information technology.” It involves integration of the business functions of an organization with the global market forces like customer needs (Keillor and Kannan, 2011, p.223). Globalization has been associated with foreign direct investments. The volume of world trade has increased over 20 times since the beginning of the second half of twentieth century. Between 1997 and 1999 alone, the foreign direct investments increase by almost 100% from $468 billion to $827 billion (The Levin Institute, 2011).
Large multinational enterprises operate business in different countries in the world. The companies manufacture products in several countries in which they are established and sell the products to their consumers across the globe. Globalization has impacts on the culture, environment, economy, political system, and the health and physical wellbeing of the individuals involved across the globe (Huynan et al, 2005). Globalization has been enhanced by initiatives by different governments of promoting international trade by removing barriers to such trade like tariffs and export/import duties, and instead, developing international trade policies (The Levin Institute, 2011). Many countries have liberalized their trade policies to allow for foreign investors into and out of the country.
Automotive industry has witnessed globalization in the past and this is bound to accelerate at even a higher rate in future, with both negative and positive impacts expected. Firstly, it leads to new markets, whereby, firms are able to locate new markets across the globe with lower production costs, for example, regions with cheap labor and raw materials. Secondly, it enhances transfer of finances, culture, technology, and ideas across different regions of the world (Global Policy forum, 2011).
However, globalization has negative impacts on the environment and health of the members of society. Firstly, in the automotive sector, globalization is characterized by various transport systems that emit harmful substances that damage the environment and are harmful to the human health. Secondly, it can enable one country to exploit the resources of another country, posing economic challenges to the latter. This will not only reduce the living standards of such individuals but also lead environmental degradation. Similarly, it may lead to a disorganized economy. For instance, the 2008 global economic crisis was greatly attributed to the deregulated global economy (Global Policy forum, 2011).
The crisis, in turn, had serious impacts on international business (Global Economics Crisis Resource Center, 2009, p.18). Globalization can also promote political oppression of one country by a more powerful country, due to increased interaction and interdependency that thwarts a nation’s ability of self-governance (Homann et al, 2007, p.4).
Nissan Motor Company is one of the players in the global automotive sector. The company entered an alliance with Renault in 1999 and the two have been conducting their marketing sales together. By 2005, Renault had 45% stake in the company (Company Spotlight: Nissan Motor Co Ltd, 2007, p.17). They currently have a combined market share of over 9% of the global automobile market (Datamonitor: Nissan Motor Co Ltd, 2011a, p.5). The Japanese automotive manufacturer deals in a variety of vehicles and other automobiles and competes with the global giants like Toyota, Honda, Ford Motors, and the General Motors (Datamonitor: Nissan Motor Co Ltd, 2011a, p.10).
The company has witnessed increased sales especially in the US this year (Bloomberg, 2011). This paper provides an analysis of the impacts of globalization in Nissan Motor Co and the strategies that the company has put, or is planning to institute, in order to manage these impacts.
Health issues related to globalization of Nissan Motor Company
Globalization has serious health challenges. Generally, globalization has the effect of “increased internationalization of health risks” (Pang and Guindon, 2004). The impacts of globalization on the economic, political, and social development in a society are extended to the health and well-being of the members of the society. However, its exact impact on the developments in a given country depends largely on the conditions prevailing in the recipient countries (Velde, 2005). It could reflect on the accessibility of social amenities in the society like schools and health centers or access to necessities like clean water supply. The globalization of the automotive sector has even more negative impact on human health, mainly through air pollution. Previous researches have indicated that outdoor air pollution is harmful to human health and that transport sector contributes significantly towards this pollution (World Health Organization, 2005).
Toxic emissions from the road and air traffic have been a serious challenge in the United Kingdom in the past years. The transport sector contributes significantly towards air pollution with the automobiles being one of the main sources of this pollution (Anon, 2011). About 36% of the total benzene emissions in the UK in 2001 were attributed to the road traffic (Nicolopoulou, et al, 2006, p.249). Equivalent rates were recorded for emissions of other toxic substances resulting from the road traffic. This raised a national alarm since these substances cause health problems like Carcinogenicity, memory loss, and reproductive impairment (Tiwary & Colls, 2010, p.40). In effect, the Department of the Environment Food and Rural Affairs (DEFRA) has developed environmental management policies in line with the EU regulations on emissions. The companies operating within these regions have to observe the regulations. Nissan Motor Co has gone international in its operations and thus it has to abide by the regulations within the UK and in the EU countries.
Fig.1 Globalization from 1980 to 2002. Source: Pang, T and Guindon, G. 2004. Science & Society, EMBO Reports, 5.
In response to the need to reduce emissions to improve on human health, the company has developed different models of automobiles over the years that have lower fuel consumption with reduced gas emissions. The company has emphasized on the use of biofuel in it automobiles and other company operations, as well as introducing new models of their automobiles that can operate on a combination of this biofuel and the fuels from petroleum products.
For instance, in Japan, the company has introduced 100% electric, zero-emission models (Company Spotlight: Nissan Motor Co Ltd, 2011b). One of the significant movements was the release of diesel powered and hybrid cars introduced by the company in the last decade. The hybrid models use a combined power source of electricity in the high voltage battery and gasoline in the fuel tanks to ensure low fuel consumptions and reduced emissions (Nissan Altima Hybrid, 2010). The first hybrid model that was introduced is Nissan Altima Hybrid, first released in North America in January 2007. The model applies the different sources of power to drive the vehicle depending on the driving conditions. When the vehicle accelerates at low speeds, it is driven by the traction motor whereby the gasoline engine is not used (Nissan Altima Hybrid, 2010).
This explains its efficiency in fuel consumption. When under normal driving conditions, the gasoline engine is used whereas a full acceleration requires the application of both traction motor and gasoline engines (Nissan Altima Hybrid, 2010). These power sources are also not used when the vehicle is decelerating or stooped.
The efficiency of these hybrid vehicles and the high costs of production can force the organization to increase the price of such automobiles. The hybrid vehicles are often priced higher than the conventional gasoline engined vehicles (HiCow, 2011). The hybrid engines do quite will in the United States. However, in the clean diesel engines do better in the European market (HiCow, 2011). To promote environmental management and capture the market at the same time, Nissan Motor Co released diesel-powered vehicles that it has purposed to extend to the United States. The models have been available in the Asian and European markets. The company has collaborated with another French-based auto manufacturer Renault to release clean diesel engines that meet the standards of emissions required (Global Environmental Planning Office, 2009). The company has developed different models of these vehicles like the X-Trail 20GT that was released in 2008 (Global Environmental Planning Office, 2009).
Fig.2 Nissan Division sales 2010-2011. Source: Nissan Canada Inc. Announces October Sales Results.
Even though the developments of new models may be costly through different research and development innovations, the company can count on the strategies to have increased profitability of the years through increased recovery rate of materials. The company has achieved the preset goal of 95% recovery of materials in different regions like Japan and Europe (Global Environmental Planning Office, 2009). Besides, the general positive image that the public develops of the organization that has concern for environmental management is significant for improved sales
Environmental Issues related to globalization
In as much globalization has been considered part of the contemporary business environment, this new development of the second half of the twentieth century has certain challenges. The environmental challenges associated with globalization are mainly experienced in the developing world where the problems outweigh the benefits. It has been noted that globalization has associated negative impacts on the human health in the societies involved. The environmental impacts of the operations of a given organization have effects in its success (Pearson, n.d, p.1). There are environmental conservation initiatives developed on the local and international scene that advocate for the global environmental management.
Nissan Motor Co Ltd started showing concern for the environment from the late 1940s and several initiatives have been witnessed since then. The company’s environmental concern was first witnessed in 1947 when it introduced Tama, the first electric vehicle by the company (Global Environmental Planning Office, 2009). The company was responsive to the regulations imposed by different environmental management authorities in different countries where it is established. This was evident in 1970 when it complied with the Clean Air Act (Muskie Act) (Global Environmental Planning Office, 2009). Environmental management and the effects of its operations on the environment became one of its fundamental policies. In 1992, the company developed its philosophy on environmental management, “Symbiosis of People, Vehicle, and Nature” (Global Environmental Planning Office, 2009).
The company continued, at different stages, to reduce the CO2 emissions by its automobile products. In 1997, it released Prairie Joy EV, which was the first electric vehicle with lithium-ion battery in the world (Global Environmental Planning Office, 2009). The automobile powered by this system has reduced CO2 emissions as much power is derived from the electric motor (Nissan, 2010). In the same year, the company received its first ISO 14001 certification. Another milestone was seen in 2000 when the company released Hyper Mini, a super-compact electric vehicle. The company also produced a gasoline-fueled vehicle in California, the first of this kind that had the recommended rates of emissions of toxic substances (Global Environmental Planning Office, 2009). The gasoline-powered engines produced the same levels of emissions as diesel engine.
This was a reduction of 20% in CO2 emissions for the earlier engines of this type (Nissan, 2010). In 2006, the company launched the Nissan Green Program, an initiative that incorporates environmental conservation measures in the auto manufacturing process (Nissan, 2010). The company was also recognized as an Eco First company in Japan due to its innovative ability and commitment to environmental management (Global Environmental Planning Office, 2009). Presently, the company is operating under the five-year plan termed NISSAN GT 2012, a plan that will see the company emerge as the leader in zero-emission vehicles and highly developed electric vehicles (Global Environmental Planning Office, 2009). This plan was established in 2008.
The US Environmental Protection Agency has positive relations with Nissan Motor Company after they solved a row that emerged following the company’s breach of various legislative provisions between 2004 and 2009 (US Environmental Protection Agency, n.d). The US EPA has since applauded the company’s efforts to environmental conservation and management. In 2010, EPA gave out the fuel economy ratings for the Nissan Leaf electric sedan, one of the automobiles designed to reduce fuel consumption and the resulting gas emissions (Bullis, 2010). The environmental agency affirmed that the automobile ‘was the best in its class in terms of fuel economy’ (Bullis, 2010, para.1).
Fig.3 Nissan’s CO2 Emission Levels- 2009. Source: Source: Global Environmental Planning Office, Nissan Motor Co., LtdFig.4 CO2 Reduction Goals. Source: Global Environmental Planning Office, Nissan Motor Co., Ltd, p.4
The company is focused on improving the efficiency of its car models and their fuel consumption. It is committed to developing car models that have low fuel consumption with reduced emission of the substances harmful to the environment. The goal of the company is to have a 70% reduction in CO2 emissions by 2050 (Global Environmental Planning Office, 2009). In the recent past, the company has been engaged in the development of electric cars, plug-in hybrid cars, hybrid cars, and fuel vehicles as a strategy to achieve these objectives of environment management (Nissan, 2010). It is concerned with its operations now and for the generations to come.
Fig.5 Reduced emissions. Source: Global Environmental Planning Office, Nissan Motor Co., Ltd, p.7.
The company has recorded evolution in the engine technology as well as transmission systems to reduce fuel consumption and subsequent emissions. This was first seen with the introduction of flexible-fuel vehicles that can run on different fuel compositions. The company began by E10 that used 10% bio-ethanol fuel, then E85 (using 85% bio-ethanol fuel, and finally E100 (100% bio-ethanol fuel) (Nissan, 2010). Models such as the Nissan Livina developed in Brazil in 2009 were an E100 flexible fuel vehicle (Data Monitor, 2011a). The blending enables proper oxygenation of the fuel mixture that can reduce toxic emissions.
The company developed automobile models with Continuously Variable Transmission as an improvement on the regular automatic transmissions. The cars with this transmission system had about 10% fuel conservation of the automatic models. The models also had high rates of sales with approximately one million units being sold annually on the globe scene (Nissan, 2010). The hybrid electric vehicle has a combined system of power: a gasoline engine and electric motor. This leads to reduced consumption of fuel and a subsequent reduction in CO2 and other emissions (Nissan 2010). The technology was further improved and the company developed a plug-in hybrid car.
This model uses a battery stack that can be recharged easily. The improved system emits no CO2 when it is operating on the electric motor, just like the electric vehicles (Nissan, 2010). The company has also launched a six-year environmental plan aimed at reducing carbon footprint, moving to renewable forms of energy and increasing diversity in the resources used by the organization (Green Car Congress, 2011).
The company is also concerned with water conservation. It has developed initiatives in different plants to recycle water used in washing the vehicles before painting. This was evident at its plants at Barcelona, Spain that saw a reduction of 20% of water usage in 2007 (Martin, 2008). The initiative yielded similar results in the previous years and is expected to continue cutting down the water consumption by the organization. This initiative has since been adopted by the other establishments of the company in different parts of the world.
Conclusions
Globalization is a phenomenon that is there to stay and yet it has its challenges. The challenges posed by globalization are often heavier than the positive impacts, especially in the developing countries. The remedy, therefore, is not to provide critique to the phenomenon but to develop strategies to overcome these challenges. This calls for development of local and international policies that govern global activities like international trade.
The automotive sector is among the sectors that have gone global in operations. With the increased globalization of operation in this sector, there have been associated health and environmental challenges. The release of toxic hydrocarbons from fuel combustion contributes to serious problems as witnessed in different parts of the world. Indeed, the release of green house gases by the automobiles has an affect on the global environment.
As a key player in the automotive sector, Nissan Motor Company has realized the serious environmental and health challenges caused by the globalization of their operations. In effect, the company has developed various initiatives aimed at promoting health and reducing damage to the environment. The company has initiatives like development of flexible-fuel vehicles that can operate on different compositions of fuel. There are also initiatives to develop models that can operate on renewable sources of energy to save the depletion of non-renewable energy associated with toxic emissions. The company also has water conservation measures to reduce water consumption in its various plants across the globe. This involves the recycling of water used in clearing the vehicles before they are painted.
Recommendations
The company should stay focused on the management of the challenges imposed by globalization that can thwart its operations.
The company should invest more on research and development to achieve the objectives of reducing emissions and improving efficiency and economy for its automobile models.
It should be focused on the environmental management initiatives by conducting further research to ensure zero emissions of toxic substances.
The company should stay focused on the management of health of its workers through ensuring the working conditions are favorable. The insurance cover for the employees and their dependants should be waived as a motivation to the employees.
The company should abide by the legislative provisions developed by the different levels of government concerning environmental management. The company also needs to develop organizational policies to be observed by the members aimed towards the environmental conservation.
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 firm’s resources were allocated in a proper manner depending on the targeted demands. This effort supported the firm’s supply chain. This strategy was critical towards supporting Nissan’s business model.
The third approach was to manage Nissan’s 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 firm’s 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 Nissan’s operations. The company was forced to incur more costs in order to support the above actions. The important thing was to support the firm’s business goals.
These four approaches encouraged the firm to restore its global activities. The main goal was to optimize the company’s 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 company’s 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 company’s 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 company’s 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 Nissan’s 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 firm’s 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 company’s 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 Nissan’s product line strategy help or hurt its ability to respond to and recover from the disaster?
Nissan’s product line strategy had produced the best goals for many years. However, the strategy hurt the company’s ability to deal with the disaster. To begin with, the firm could not have reproduced the strategy after the disaster. It also paralyzed the company’s 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 company’s 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 Nissan’s exposure to future disruptions?
The operational changes announced in 2012 affected Nissan’s 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 Nissan’s supply chain. A powerful Business Continuity Plan (BCP) was also required in order to produce an effective supply chain. This approach would eventually make Nissan’s business more sustainable. The proposed changes would also support Nissan’s 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 Nissan’s 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 client’s 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 company’s 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 (O’Brien & 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.
O’Brien, 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.
Soon after its foundation in 1933, Nissan, a Japanese automobile manufacturer, rose to fame and success. Due to its early connections to the United States – a country with a record-breaking number of car owners even at the very inception of the automobile industry – Nissan rapidly expanded its customer base. In 2013, Nissan became the world’s sixth largest car manufacturer and in 2014, it was recognized as the largest car manufacturer in North America.
Over the years, the Japanese company has proven to be a force to be reckoned with and it is safe to say that what indeed fueled Nissan’s success was its constant search for innovation. On par with looking for innovative solutions, this car manufacturer boasts effective management which allows it to tackle emerging issues promptly. This paper will discuss how well-known manufacturing and management strategies relate to Nissan and future recommendations for enhancing its sustainability.
Theories and Techniques
For characterizing Nissan’s approach to management and production, it is essential to explain three popular strategies: lean manufacturing, just in time (JIT), and Toyota Production System (TPS). All three strategies aim at cost-saving and maximum elimination of waste. Lean manufacturing includes a set of principles that, when implemented adequately, allow producers to reduce waste while upholding high quality and increasing labor productivity.
Just in time is one of the methods of bringing lean manufacturing to life: it is encouraged that companies maintain production flow by ordering materials in the process as opposed to purchasing in advance. Toyota adopted both lean manufacturing and the just in time method. Moreover, over the years, Toyota has elaborated its classification of waste that it is trying to combat: waste of time, waste of overproduction, waste of movement, and other types. Nissan too supports zero waste initiatives; however, it is argued that so far, its measures have not been as sustainable as those of Toyota (Schmidt & Simchi-Levi, 2013).
Nissan seems to be concentrating on managing the environmental impact, for instance, emissions. It is possible to point out similar advantages and disadvantages for each of the three concepts. The advantages relate to long-term sustainability and a better reputation, whereas among the disadvantages are the necessity to restructure manufacturing and management processes, which may be expensive and time-consuming.
Sustainability
Triple Bottom Line
Triple Bottom Line is an approach that allows a company to expand its focus beyond financial profitability and consider social and environmental factors. Thus, by implementing Triple Bottom Line, a company upholds moral integrity and seeks environmentally sustainable solutions. In the early 2010s, Nissan adopted TBL for operational management. Increasing revenue is any company’s primary goal, and Nissan is not an exception.
In recent years, Nissan has been tapping into emerging markets such as China and India where car ownership is on a slow but steady rise, seeking to attract new buyers. As for social responsibility, Nissan should consider diversity its strength: top management should never impose its cultural expectation upon regional management, for each country is unique. Lastly, the Japanese company should support more environmental initiatives and follow Toyota’s example regarding waste management.
ISO 14000
ISO 14000 is a set of standards that relate to environmental impact management. A company that adopts ISO 14000 standards expresses its commitment to minimizing environmentally harmful operations, complying with relevant regulations, and seeking continuous improvement. It took Nissan five years to obtain ISO 14000 certification for all its plants in Japan and outside the home country. In 2006, Nissan set long-term goals for Nissan Green Program 2010 to bolster its environmental management. In 2011, the company proved its compliance with ISO 14000 standards (Nissan Global, 2016).
Among the measures that the manufacturer took are making utilization of natural energy more efficiently, launching “Zero Emission” car models, and established environmental management in all domains-buildings (Nissan-Global, 2016).
Corporate Responsibility
Corporate Social Responsibility (CSR) is a business model that holds a company socially accountable – to itself, stakeholders, and society. Nissan is thoroughly apt for integrating CSR into its development strategy: CSR applies best to large companies for at some point of growing their revenue they become capable of giving back to people. Nissan’s corporate vision can be described with their original motto “Enriching people’s lives.” In their mission statement, the company states that it is eager to bring innovation to customers’ experience and contribute to technological advances (Automotive World, 2017).
Nissan seeks to align profitability with social accountability, which accords with the CSR principles. The car manufacturer capitalizes diversity among their managers and employees and strives to build relationships on trust with its stakeholders. As for other measures that the company could take to comply with the CSR model, one of the most relevant goals could be alternative fuel research.
Conclusion
Nissan is one of the largest and most influential car manufacturers in the world. The Japanese company recognizes its vast impact and leverage and holds itself socially and environmentally accountable. The manufacturing strategies at Nissan plants align with lean, just in time, and Toyota Production principles to a certain extent. Nissan is a prime example of a company that successfully adopted the triple bottom line approach and is considering environmental and social factors. One of the significant milestones in the history of Nissan was ISO 14000 certification. The company’s vision is aligned with the Corporate Social Responsibility business model and future recommendations would include realizing employees’ and stakeholders’ full potential and searching for alternative fuel.
The theory of constraints (TOC) is a framework utilized to detect the most debilitating factors in the supply and production chain, in order to apply a 5-step process to help eliminate or mitigate the constraint to the point when it is not considered a relevant issue. The five steps of the theory are as follows (Franzetti, 2016):
Identify the constraint. In order to solve a problem, the company must first recognize that there is one.
Exploit the constraint. Provide a series of makeshift solutions to make short-term improvements to the issues.
Subordinate the constraint. Review all other processes to discover ways to support the constraint.
Elevate the constraint. If all previous measures are ineffective, develop specific interventions to eliminate the constraint.
Repeat. Utilize the framework for a different constraint.
Nissan could apply this framework to resolve its supplier issue, as it presented itself to be a major factor even with the existent crisis measures present. By utilizing TOC, Nissan would be able to maintain stable production and supply the customers in all regions in the event of a catastrophic failure in any of their major production facilities.
Total Quality Management
Total Quality Management (TQM) is a framework of continuous quality improvement aimed at exceeding the expectations of the customers. Implemented by major giants of the automotive industries, such as Ford, General Motors, and Toyota, it seeks to severely reduce the potential for production errors and defects. In addition, TQM helps simplify and streamline the system, thus leading to saving money on expenditures, refunds, and reconstruction (Franzetti, 2016).
The integration of TQM would be beneficial for the lines of products promoted in the company’s localized production facilities in Europe, Asia, and South America. It would allow implementing the same standards of production quality across the entirety of the supply network and speed up operations. If all suppliers were subjected to the same production standards, there would be no need for additional inspection of the materials and resources provided by them.
Data Analysis
Cause and Effect
Fig. 1. Cause and Effect Diagram.
Although Nissan did have emergency measures prepared for the event of a tsunami followed by a nuclear meltdown, these precautions did not spread on their suppliers (Schmidt & Simchi-Levi, 2013). There were inconsistencies between how individual suppliers managed the crisis. As illustrated in Figure 1, several negative trends have emerged, including a lack of contingency plans for Force Majeure events, a lack of strategic reserves to supply Nissan while the lines are restored, and poor quality management, which resulted in higher costs and slower recovery times. As a result, Nissan suffered marginal production drops, as it struggled to find new suppliers to make up for these inadequacies (Schmidt & Simchi-Levi, 2013).
Process Map for Nissan Versa
Nissan Versa is one of the low-cost models currently produced by Nissan. Sold for about 12,500 dollars. Although considered the cheapest model currently available in the list of Nissan products, it shows good performance in safety, speed, comfort, and fuel consumption. The model is produced primarily in Mexico. The process map for Nissan Versa is demonstrated in Figure 2:
Fig. 2. Process Map.
The process/value map is a very important tool for an operations manager. It shows the type of work done at every step of the production process, the value put in each of these steps, and whether or not it requires relying on additional outside suppliers to complete the operation. Using the initial process map provided above, it is possible to optimize and streamline the production. One of the examples of such optimization is the construction of a whole-cycle plant, where every operation, starting from stamping metal and ending with the assembly of the engine and the chassis is completed locally (Franzetti, 2016).
Choosing the Location for a New Manufacturing Plant
Factor
Weight
Mexico City
Columbia, SC
Political Risks
0.25
70
80
Transportation Costs
0.20
40
90
Labor Productivity
0.20
85
75
Rental Costs
0.15
90
55
Labor Costs
0.10
80
50
Taxes
0.10
90
50
Fig. 3. Location Analysis.
Figure 3 illustrates two potential choices for Nissan for the construction of a new factory. The weight section indicates the importance of each individual factor for the company. As it is possible to see, political risks, transportation costs, and labor productivity are the three major factors for Nissan to consider, with rental costs, labor costs and taxes were less influential (Schmidt & Simchi-Levi, 2013). In order to determine the best possible solution, it is required to multiply the assigned points and weight and compare the combined results. The calculations are as follows:
Mexico City = 0.25 x 70 + 0.20 x 40 – 0.20 x 85 + 0.15 x 90 + 0.10 x 80 + 0.10 x 90 = 39 points.
Columbia, SC = 0.25 x 80 + 0.20 x 90 – 0.20 x 75 + 0.15 x 55 + 0.10 x 50 + 0.10 x 50 = 41.25 points.
The reason why labor productivity was deducted instead of added to the sum is that it represents a positive feature, whereas the rest (taxes, costs, instabilities) are negative features. As a result, the choice with the least negative points is to be considered superior. As Mexico has the least negative points, it should be chosen as the new location for the factory.
References
Franzetti, C. (2016). Operational risk modelling and management. New York, NY: Taylor & Francis.
Schmidt, W., & Simchi-Levi, D. (2013). Nissan motor company Ltd.: Building operational resiliency. Web.
A strategic group is a concept that describes companies that operate in the same industry with the same business model and specialization of business strategies. Typical examples are companies that operate in the automobile industry. The first group is characterized by “broad product lines, heavy advertising, medium integration, extensive distribution, mass-market appeal, and widely available service” (Bakker 2010, p.2). The second group is characterized by “extremely narrow product lines, minimal or no advertising, high integration, selective distribution, and service, as well as superior performance” (Bakker 2010, p.4). Some groups are more profitable than others operating in the same industry. According to Grant (2010), the key elements that define strategic groups include mobility barriers.
Companies in the strategic groups
The two automobile firms that were selected that belong to the two strategic groups include Mazda and Nissan companies. Mazda manufactures different models of vehicles such as the Fiesta, Mazda eco-Sport, and Mazda Endeavour.
The company is ranked fourth in the list of the strategic group of companies, which manufacture different models of vehicles for different purposes. The CEO is the most senior executive in Mazda’s organizational structure followed by middle-level executives and lower-level employees (Grant 2010). On the other hand, Nissan manufactures automobiles in Japan and sells them worldwide. The company is the third in automotive sales in the world.
Both Mazda and Nissan fall under different resource groups. The difference between Mazda and Nissan’s strategic groups is that Nissan manufactures large cars, pickups, and luxury cars while Mazda manufactures vehicles that are customized for specific markets. According to Bakker (2010), Nissan’s strategy is to manufacture smaller and more fuel-efficient engines by investing over 550 million dollars in its manufacturing plants by introducing hybrid cars using technology from Japan. On the other hand, Nissan is the first company to invest in hybrid technology that is used in 73% of the vehicles in the USA offers widely available services compared with Mazda.
Resources and capabilities
The differences in the resource groups of the two companies are that Mazda focuses on one team and lean manufacturing and one plan for aggressively developing new markets and products. The company emphasizes the use of resources to manufacture universal models. However, the company does not have the strength to alter work practices and compensation for employees. On the other hand, Nissan encourages employees to work for the company whilst building a career path, and the employees are always protected by very strong trade unions in Japan.
Driving competitive advantage
Different companies drive competitive advantage in different ways. For instance, employee empowerment in Nissan plays a significant role in developing their skills, knowledge, commitment, and participation at work to position the company on a competitive edge compared with the rival firms. The Japanese work longer hours and undergo better training compared to their counterparts who work for the Mazda company.
Both firms have modern equipment for the production of vehicles, which is a core competency in both cases. Despite that, Nissan has a better competitive advantage compared with Mazda because the company manufactures hybrid cars and enjoys a bigger market share for its luxury cars in the USA. Mazda has limited employee empowerment and development programs, a strategy that does not provide opportunities for employee development and competitive advantage.
How resources lead to core competencies
Mazda and Nissan have employed well-trained, skilled, and experienced people to work on strategic, tactical, and operational levels. The empirical evidence presented by John (2006) shows that Nissan leases to Mazda some of its physical resources, which makes the manufacturing of vehicles more expensive for Mazda. John (2006) has established that Nissan has enough physical, human, technological, and financial resources for sustainability that places the company at a competitive advantage compared to Mazda.
According to John (2006), Nissan’s competitive advantage has resulted in the company protecting itself from the initiation, transfer, and substitution of resources. On the other hand, Mazda leverages the innovation of new models that takes the customer’s experience to better experience in low fuel consumption and aesthetical features than Nissan.
References
Bakker, S 2010, The car industry and the blow-out of the hydrogen hype. Energy Policy, vol. 11, no. 38, pp. 6540-6544.
Grant, R M 2010, Contemporary strategy analysis and cases: text and cases. John Wiley & Sons, New York.
John, S 2006, Leadership and strategic change in outsourcing core competencies: lessons from the pharmaceutical industry. Human Systems Management, vol. 2, no. 25, pp. 35-143.
Kumar, S & Eickhoff, J H 2005, Outsourcing: When and how should it be done?. Information-Knowledge-Systems Management, vol. 4, no. 5, pp. 245-259.
The key reasons are regarded to be the difficult financial situation in the 1999, when Nissan nearly became a bankrupt. It is explained by the fact that the two largest car markets (the USA and Japan) were featured by the decreased sales of the cars during this period. Thus, the production of Nissan declined to 600,000 units (nearly 53%).
Alliance
On the one hand, it is necessary to mention that the alliance is senseless, as Renault Company has already had negative experience n merging with Volvo. It is claimed, that car companies’ unification during their crisis periods is not the best solution of the problem. On the other hand it is emphasized that the merging companies were quite matching in geographic scope and skills. Renault had a flair for marketing and design, and was strong in Europe and Latin America. Nissan was an engineering powerhouse with a strong market presence in Japan, North America and Asia.
Unanimous Pessimism
The news of the unification were met without enthusiasm because of the fact that these two corporations experienced not very successful times in their histories, and they were regarded as two mules on the horserace, as the industrial powers and financial capabilities of these companies were not rather strong.
The key success factors in management literature are based on the concept that a corporation’s information structure should be highly selective, concentrating on the most successful factors of the activity, and actions which are vital for the company. These factors must be closely linked with the aims of the organization and shape the grounding of management control.
The personal experience states, that key success factors are linked with a few key spheres of activity in which positive results are necessary for successful competitive performance for the company.
Renault and Nissan stand against these factors by just ignoring the significance of the information system and focusing on the success factors.
The risks, which companies faced, were linked with the instability of their position on the markets and the instability of the markets themselves. Thus, the future of the alliance was shady and lacking any perspective.
Carlos Ghosn’s Key Challenges
Return to profitability during the year March 2000 to March 2001. The net income after tax of the Nissan Group will be positive.
An [annual] operating margin superior to 4.5 percent of sales during the year March 2002 to March 2003.
A 50 percent decrease in net debt, from $12.6 billion today to $6.3 billion by March 2003.
Reduce purchasing costs by 20 percent by March 2003.
Reduce 21,000 jobs (from 148.000 to 127,000) by March 2003.
Ghosn’s Actions
First of all he established the cross-functional teams for the corporation, Each one was led by two Executive Committee members and headed by a pilot. Team members were selected by the leaders and the pilot from the company’s managerial ranks. This was performed for the changes in the managerial structure, which was ineffective for that time.
As for the personnel, he had selected the people who clearly realized the goal of the company, and who were able to act like F1 pilots, who use acceleration and breaks in time, when it is most needed. The profiles of the managers looked exactly this way, as they were reaching the same goal.
The plan was implemented with the help of cross-functional teams. They appeared to be successful as they were planned to perform not only direct responsibilities, but also be able to replace other teams. Thus, all the responsibilities were assigned, and teams were interchangeable.
Ghosn’s approach may be described as multi-angle and global, as he was not afraid to subject almost bankrupted company to global and deep changes.
Success and Position Nowadays
The only thing may be said of this alliance. The production by these companies is rather popular on the European and Asian car markets. The companies are close to their industrial maximum and can afford comfortable conditions of purchase for their clients.
Lessons
These are the following:
There is no need to be afraid of changes
Closeness to bankruptcy is not the bankruptcy, and wisely elaborated strategy may become the way out
The highest goal should be set independently on the capabilities
Originally, the Renault-Nissan Alliance was established in 1999. The basis of this alliance is the crossing of the shareholdings, which were possessed by both companies, and currently, it is the third largest global automaker, and the global market share is 9%. It is stated in the principles of the corporate policy that the Alliance is aimed at developing and implementing a strategy of profitable growth of both companions. Originally, it is created on the principles and values of trust and mutual respect.
Alliance Instead of Purchase
Answering this question, there is strong necessity to emphasize that the main aim of the alliance is to establish a powerful automotive group, and expand the corporate culture and identity of each brand, which is a part of the Alliance. The main aims of the alliance are represented in the following criteria of the successful business performance:
quality and value of products and services
key technologies in engines, electronics and the environment
operating profit
On the one hand, the purchase and total merge of the companies could eliminate the problems, associated with the matters of independent management and business performance principles. On the other hand, alliance have created two comparatively independent teams, which are interested in the benefits of each other (Renault holds 44,3% of Nissan stake, while Nissan controls 15% of Renault shares).
Areas of Cooperation
The following areas will be analyzed:
Joint Purchasing
Manufacturing
Technical Cooperation
Joint purchasing. Originally, this sphere appears to be beneficial for both companies, as the purchase of the equipment, technologies and industrial powers is currently arranged in accordance with the mutual interests, and the companies apply all the managerial resources in order to define, whether the purchase will be beneficial. (Yoshino, 2003)
The sphere of manufacturing is difficult to estimate in the context of mutual benefits, as the brands are developing independently on each other, thus, the manufacturing sphere develops independently. Nevertheless, the managerial powers are united, thus, the optimal variants of manufacturing control and performance are provided. Consequently, there is thorough control of both sides for the manufacturing process of both partners.
Technical Cooperation. In order to take advantage of the powertrain experience and advancement of both partners, as it is stated in “Alliance Facts and Figures” (2009) the Alliance co-developed common engines and gearboxes: a six-speed manual gearbox and a new V6 diesel engine. The Alliance also exchanges existing engines or gearboxes ‑ for example, the Nissan 3.5-liter gasoline engine for Renault Laguna and Renault 1.5-liter diesel engine for Nissan Qashqai). In total, eight engines are commonly used. (Alliance Facts and Figures, 2009)
Criteria of Success
The criteria, in accordance to which the success of the alliance may be estimated, will be the following:
Changes in the world sales rates
Awareness of the Brands all over the world
Advancement in Technologies
Net Income Changes
The fact is that, Renault and Nissan sold 2,382,230 and 3,708,074 vehicles respectively. Renault’s worldwide sales decreased by 4.1%, while Nissan’s rose by 0.9%. The financial report of the Alliance reveals the following information (Alliance Facts and Figures, 2009):
The Renault Group pursued international growth with a 1.5% rise in sales outside Europe to a total of 873,798 units, accounting for almost 37% of all Renault group global sales. Despite declines in many of its major markets, Nissan (Nissan and Infiniti brands) closed 2008 with global sales rising 0.9% year-on-year to 3,708,074 units.
The awareness of the brands increased for 5,5% for Nissan, and 3% for Renault.
The breakthrough in technologies was not observed, nevertheless, the fact that both companies acquired significant experience in manufacturing diesel and gasoline engines appeared to be crucial.
Suggestions
First of all, it should be stated that the key principles of the alliance should be cared and preserved, as mutual trust and respect is the essence of any cooperation. The fact is that, the partners may achieve only in the case when both are interested in the benefits of the other, thus, the joint efforts for developing the industry are highly estimated, and the managerial aspect of the cooperation has revealed that there is strong necessity to improve the cooperation in the sphere of managing the manufacturing processes.
Another factor that should be highlighted is the notion, which claims for the improved advertising strategy. The results in this sphere are not impressive, thus, advertisement and marketing departments should unite their efforts and think over the matters of brand junction, rebranding, or adaptation of the brand advertising for the narrower target audiences.
The final suggestion relates the matters of technology improvement. In spite of the fact that deep cooperation is observed, laboratories and test grounds should be united for the experience exchange, and the united efforts in developing the new technologies.
References
Alliance Facts and Figures (2009) “Renault Nissan”. Web.
Yoshino M, Perry F. (2003) “The Renault-Nissan Alliance” Harvard Business School.
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 leader’s 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 company’s 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 leader’s 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 company’s 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 Mayo’s 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 company’s 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, Mayo’s 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.
