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Essay example - Renault-Nissan: The Challenge of Sustaining Strategic change

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Undergraduate
Essay
Business
Pages 4 (1004 words)
The two companies were facing different challenges and were performing unsatisfactorily at the time of alliance formation. Nissan was facing marketing and financial crisis while Renault lacked…

Extract of sample

ale for the alliance was mainly on the bases that the two companies, Renault and Nissan, were facing challenges and were likely to collapse since they could not support themselves. Each of the two companies had attempted to find other partners to form alliance with but the searches had been fruitless. The alliance between Renault and Nissan and was formed in 1999 in which Renault signed a deal to invest $5.4 billion in the alliance. At the moment, Nissan was at the verge of collapsing since it was facing serious marketing and financial crisis resulting from a vast debt, deteriorating global market prices, as well as indistinct future prospects (Ramaswamy Web).
Renault lacked the relevant skills in production, which resulted in high production costs. In 1986, Renault had to terminate its operations in United States since the Car models it was manufacturing were becoming increasingly unpopular due to their small size. Additionally, American buyers felt that Renault cars were underpowered and below par. By 1999, Renault was at the verge of collapsing. On the other hand, Nissan had been undergoing financial crisis and a lot of competition from larger companies within Japan. Additionally Nissan’s management was poor, the decision making process was too bureaucratic and had previously demonstrated poor performance culture. The above factors made it hard for Nissan and Renault to get other companies to partner with since most of the other companies were unwilling and had large and widespread market. In 1998, Renault and Nissan were both performing poorly and they started exploring the possibility of possible partnership. They started cooperating in their operations and realized their collaboration was becoming fruitful. Nissan was then under the leadership of Yoshikazu Hanawa who had proved to be somehow competent than the previous CEOs (Ramaswamy Web).
Renault had been quite profitable particularly in Europe but lacked engineering as well as production techniques ...
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