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Renault-Nissan: The Challenge of Sustaining Strategic Change - Essay Example

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Author : turnerschoen
Pages 4 (1004 words)


Renault and Nissan are both automobiles manufacturing and marketing companies. 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 engineering and production knowhow. …

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Renault-Nissan: The Challenge of Sustaining Strategic Change

The rationale 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. ...
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