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Carlos Ghosn and Renault-Nissan: Leading for Global Success Case Study

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Updated: Jan 25th, 2020

Introduction

Nissan being the second largest company in the automobile industry in Japan recorded a significant increment in their sales profit in the year 2006.

However, due to unpredictable shifts in the market they suffered substantial losses before Renault chipped in and appointed a new CEO; Carlos Ghosn. Carlos then took charge of the company and his leadership brought it back to a profitable level in the competitive market.

This paper, aims at discussing Carlos Ghosn leadership, the strategy used by Nissan Motor Company globally and its efficiency, the company’s organizational culture, its characteristics when doing business in the world and the view of Nissan’s recognition at home as compared to the way it is picking up worldwide.

Carlos Ghosn Leadership

On Carlos Ghosn appointment as the new CEO of Nissan, he outstandingly transformed the company’s status by focusing on the goals of the organization entirely in his leadership.

In his vision for a lasting solution, he addressed the bankruptcy problem by using a unique approach; cutting down the company’s expenditure, expanding the profit-making avenues globally and sharing costs through the introduction of another stockholder.

This highlighted his global mindset trait. Additionally, the partnership approach that he adopted not only saved the company but also created the visionary sense in the company and its employees.

Carlos Ghosn had a vision by acting and committing himself to the goals of the company instead of just leading with words. It is evident when he took his own initiative in supervising and pressurizing the employees into meeting their targets on sales.

As a charismatic leader, he displayed his best leadership trait through constant communication with employees. Hence, he motivated them into increasing their output because they felt they belonged in that company.

Another trait he had, as a visionary leader, involved his tactical introduction of the proactive style in the company’s decision-making; and his adequate preparedness in anticipation for any problems arising.

Additionally, he displayed boldness and creativity by refusing to follow Japanese culture of business. Instead, he introduced the proactive style approach in his Nissan’s organizational culture with a vision for its success.

Nissan’s International Strategy

The company continuously invested in new technologies and products that evolved often. Nissan did not limit its business to Japan only instead, it ventured globally for example; they established the Mississippi plant in America.

In order to meet the alarming demand from its customers, Nissan expanded to China and erected another plant to design new products for the growing market.

The company ideally established more plants in other countries in the world to increase their production output and expand their territory with the aim of closing in on the foreign markets.

The company focused its strategy primarily in the global market rather than domestic. Nevertheless, in search of cheap but high quality labor, it acquired some business territory in the underdeveloped countries and established more automobile production plants.

This global strategy reported positive benefits for Nissan such that they improved uniformity in its branches and their attractive business image portrayed to the world.

The financial benefits Nissan observed as a result of this strategy grew to over $500 million every year for every model the company sold hence their remarkable profit-margin increase.

Furthermore through establishing their roots in other countries Nissan ensured it met its rapid growing customers’ demands and in return, they closed in on the foreign markets; adding their profit percentage.

Strategizing globally, especially in the United States regarded as the biggest competitive market earned Nissan free publicity through the high quality brands displayed and sold there such that they started gaining control over the motor world exporting industry.

Organizational Culture

The bureaucratic culture commonly used in Japan never featured as Nissan’s organizational culture; instead, Carlos Ghosn took a massive risk in an effort to achieve his vision for the company; by introducing the proactive approach style in decision-making.

It was an assumption in Japan that giant companies always failed, but Ghosn maintained the expansive Nissan and even cut down on its suppliers to three.

Nissan had a centralized structure, which included senior management and the staff that worked together as a team in meeting the targets in sales hence improving the company’s profit.

Nissan’s top management always acted fast in readiness for any problems that arose. This wiped out most obstacles to the company’s productivity before hand. They operated business in urgency; there was rush decision-making, fast handling and solving of business-related matters and problems.

Ghosn played a crucial role in developing Nissan culture by introducing the new style of decision-making, a strategy that challenged all Japanese competitors.

He set the fast pace culture in Nissan’s performance through delegating duties and pressure on his staff into accomplishing the set targets in sales.

Having been fluent in English, he further went ahead and made English the standard language used in Nissan because the company is at a better chance of competing globally than the limitation of speaking only Japanese.

He channeled the hardworking spirit in all Nissan employees by his hands-on approach when leading his staff; though he pressured them for results, he also communicated and interacted with them at their level. These build the culture of integration in the company and team spirit that ensured Nissan high productivity.

The Global Integration Trend

Most company’s continuous efforts towards expanding their markets in other countries aim into global integration. The trend characteristically entails having a fast growing international network, leadership that skillfully manages all the international branches, increased ties and collaboration from other countries and a technologically equipped economy of scale.

Nissan demonstrated this by a structured leadership of four directors who had an international base; which they used to congregate and strategize on how to increase the value of their chains in the global market.

It also went further and expanded its manufacturing base, production and its market for selling its products; the most remarkable being the installation of more centers to spread their engineering activities internationally. Nissan also competed in the biggest world market hence increasing their global efficiency and control in the foreign market.

Integration Responsiveness Framework and Local Responsiveness

The main objective for this framework goes in achieving cohesion internationally and positive feedback from the domestic market, as well. Evidently, Nissan expanded its operational base by having new structured plants and engineering centers in Europe and other countries.

It reduced its production costs by adopting cheap labor for the neighboring countries like Philippines hence the significant improvement in their economic efficiency globally.

However, they faced pressure in trying to meet the different tastes and demands of their customers in different parts of the world. They even incorporated new technique in engineering to achieve uniformity in their models.

They never suffered when sourcing for raw materials though they tasked for cheap and high-quality labor in the underdeveloped countries.

Nissan faces the challenge of keeping itself afloat in the competitive market like in the U.S and still maintain itself as fast growing distribution chain and purchasing market. Hence, their investment in the U.S. is the aim of leveling with other competitors in the automobile industry.

Turning to Local Responsiveness, Nissan had to shift its design to the Chinese to satisfy its clientele base. In an effort to remain competitive but maintain its distribution chains, they manufactured hybrid design of vehicles to satisfy their clients. This stretched their labor, production, and operational costs hence the partnership in sourcing for raw materials.

Despite the pressure, Nissan benefited through this IR framework by gaining fame in the world market and uniformity in its model production.

Their market efficiency also increased tremendously and as they took advantage of the high demand rate, they acquired control and competitive power in the foreign market.

The local response towards Nissan gave the company and its shareholders freedom to venture and expand their business into the world market due to the improvement in their distribution structure.

Conclusion

Nissan’s success and the emergence in the future global market mimicked the dimension of all global companies constituting all the discussed components in organizational management. Globalization may not be easy, but strong leadership and

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IvyPanda. "Carlos Ghosn and Renault-Nissan: Leading for Global Success." January 25, 2020. https://ivypanda.com/essays/carlos-ghosn-and-renault-nissan-leading-for-global-success/.

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IvyPanda. 2020. "Carlos Ghosn and Renault-Nissan: Leading for Global Success." January 25, 2020. https://ivypanda.com/essays/carlos-ghosn-and-renault-nissan-leading-for-global-success/.

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IvyPanda. (2020) 'Carlos Ghosn and Renault-Nissan: Leading for Global Success'. 25 January.

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