The Renault-Nissan Alliance’s Analysis Report (Assessment)

Introduction

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:

1. Changes in the world sales rates
2. Awareness of the Brands all over the world
3. Advancement in Technologies
4. 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.