The making of a Global Alliance: Nissan and Renault

Topics: Renault, Automotive industry, Ford Motor Company Pages: 10 (3182 words) Published: May 25, 2008
The term strategic alliance has become widely used to describe an agreement between two or more businesses joining together to cooperate in a specific business activity, so that each benefits from the strengths of the other and gains competitive advantage. The businesses are usually not in direct competition, but have similar products or services that are directed towards the same target audience.1 The formation of strategic alliances is widely seen asa response to globalization and increasing uncertainty and complexity in the business environment.

In the recent years companies worldwide, including many industry leaders, are becoming increasingly involved in strategic alliances. Furthermore, several surveys have disclosed that such partnerships are distinguishable from traditional foreign investment joint ventures in several important ways.

Strategic alliances involve sharing of knowledge and expertise between partners as well as the reduction of risk and costs in areas such as relationships with suppliers and the development of new products and technologies. A strategic alliance is sometimes equated with a joint venture, but an alliance may involve competitors and generally has a shorter life span. Strategic partnering is a closely related concept.

Taking into consideration the automotive industry itself in the near past there have been observed many consolidation and inter corporate linkages as alliances or joint ventures in this sector. All with the aim to become more cost-efficient and to stay competitive. In 1998 took place the merger of Daimler-Benz and Chrysler and in 1999 the alliance between Renault and Nissan.

"The majority of the auto industry views this as a time of consolidation, not expansion, as many expect global overcapacity to exceed ten percent," said Daron Gifford, National Automotive Industry leader, KPMG LLP. "The reasons for this consolidation are clearly structural and material-cost reduction, as well as revenue growth through new business opportunities." For the fourth consecutive year, slightly more than half of the executives, 57 percent, agree that alliances will be more important than mergers and acquisitions in the auto industry over the next five years.2Problem DefinitionThis paper will discuss strategic alliance between Nissan and Renault in 1999, the negotiation period that proceeded it and all issues and problems that arose during this process, deriving among others from cultural differences.

Nissan Motor Company, Limited shortened to Nissan is a multinational automaker headquartered in Japan. It formerly marketed vehicles under the "Datsun" brand name and is one of the largest car manufacturers. Nissan is among the top three Asian rivals of the "big three" (the three major Japanese automakers: Nissan, Honda and Toyota). Currently, they are the third largest Japanese car manufacturer.

Nissan has demonstrated a commitment to innovation since the company's founding in 1933. Not only are Datsuns the first mass-produced Japanese vehicles, their unique, automotive style makes a major impact on the U.S. market when Datsun sedans and compact pickups are first imported in the late '50s.3Renault S.A. is a French vehicle manufacturer producing cars, vans, buses, tractors, and trucks. The company is well known for numerous revolutionary designs, security technologies, and motor racing. Present in 118 countries, Renault is a multi-brand volume carmaker.4It is also worthwhile to mention another global player in this industry, DaimlerChrysler, since it has been the Renault's rival during the alliance negotiations.

DaimlerChrysler was founded in 1998 when Mercedes Benz, manufacturer Daimler-Benz (1926-1998) of Stuttgart, Germany merged with the US-based Chrysler Corporation. The deal created a new entity, DaimlerChrysler. Daimler produces cars and trucks under the brands of Mercedes-Benz, Maybach, Smart, Freightliner and many others.5This report will analyse the way to the global...
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