Business Case Studies, Leadership, Carlos Ghosn as CEO of Nissan and Renault: Can He Rework the ‘Nissan Magic’?

 

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Carlos Ghosn as CEO of Renault and Nissan

By 2010, Nissan and Renault would build their cars using the common building blocks. Ghosn viewed the alliance as "managing contradiction between synergy and identity"¹⁷ and confirmed that while gaining synergies, the individual identity of each brand would be safeguarded. The other major alliances in the industry, the DaimlerChrysler and the GM/Fiat had not proved to be very successful because of improper management of merged assets, trans-atlantic product development and failed attempt in understanding local market; Ghosn confirmed that Nissan's alliance with Renault would creatively achieve it. At the same time the alliance would avoid merger and would maintain 'a spirit of partnership'¹⁸ . The alliance would be the fourth largest automobile group in the world. In October 2004, the first car was built using a common platform of Nissan and Renault. Modus, a subcompact minivan of Renault shared its base with Nissan’s Micra saving $500million for Renault every year.

After Carlos Ghosn succeeds Schweitzer at Renault's in April 2005, he would also continue as the CEO of Nissan. Carlos Ghosn was affirmative that he would not leave the company unless he finds the right person who would succeed him at Nissan. He stressed on the need for a Japanese as the CEO of Nissan in such a culture sensitive country. While at Nissan, he had transformed himself into a Japanese, adapting to the culture, analysts feared if he would breach the French business etiquettes as he takes up the rein at Renault.19 Two of the five vice presidents at Renault would retire soon, and Carlos Ghosn was to take up the reigns at both the companies, during such senior level management changes. At the same time, many feared if the sense of urgency brought through NRP would continue at Nissan or will the company slip back to its old habits, when Carlos Ghosn leaves. The pressure was considered to be very high, as an analyst stated, "He will be less present at Renault than he was at Nissan, and less present at Nissan that he used to be. I believe this challenge will be more difficult."20 The alliance had helped both the companies equally, in terms of cost savings from not requiring to construct new plants where the alliance can use common buildings, common platforms etc. This had also helped them enter new markets faster and gain other synergies . The purchasing power had also increased as they ordered and bought components through Renault-Nissan purchasing organization for both the companies at a time.

The alliance had from the beginning ensured that the inter-company cultural clashes do not exist, by maintaining individual cultural identities. While a merger had been avoided since the beginning, Carlos Ghosn confirmed that it would be its agenda in future also.

Carlos Ghosn remarked that when he takes up the two positions, he would blend the strengths of the people at the companies, the innovation excellence of the French and the dedication towards manufacturing of the Japanese. ²¹ He affirmed that his tenure at Nissan had allowed him to learn the real essence of successful leaders, and would drive his success in future also. He called himself, ‘not a theorist of citizenship but an expert in multi nationality’.²²

Carlos Ghosn called the three major attributes, 'Value, Transparency and Performance' as the ones that would determine the competence of any CEO. He believed that they act as standards for leadership in global business, in the light of growing corporate scandals, when the top executives of the companies were increasingly coming under scrutiny. He explained that the actual results that are delivered along with simultaneous value creation to the customers and the other stakeholders through maintaining transparency, reflect an efficient leadership. By communicating every strategy to every person concerned, he maintained that it would facilitate a faster reaction to dynamics in the fiercely competitive global market place. An analyst once called Carlos Ghosn, 'amanager without borders, polyglot and cosmopolitan'. Talking about his dual roles and the cultural barriers that he will have to face as he moves to Renault while also heading Nissan, Carlos Ghosn said, "Global is global. In my opinion, this is going to be the story of the twenty-first century. This is what's going to happen in the twenty-first century - you're going to see the emergence of more 'global' standards, some kind of global references; you're going to see more and more of it. But 'globality' doesn’t mean 'uniformity.' It doesn't mean that. You’ll still have different cultures, you’ll still have different tastes, and you’ll still have some adaptations to make to different countries, but you'll have some basic things that will be common globally, especially in the economic area."²³

17]"Renault's alliance with Nissan", www.economist.com, August 16th 2001
18]Parachkevova, Anna "CEO outlines Nissan's resurgence", http://thedartmouth.com, May 12th 2004
19]"Carlos Ghosn- Nissan motor", www.businessweek.com, January 8th 2000
20]Tierney, Christine "Leadership, bold moves help Renault save Nissan", www.detnews.com, October 24th 2003
21]Smith, Duvergne, Nancy "Nissan Renault alliance faces down few challenges", http://web.mit.edu, November 18th 2004
22]Abescat, Bruno "I am an expert of multi nationality", http://livres.lexpress.fr
23]"Carlos Ghosn: standing at the global crossing", op.cit