Automobile †Renault Essay

From its humble beginnings from in 1885 today the automotive industry is one of the biggest industries today and is one of the world’s most important economic sectors by revenue. Not only does this industry develops and manufacture but it also markets and sells motor vehicles globally. STEEP Analysis onSocio-cultural Socio-cultural variables such as population, social responsibility, cultural differences, and theinfluence of consumer movement affects directly to the automobile industry. Technological Technological factors and innovations, Research & development plays a most important role   asthey improve standards of driving. Fuel consumption is one of a major problem at the moment, hybrid engines has developed toreduce fuel consumption. Ex: Honda, ToyotaOne of a major requirement of the customer is safety. Seat belts, air bags which protect passengers at a collision, ABS brakes to stop the vehicle in short distance even in icy surfaces. By investing for Research and development and innovating new technologies can gain patentedand boost sales. Technological development is support the driver to control the vehicle more comfortable andeasier. In 1999, Renault bought a controlling interest in Nissan at 44% of the shares. This merger raised several questions about the two companies from different countries and their methods of manufacturing and business practices in how they could co-exist and profit from one another. Now, the merger has proven to be the â€Å"most successful partnership in the global automobile industry† (Nissan News, 2005). During research for this paper, not much if any negative information surfaced. There have been some difficulties along the way of factory closing and elimination of redundancies but overall, Nissan and Renault have improved their standing in the marketplace and have improved their profitability, technology utilized, and image within the automobile industry. Nissan was on the verge of bankruptcy before the merger. The company had been unprofitable throughout the 90’s and was in debt in excess of $22 billion. Since the merger, Nissan has turned around to one of the highest operating profit margins in the car industry at 9. 2 percent (Nissan News, 2005). Additionally, Renault has more than doubled their market capitalization since the alliance and has increased their corporate value more than any other European producer. By this measure, no real problems are facing the companies that would not normally arise when considering the cultural differences and production methods between the two companies. As part of the merger, a cross company team was formed to handle such situations. This team shares knowledge, processes, and technology when needed and they work together on new strategies that affect both companies. Both companies continue to act as separate entities with a sprit of independence yet do share several platforms in terms of technology and production along with customer services practices and communications. Sharing these platforms offer huge financial savings as a single platform could be used across two companies. Purchasing power of Renault is shared with Nissan which is a major source of cost savings. Overall, it’s a win-win situation for both companies. The biggest recommendation one could make is to continue down the road of brand separation on the front end but sharing as much as possible on the back end. Sharing such practices as customer service, engineering techniques, research and design of new technologies, and cost saving practices. Another recommendation that could be made to Renault Nissan is to compromise during differences. To this point, once a decision has been made that decision needs to be carried out to the fullest with no changing in mid-stream. If the initiative does not work to the expectation of the teams then the teams must work together for the solution and not point fingers or place blame. This is especially important on platforms that are shared between the two and has impact to both companies. Balancing commitment to shareholders and the community is a very delicate task in this case considering each is from a different country with different views and values. Since each company operates independently from one another, this allows each to focus on their own. With the cross company teams, made up of equal representatives from the two companies, these commitments can be considered and evaluated by both companies. Since Renault has controlling stake of Nissan, their shareholders are a majority but that doesn’t mean that they cannot be sensitive or mindful of Nissan’s shareholders desires for the companies. Culturally speaking of their communities, each company has a presence in their homeland that does not prevent them from involvement in their communities just the same as they were not merged in with another company. Turing around a failing automobile manufacture into a global leader is not a sign of failure and Nissan has done just that. It took the help of Renault to perform this transformation yet the identity of Nissan has remained. The same for Renault, their ability to increase their market standing with the introduction of new technology and manufacturing techniques introduced by Nissan demonstrates that when two companies combine their efforts and work as single unit it does not mean an acquisition or merger is such a bad thing. Sure there can be challenges along the way but in this case the success is evident and has continued to flourish as time has passed. Resources: Hunger, J. D. , Whellen, T. L. (2006). Strategic management and business policy (10th ed. ). Upper Saddle River, NJ: Prentice Hall Lewis, R. (2004, June 4). Renault/Nissan: A successful partnership. Car Keys. Retrieved July 21, 2007, from http://www. carkeys. co. uk/features/industry/2004/3439. asp Renault-Nissan alliance: A uniquely successful partnership that offers synergies and economies-of-scale, while preserving independence. (n. d. ) Retrieved July 21, 2007, from www. nissannews. com/corporate/alliance/1_Introduction. doc