Nissan Motor Essay

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Nissan Motor  Co. Ltd. is a multinational enterprise headquartered in Ginza, Tokyo, Japan. With 3.5 million cars sold worldwide in 2006, Nissan is one of the top 10 car producers in the world and is number two in Japan. Of these 3.5 million cars, only 740,000 cars (21 percent) were sold in Japan; the remaining 2.8 million cars were sold overseas, mainly in the United States and Asia. Although Nissan has increasingly shifted its production abroad, it still produces significantly more cars (1.2 million) than it sells in its domestic market. The main plants  in Japan are located in Kanagawaken and Tochigi-ken, both in the Kanto region not far from Tokyo. Both plants are open for public visits. In addition, Nissan produces in North  America, southeast Asia, China, Europe, and Africa.

From 2004 to 2006, Nissan steadily increased  its sales from 8,576 billion yen ($83 billion) to 10,468 billion yen ($102 billion) while keeping its net income relatively constant at around 800 billion yen ($7.8 billion, outperforming all major American car producers but still falling behind Toyota.

History

Compared  with other  Asian carmakers,  Nissan has a long history dating back to 1914. At that time, the company  produced  mainly  trucks  under  the  Datsun  brand  and  only later  started  to  produce  cars under the Nissan brand. The company raised capital in 1933 and was formally acknowledged  as Nissan Motor Co. Ltd. in 1934.

In the 1960s Nissan started  to export small cars to the United States and Australia. By 1970, Nissan had established  itself as one of the major carmakers in the world. The oil crisis in 1973 gave Nissan, as well as other  Japanese carmakers, a major boost in sales abroad, because consumers  became aware of fuel prices  and  appreciated  the  small Japanese economy cars.

To overcome  trade  barriers  in the 1980s, Nissan set up  plants  in Australia,  Mexico, Taiwan,  South Africa, the United Kingdom, and the United States. As a result of this aggressive international expansion, the  company  had to scale back some of its operations, closing its plant  in Australia, among  others. In the  late 1990s, Nissan had suffered consecutive losses to such an extent that it needed a partner  to survive; in 1999 Nissan was virtually bankrupt.

After other Japanese carmakers and DaimlerChrysler  rejected  an  alliance, Renault  was the  only remaining bidder for the ailing Nissan. In March 1999, Renault  acquired  a 36.8 percent  stake of Nissan for $5.4 billion. Renault later increased its investment  in Nissan to 44.3 percent, and also invested 15 percent in Renault. At that time, the financial press was extremely skeptical  that  medium-size   Renault  would  be  able to  turn  Nissan  around.  Limited  financial resources, cultural differences, and the complicated Japanese bureaucracy posed serious challenges. On the positive side, the  companies  brought  complementary assets into the alliance. Nissan had a strong presence in Asia and North  America, as well as advanced engineering skills. Renault offered a presence in Europe and a more marketing and sales-focused approach.

Soon after  his arrival in Japan, Carlos  Ghosn,  a charismatic  Renault manager, implemented  the Nissan Revival Plan. Even before the targeted  timeline, Ghosn achieved his ambitious goals and turned  Nissan into a profitable carmaker. This successful turnaround of a Japanese company through  a foreign investor attracted worldwide attention, resulting in various publications ranging from books to academic case studies, and made Ghosn one of the most famous executives in Japan.

Not immune  to the cutthroat competition  in the global automobile industry, Nissan has failed to increase profitability during recent years. That Ghosn has  become  chief executive  officer of both  Nissan and Renault has not  made the  situation  any better. To compete,  Nissan has increased  its investment  in research and development and is expanding into Russia and India.

Bibliography: 

  1. J. Froese and L. E. Goeritz, “Integration Management of Western  Acquisitions in Japan,” Asian Business & Management (2007);
  2. Stewart Lone and Christopher Madeley, The Automobile in Japan (London School of Economics and Political Science, 2005);
  3. Nissan Motor Co. Profile 2007, www.nissan-global.com (cited March 2009);
  4. Alex Taylor III, “Nissan’s Radical Chic,” Fortune (v.156/9, October 29, 2007).

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