Nissan Motor Essay ⋆ Business Essay Examples ⋆ EssayEmpire

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:

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

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