Cultural Impacts on international strategic alliances

Analysis of Renault-Nissan case

Course: International Business Course

Prepared by Team No 6: Mahmoud Abu Farha, Hazem Tirhi

To: Prof. Aysar Sussan

Date: 13/06/2015
Outline

1 Abstract
2 Introduction about strategic alliances
3 Renault-Nissan alliance
Major Cultural Differences and challenges
4
between Renault and Nissan
5 The success of Renault-Nissan alliance
6 Conclusion
Abstract

Cultural differences should be considered as a main strategic

issue when forming and managing international strategic
alliances, especially for the alliances that are formed of members
who have huge cultural differences like Renault-Nissan alliance.

The paper focuses on studying the cultural impacts on the

international strategic alliances through analyzing Renault-
Nissan case; whereby trying to prove that the cultural
differences are not obstacles in front of the international
strategic alliances if well managed. On contrast, the cultural
differences may provide new opportunities by combining the
best of the different cultures and come up with new best
practices like what Renault and Nissan has done.
Introduction about strategic alliances

Benefits of the Strategic Alliances

The core of strategic alliance is the co-operative relationship that improves effectiveness of
the competitive strategies of its members (OECD)

1.Easier and more cost effective 2.Shared risks

market entry and expansion
3.Get access to the others 4.Synergy and competitive
knowledge and expertise advantage

Main forms of strategic alliances

Joint ventures, equity swaps, minority equity investments, joint
R&D, joint marketing, joint manufacturing, long-term sourcing
agreements, shared distribution, shared provision of services and
standards-setting
Renault-Nissan alliance

The alliance enabled the two

companies to outperform
some of their historic
regional rivals and it elevated
both Nissan and Renault into
the elite level

Synergies of the alliance

1.Purchasing (RNPO)
3.Research and Development
exchange powertrains, common powertrains, cost saving strategies
around the world which include Logistics, Customs & Trade,
information systems infrastructure, and Sales and Marketing
2.Manufacturing and Logistics
improvement plant performance, optimize capital expenditures
through standardization, better capacity utilization
4.Human Resources
common human resource processes, unified talent management
Major Cultural Differences and challenges between
Renault and Nissan
Main cultural differences between the Japanese and the
French cultures based on the Hofstede center website
Major Cultural Differences and challenges between
Renault and Nissan

After the alliance, Renault has started in implementing

changes within Nissan organization. The main goal for
those changes was to take Nissan back to profitability
after the difficulties that Nissan has faced in 1990s. In
order to achieve its goals Renault worked and is still
working to change some parts of Nissan culture which
they find inefficient like keiretsu, life time employment,
Masculinity, collectivism, decision making, Time
perception, Uncertainty Avoidance and many others
Major Cultural Differences and challenges between
Renault and Nissan

1 Individualism Vs Collectivism
Nissan Renault
Based on the concept of collectivism. The more individualistic culture
group as the most efficient instrument,
decisions are taken by consensus
The new reward system that assesses managers according to their results and
promotes them based on objectives achievement, this change in Nissan aims to
increase individualism in a way that facilitates finding new talents.
decision making process changed in a way that allows individuals to take decisions
quickly instead of taking decisions based on group consensus.
The new management system in Nissan now encourages individual initiatives and
advancements in contrary to the former system
Major Cultural Differences and challenges between
Renault and Nissan

2 Power Distance
Nissan Renault
Strong, lower than Renault, hierarchy is Strong, hierarchy is strong
strong.
What determines the hierarchy is the
time spent in the company.
Traditions forbid the commandment of
managers by someone younger
new system of promotion that is based on performance was implemented.
To minimize the high risks of conflicts Carlos Ghosn had established a double
hierarchy system.
Major Cultural Differences and challenges between
Renault and Nissan

3 Masculinity Vs Femininity
Nissan Renault
Japanese society is one of the most French culture tends to support equality
masculine societies in the world between males and females
Renault is sending women managers to Nissan as part of their collaboration
Major Cultural Differences and challenges between
Renault and Nissan

4 Language
Nissan Renault
Japanese language French language
English is the official language, higher risks of misunderstanding in communication
Major Cultural Differences and challenges between
Renault and Nissan

5 Uncertainty Avoidance
Nissan Renault
Being more conservative Taking risks
long term planning
Board members reduced from 37 to 10
Decision making process now dont need consensus
Major Cultural Differences and challenges between
Renault and Nissan

6 Time Perception
Nissan Renault
cyclical perception of time linear perception of time, Time is money
More long term oriented More short term oriented
Time orientation in Nissan had to be changed, Carlos Ghosn set the survival plan to
make Nissan able to recover as soon as possible by focus on regaining short term
profit
Major Cultural Differences and challenges between
Renault and Nissan

7 Truth Vs Virtue
Nissan Renault
make compromises and choose the best take decisions fast and pursue its logic till
in the different choices which is time the end
consuming
The new promotion system that is based on performance encourage taking decisions
fast
Major Cultural Differences and challenges between
Renault and Nissan

8 Decision-making
Nissan Renault
Making decisions take much longer time They make decisions quickly
because general consensus
Number of Nissan's board members reduced from 37 before the alliance with Renault
to 10
Major Cultural Differences and challenges between
Renault and Nissan

9 Enterprise Loyalty
Nissan Renault
employees are very loyal because of the Employees are be less loyal because of
concept of lifetime employment the individualistic culture
Carlos Ghosn eliminates this principle lifetime employment mentioning that
Japanese cannot stuck with this old principle, and they had to adapt to current
management systems in order to keep their powerful in the auto industry
The success of Renault-Nissan strategic alliance
The strategic alliance between Renault and Nissan has created a successful
giant car producer in the global Auto Industry market, ranked No. 4

8.3 million cars of sales in 2013, about 10% of cars manufactured all over the
world, expectation for 2016 is to sell 10 million cars

Combining the best practices coming from the two companies

Constant synergy between the two companies and common goal vision

After 15 years of the alliance, the two companies still seeking more
convergence (strategic alliance is a constant process of re-shaping and good
practicing )
Conclusion

The distinctive success of Renault-Nissan alliance can

be considered as an evidence that proves that the huge
cultural differences are not obstacles in front of
international strategic alliances if well managed. On
contrast; combining the best practices from both
Renault and Nissan produced more effective best
practices for both of them, made them stronger and a
main player in auto industry on the global level, and
improved their future opportunities
Thank You

Questions