Success in the Alliance

In 1999, Renault and Nissan built an Alliance following a common strategy and exploiting synergies. Cross company teams were built to support the Alliance in all aspects of the companies business. It was a win-win for both sides. For Nissan, the Alliance helped it avoid bankruptcy and regain profitability as well as receiving from Renault the expertise and experience. And on the other side, Renault was provided with the economies of scale and Nissan’s technology, sales experience, and in addition, its distribution in Nissan’s territory.

This Renault-Nissan Alliance, after 9 years’ development, was considered as the most successful alliance in the automotive industry in the world. The success of the Alliance was significantly attributed to the leadership of Carlos Ghosn, the CEO of both companies and his management team. As Carlos always had a big picture over the two companies, he was able to balance the development and benefit for both. Mutual respect was the philosophy for the Alliance to stick to, and it was always kept in the minds of managers when making decisions.

Another critical rule was the win-win principle, which was also the reason why the Alliance could remain as any single decision should not been made at the expense of the benefit of the other side. Although Carlos’ leadership had proved a new way of companies’ cooperation, the sustainable development of the Alliance laid in the future leaders and management team coming from both Renault and Nissan with the similar traits, perspectives and belief like Carlos.

As the Alliance was about to enter the next stage, leadership was facing a new challenge as to what would be the criteria to select, recruit and promote people for the leaders of the new generation for the Alliance and what qualities and personality trait would be needed for future managers. The skills stated above were the general qualifications for managers to success. To be specific in the case, Carlos had set a good example for the management team.

Different from previous leaders, his successor, and other future Alliance managers would have the following qualities and skills, in order to maintain the balance of and develop, as always, the Alliance of Renault and Nissan and benefit from it. Motivation was a quality leaders should possess. They should be a firm supporter of the Alliance seeing the achievements it had reached, having confidence and enthusiasm in the Alliance as it could bring new development and opportunities to Renault and Nissan, and striving for pushing forward the Alliance to the next stage.

Their mission was, from the Alliance’s perspective, seeking for the development for the two companies. Managers, no matter they came from Renault or Nissan, must always consider the Alliance’s interests as the priority, with no partiality or unfairness to any party. As Carlos said: “(He) would never accept even for the most skilled and powerful leader to join the executive committee of any one of the companies if I suspected disloyalty to the Alliance”.

Renault-Nissan Alliance was built up on basis of long-term interests and its original goals was to join the two large companies in the automotive industry together sharing their own advantages with partners as well as learning from each other in order to obtain new development potential. Renault, from Nissan got its market, technology and sales experience, while Nissan was provided with financial support and manufacturing experience. However, due to the discrepancy of the market and comparative advantages of the two, there would inevitably be a win for one and a loss for the other.

The priority of leaders was to ensure the balanced relationship within the Alliance instead of seeking the interest for one party at the expense of the other side since leaders should always remind themselves of the objective of building the Alliance. For Renault and Nissan, the long-term interests was how to maintain the partnership, to maximize the potential of synergy and to guarantee that the Alliance can continue to serve the benefits of both sides, rather than short-sightedly evaluate and pursue unilateral gain.

The most important foundation for the formation and development of the Renault-Nissan Alliance was mutual respect. The two companies were equal in the Alliance although at the very beginning of cooperation, Renault acquired more capital of Nissan and helped it survive in the bankruptcy crisis. Renault and Nissan, respectively, represented two different corporate cultures and national cultures of France and Japan in which countries they came from.

The cultural differences of western and oriental world and the uniqueness of corporate cultures led to the cultural diversity of the Alliance. Furthermore, the main areas of cooperation of Renault and Nissan focused on the exchanges and mutual learning in technology, personnel and management, the sharing of global purchasing and production platform in order to cut costs and take full advantage of economies of scale and the new synergies.

However, at the same time the two companies maintained independent in the development strategy and decision-making, and guaranteed not to lose their brand identities. In market segmentation, Renault and Nissan on the one hand wanted to minimize the direct competition with the partner while exploring the markets where the partner had not presented, and on the other hand, tried to break the geographical boundaries to meet the market demand as possible and encouraged production and promotion of the products with more popularity in one particular local market.

Therefore, if disagreement appeared in related to culture difference, brand identity or marketplace overlapping, managers’ decision making would play an important role. They had to always bear in mind that mutual respect was the core value of the Alliance, tolerating the coexistence of different viewpoints, respecting diversity, dealing with possible problems and differences based on the principle of equality and mutual respect.

“In order for the combined share of ideas and strategic management to be effective, the employees of both companies must respect the identities of their fellow colleagues as well as their values. If this critical first step isn’t met and members in a particular team act disrespectfully and selfishly towards their teammates, an organization is bound to self-destruct in a short time of period. “