The logic of alliance Value Creation model on case study Renault and Nissan - Assignment Example

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The combination of two organization structures has enabled both companies to address their individual shortcomings. Nissan has been able to address the financial problems while Renault has been able to enhance market reach. …
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The logic of alliance Value Creation model on case study Renault and Nissan
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Download file to see previous pages In this manner the alliance has proved to be a success for both Nissan and Renault. However the two companies are still facing challenges in creating an organizational culture that can maximize cooperation between the human resources from the two companies. In order to create the maximum value from this alliance, Nissan and Renault need to share their core competencies to synergistic effects. This will enable both companies to improve their specifications and standards in a continuous process so that the competitive advantages of both companies are made sustainable.
Strengths and weaknesses
Nissan’s strength is the worldwide market share while Renault’s strength is in financial management (Glover, 2006). By forming this alliance, both companies will be able to address these structural problems. In order to maintain its financial strength, the French car maker Renault has to access new markets and this objective is met by forming the alliance with the Japanese car maker Nissan. Both companies will be able to implement the practice of benchmarking which is defined as comparing an organization’s performance against the best practices in the industry. This alliance will enable Nissan to compare its financing strategies against those of Renault and thus identify the areas of improvement. Renault will be able to compare its product development practices with those implemented by Nissan. As a result both companies can improve their efficiencies in these operational processes and thus strengthen their competitive advantages. ...
The main weakness is the different focus in each organization design. Nissan places strategic focus upon supply chain management while Renault’s strategic focus is upon product development. Therefore there are structural dissimilarities which must be addressed if the alliance is to enable Nissan and Renault to capitalize upon each other’s assets. The challenge in front of the management is to create a decision making process which will enable the human resources from both companies to coordinate their efforts so that there is no duplication. This can address the company-specific weaknesses. Nissan’s financial weakness can be addressed by importing the financial management practices from Renault. Similarly Renault can access additional geographic markets in order to maximize its market reach. However in order to meet the demand from additional markets, Renault has to focus upon supply chain management which is Nissan’s strength. Nissan has embarked upon a cost-cutting initiative to create greater demand for its products. If Nissan can reduce its cost of operations, then it will be able to price its automobiles more competitively. Because of its financial management practices, Renault has been successful in maintaining demand for its products in the market that the automaker currently operates in. However demand in these markets is shrinking. Therefore Renault needs to access additional markets in those regions which have growing demand. By forming the alliance with Nissan, Renault has been able to meet this objective. By forming this alliance, Renault will be able to access those markets that Nissan operates in. As a result, Renault will be able to sell more cars and enhance scale economies. Because of the high costs of new ...Download file to see next pagesRead More
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