Strategic Analysis of Nissan Company - Essay Example

Strategic Analysis of Nissan Company STRATEGIC ANALYSIS OF NISSAN COMPANY Background history of Indonesian Nissan Company The Nissan Motors company Ltd was established in the year 1993 as Jidosha Seizo Co., Ltd. It later changed its name to the Nissan Motor Co., Ltd in the year 1934. In 1966, the company did an amalgamation with the Prince Motor Company hence acquiring its plants and production capacity. Nissan Company Ltd was involved in a major strategic alliance in the year 1999 by combining with the Renault Company to form the Renault- Nissan Alliance Company. Recent strategic developments have been the establishment and incorporation of the Nissan Motor Kyushu Co., Ltd, which occurred in the year 2011(Nissan Annual Report, 2012: p4). The Nissan Motors Co., Ltd, operates in the retail automotive industry. Its core business is the manufacturing, sales and distribution of automotive products and marine related equipment and parts. The company is also involved in provision of financial and other support services in the motor industry. According to the 2012 financial report, the company had an annual sales turnover of ¥9,409.0 billion (Nissan Motor Co., Ltd, 2012: P6). The Nissan Company Ltd has played a significant role in the general Indonesian economy. The company employs approximately 157,365 full-time employees annually in its global market with 10% coming from Indonesia. The company has also contributed significantly to the automotive industry, which accounts for 48% of the national GDP of Indonesian economy (Nissan Motor Co., Ltd, 2012: p13). Strategic Analysis of the Nissan Company Ltd Planning is very important for the lantern success of the company. According to the 2012 financial report, Nissan Company has identified various issues that call for strategic interventions. The company is operating under a mid-term plan termed as “NISSAN POWER 88” in the financial year 2011 to 2016. Under this plan, the company hopes to improve customer-driving experience, improve the power of the Nissan Brand and ultimately raise the quality of the Nissan car. With this plan, the company hopes to increase its share in the global market and also raise its operating income (Nissan Motor Co., Ltd, 2012: p17). In order to achieve this short-term plan, the Nissan Company has identified a number of strategies and tactics identified below: Enhancing partnership strengths The company has established strategic alliances and partnership with other companies. The most successful alliance has been with Renault Company; this alliance was established in the year 1999. The other key strategic alliance was with Daimler AG Company that was established with the intension of sharing production technology (Interbrand, 2013: p7). Capacity expansion The Nissan Motor Indonesia has been involved in a series of capacity expansion since the year 2010. In the year 2010, the company had a production capacity of 50,000. However, this was projected to increase to approximately 180,000 in the year 2013 with the investment of 270 million USD. This growth was facilitated by increased industry capacity, which was predicted to increase from 894,000 to 1.64 million by the end of the year 2013 (Marsh, 2013: p5). Power brand The company has also been working on creating powerful brands through continuously engineering and development to increase consumer ownership experience. This strategy has been engaged to counter stiff competition in the automobile industry. Enhancing quality through innovation In addition to this, innovation remains a key competitive factor for the Nissan Company. Through innovation, the company plans to produce quality and efficient motor vehicle products and brands. In this effort, the company has been reported to invest 4.5% of its revenue in Research and Development project every year with the goal of enhancing quality (Nissan, 2012: p20). Zero-emission leadership The Nissan Company understands the importance of managing the environment in its efforts to improve its performance and productivity. The company has invested in friendly, sustainable and energy efficient motor vehicles and motor vehicle spare parts that have enabled it to gain a competitive advantage over its competitors. To what extent have these strategies been intended, realized, unrealized, or emergent? Nissan has benefited immensely from synergy, technology and new capabilities by implementing partnership strategy. Through alliance with Renault and Daimler, Nissan has acquired power train technology, diesel engines and Mercedes-Benz engines (Yamamoto, 2012: p14). Other partnerships have been formed with China, India and Mitsubishi in an effort to expand the scope of its manufacturing capacity and market share. Capacity expansion has yielded two opposing results. First, it has strengthened Nissan’s financial performance, giving it a fair competitive advantage over its competitors. Nissan’s revenues have been reported to grow form 7,517, 217 billion yen in 2010 to 9,409, and 026 billion yen in 2012 (Interbrand, 2012: p4). This depicts a strong financial growth as a result of capacity expansion. However, this strategy has weakened the goal of Nissan as most vehicles have been recalled. In the consecutive years of 2011 and 2012, the company is reported to have recalled about a million vehicles of various car models (Nissan, 2012: p23). This kind of a situation negatively implicates the firm’s brand image and lowers the customer loyalty to future products. Power brand strategy has also influenced the reputation of the Company positively. This strategy has led to growth in the brand value. According to Interbrand, Nissan’s brand was the fastest growing automobile brand in 2012; its value rose by 30% and became among the most valuable brands in the world (Interbrand, 2013: p8). This value growth proves a significant improvement in quality, innovation, reliability and increased customer reach as a result of the strategic intervention. Implementation of quality through innovation has also increased the value and usefulness of Nissans products. Innovative technological investments have led to development of electric vehicles such as LEAF and more energy efficient vehicles. Other technological innovations made by Nissan include fuel-efficient cars with hybrid, hydrogen and electrical engines together with safety technologies such as seat belts and curve control technology (Marsh, 2013: p9). Therefore, innovation has enhanced quality, and thus, improving customer driving experience and customer loyalty. Zero-emission leadership strategy has also been successful. This is mainly because it is in line with consumer’s expectations, which have been shifting in favor for environmentally friendly vehicles. Nissan has taken a leadership role in all its areas by developing vehicles, chargers and batteries that are environmental friendly. The alliance with Renault has also brought more electric vehicle models that support low carbon emission technology. This has been significant in maintaining the status of the company as a globally leader in CVT technology (Indonesia, 2011: p31). Strategic planning in Nissan Company The top management is responsible for setting strategic objectives at Nissan. The firm has pursued other goals other than profit maximization such as environment sustainability. The company has been working to reduce CO2 emission in vehicle use and end-of-life recycling in an effort to achieve a sustainable environment (Interbrand, 2013: p5). These environmental measures are aimed at minimizing pollution. Moreover, the firm has also invested immensely in employee development through training programs, nurturing competitive employees and offering well rewarding system. According to the CEO, Carlos, the employees are important asset to the organization, and they are highly motivated for their productivity (Nissan, 2012: p3). Finally, Nissan has played a role in community involvement through corporate social responsibility. The company has been reported to be leading in its strong commitment to CRS, based on the principle of corporate governance, accountability and transparency. It is noted to have donated robots at universities and its employees volunteering community service (Sivac, 2008: p2). The company has managed to meet the global demands for environmentally friendly products. Vehicles have been an outstanding factor in intensifying the greenhouse effect by emitting large amount of CO2 and other pollutants in the air. Nissan have been able to overcome this challenge by producing vehicles that are efficient and free from pollution. The company has also amalgamated with a number of firms in achieving its goals. Renault and Daimler AG are noted to have created synergy with Nissan and share technology in their production. The company has been successful in balancing shareholder interests, economic growth and societal expectations. References Indonesia Retail Report, 2011. Including 5-year industry forecasts by BMI. Business ` Monitor International. Interbrand., 2013. Best Global Brands 2012. Retrieved on 6th Feb 2014 from: http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012.aspx Marsh, P., 2013. Nissan seeks to overtake Toyota in Europe. Retrieved on 6th Feb 2014 from, http://www.ft.com/cms/s/0/5404b782-8680-11e2b90700144feabdc0.html#axzz2N9fFzTIH Nissan Annual Report, 2012 Retrieved on 6th Feb 2014 from, http://www.nissan global.com/EN/IR/LIBRARY/AR/ Nissan Global., 2013. Corporate Information. Retrieved on 6th Feb 2014 from, http://www.nissan-global.com/EN/COMPANY/ Nissan Motor Co., Ltd., 2012. Financial information as of March 31, 2012. Kanagawa: Tokyo Stock Exchange, Inc. Research & Markets Brochure, 2010. Country Analysis Report - Indonesia - In-depth PESTLE ` Insights. Retrieved on 6th Feb 2014, http://www.researchandmarkets.com/reports/2018418/ Sivak, M & Omer, T., 2008. Future Demand for New Cars in Developing Countries: Going ` Beyond Gap and Population Size. USA: Michigan Transportation Research Institute. Yamamoto, H., 2012. HIS Automotive 2010: ASEAN Automotive Market Outlook and ` Challenges and Opportunities for Suppliers. Thailand: HIS Inc. Read More