Nissan - Corporate-Level Strategy - Case Study Example

Nissan: Corporate-level strategy analysis: Product diversification Contents Contents 2 Analysis of Corporate Level Strategies of Nissan 3 Strategy1: Brand Equity 3 Strategy 2: Power gained through increased sales 3 Strategy 3: Quality Improvement 4 Strategy 4: Market Leadership through Zero-Emission and Cost Leadership 4 Strategy 5: Market Expansion 4 Levels of Diversification 5 Analysis of BCG Matrix 7 References 9 Analysis of Corporate Level Strategies of Nissan The corporate level strategy can be considered to be actions that are taken by an organization so as to gain competitive advantage through managing and selecting different forms of businesses that compete in various product markets and industries. Nissan is a Japanese automotive firm that was invented in the year 1933 after the acquisition of Tobata Casting Co. The company ranks sixth across the globe amongst all the other automobile companies such as Ford, Volkswagen, Toyota, General Motors and Hyundai. The current corporate level strategy of the firm is Nissan 88 that mainly focuses on five different strategies to accomplish the common goal. Strategy1: Brand Equity The automotive company tries to build its brand equity through enhancing their strengths in production as well as engineering. The major motive behind its marketing strategies is to facilitate more of interaction with the customers so as to deliver exceptional service. The strategy of developing the brand power gives the firm strength of being competitive in the industry (Jeffs, 2008). In the scenario of short term plan of Nissan creating good recognition and expertise image may prove to be difficult as it is long term oriented strategy. Strategy 2: Power gained through increased sales The increased sales concept is categorized into major parts such as expanding the dealer base to 7500 from 6000 across the globe and triggering the sales volume by increasing sales in ASEAN region, Japan and United States. The objective behind this strategy is that the company by end of 2016 aims at becoming the biggest Asian automotive company across Europe (Abell, 2010).The risk in this process is high and encompasses improved production and manufacturing capabilities so as to fulfil the goal of the adopted strategy. Strategy 3: Quality Improvement One of the most essential components of the company’s corporate strategy is quality improvement. The aim of the firm is to raise its product image amongst all the automakers in relation to quality and even to enhance the Infiniti brand image amongst the luxury car sector to degree of leadership by the financial year 2016 (Thompson and Martin, 2010).This tends to increase the costs as higher standards of quality would require more of R&D investments. The quality improvement strategy focuses on creating expertise image in the industry. Strategy 4: Market Leadership through Zero-Emission and Cost Leadership The company aims at recycling procedure through its battery engineering development. The strategy even extends to selling and manufacturing electric vehicles through alliance and emitting on the streets only 1.5mil by the end of 2016. The company even is trying to incorporate its hybrid technology within all its products in the form of mobility technology that is sustainable (Keller, 2008).The company even aims at gaining leadership through offering lowest costs than other players in the market. It plans to achieve this through resource sharing with all the other sectors or through partnerships. Strategy 5: Market Expansion The firm’s corporate strategy even extends to increasing its market share in the global context to 8%. The company focuses on increasing their market presence in the ASEAN region and in the BRIC countries. The firm even focuses on gaining strong presence in Chinese market by launching their new brand Venucia through forming partnerships. This strategy would enable the firm to capture different market segments with the help of its competitive price and high product quality. Levels of Diversification There are various forms of diversification and it depends on the number of businesses that is hold by the firm. Nissan belongs to the dominant business category where 70% to 95% of the total revenue that is generated by the firm comes from one single business. As per the strategies of the company it has adopted the technique of vertical integration where it aims to develop various downstream and upstream activities based on their dominant business. The activities that are encompassed in the dominant business of Nissan supports one another for execution of the business operations. The plant of the company manufactures its car parts which mainly comprises of transmissions and engines. The upstream activity of the firm majorly aims at sourcing those components which are not that essential in the manufacturing process. The manufacturing activities of the firm can be categorized as development of commercial and passenger cars, manufacturing of luxury cars such as Infiniti cars, development of industrial machinery and production of fishing boats and family cruisers (Lynch, 2007).The downstream activity of the firm is conducted by Nissan Finance that involves providing guarantees, finances and insurances related only to the products of Nissan mainly its cars. The diversification level can be illustrated further with the help of the diagram given below- (Source: Ali and Kaynak, 2012, p.97) The company has initially adopted the strategy of low diversification but in relation to its dominant business the firm can be stated as possessing related constrained diversification. This type of diversification has low corporate relatedness and high operational relatedness. Though the finance part of its business is one of the essential sectors but the major focus has always been on its dominant business that is associated with the car business. This diversification level clearly describes that vertical integration is incorporated by the firm into the system as it manufactures its inputs such as car parts, motors, etc., that is backward and inward because they possess own distribution channel and even offers post sales services through its another business segment that is Nissan Finance. The company even focuses on reducing its overall costs that is associated with secondary and primary activities. The factor of operational relatedness can be divided into three parts such as shared activities in terms of logistics, shared technology and shared plants. The logistic activities are shared by the various SBUs belonging to the group. An affiliate of the company known as Nissan Trading Corporation is involved in providing local and import purchases of automotive parts and also for the Forklift applications. This group even provides various other raw materials along with export components to Middle East, Japan, Asia and Europe. Through this approach the firm is able to use its global network so as to enhance its logistics and trade to be cost competitive. The technology and plants are being shared by the company in order to perform various activities (Kapferer, 2008).The Zama operation centre that is located in Japan serves dual purpose such as it installs designs and plans technologies for the electric vehicles and also is utilized for development of forklifts. The factor of corporate relatedness is very low and can be subdivided into two major parts such as manufacturing and philosophy strategy and staff training. The firm focuses on lean manufacturing concept so as to reduce the overall waste and in order to do so the company even has developed an Integrated Manufacturing System so as to coordinate well with all its suppliers in order to reduce the lead time in the production process. All the plants of the company follow the same process across the globe. The firm even gives importance to staff training and in order to do so the company has developed education centres so as to train employees and staff who may belong to other subsidiaries. Analysis of BCG Matrix The BCG matrix for this particular company is given below- (Source: Markides, 2013, p.104) The star segment of the matrix comprises of two specific business units that is Nissan cars plus electric vehicles and Infiniti cars. The Infiniti cars can be considered to be a separate business unit in comparison to other passenger cars as it follows a different strategy and the target market segment is also different. The development of this SBU is pretty well and it has raised the sales target of the company as it aims to sell 500,000 units by the financial year 2016. The company even aims to develop brand new products of this category into the Chinese market so as to eliminate the import tariffs. The passengers cars of the company can be considered to be cash cow but this particular unit even comprises of electric vehicles that clearly indicates that it has been able to raise its presence as star in the matrix (Franzen and Moriarty, 2008).The demand for EVs is continuously increasing in the present scenario and the company aims at capturing this demand through manufacturing more units of EVs. The Nissan Leaf the first EV that is to be developed by the company in a large scale is in the spotlight. They want to gain their market leader position on the basis of the factor that they promote zero emission and hence drive the attention of their consumer market to these product lines. The Forklift business of Nissan majorly resembles the cash cow segment of the matrix. The company has been able to establish their position as the biggest manufacturers of forklifts across the globe. They offer a large product range to its customers and along with that provides added value and post sales services which have enhanced the demand level of the products. The marine business of the company occupies the question mark segment of the matrix (Simerson, 2011).This business is totally different from all other business units of the company and does not provide any form of support to the other units. This activity is run by the company so as to generate minimum funds and in order to step into a completely unknown market segment which has no link with its dominant business. References Abell, D. F. 2010. Managing with Dual Strategies. USA: Simon and Schuster. Ali, A. A., and Kaynak, E. 2012. Globalization of Business. New York: Routledge. Franzen, G., and Moriarty, S. 2008. The Science and Art of Branding. New York: M.E. Sharpe. Jeffs, C. 2008. Strategic Management. California: SAGE. Kapferer, J .N. 2008. The New Strategic Brand Management: Creating and Sustaining Brand Equity Long Term. Great Britain: Kogan Page Publishers. Keller, S. 2008. Strategic Brand Management. New Delhi: Pearson Education India. Lynch, R. 2007. Corporate Strategy. New Delhi: Pearson Education India. Markides, C.C. 2013. Game-Changing Strategies: How to Create New Market Space in Established Industries by Breaking the Rules. San Francisco: John Wiley & Sons. Simerson, B.K. 2011. Strategic Planning: A Practical Guide to Strategy Formulation and Execution. USA: ABC-CLIO. Thompson, J. L., and Martin, F. 2010. Strategic Management: Awareness & Change. Hong Kong: Cengage Learning EMEA. Read More