SWOT Analysis of Nissan Corporation - Research Paper Example

? Nissan Corporation SWOT Analysis SWOT analysis of Nissan Corporation Strength Nissan is the fastest growing brand and among the top three brands in Japan. The existence in the market makes the brand strong. Despite its origin from Japan, Nissan is a global brand with improved brand visibility across the world. The evaluation by Business Week Global Brand Scorecard indicates that it is the fastest growing brand in the automotive industry. The valuation of the brand in terms of equity placed the brand at $3, 108 million in 2006 (Boone & Kurtz, 2011, p. 111). Brand strength is vital in improving the competitive advantage and in turn offset the increasing competition. The approach by the company in the last five years has been the milestone in the establishment of a global brand. Through focusing on brand pyramid and dynamics encompassing silky design, pleasurable experience, and the interplay between driving pleasure and serenity, the corporation established consistency and high level alignment in the sector (Anushree, 2012). Additionally, the global financial position has been useful in the strength creation which is vital in the wadding off competition. One major financial indicator is the overall growth of the corporation. From the financial year of 2002 t0 2006, Nissan experienced an average growth in revenue of 13.8%, net income growth of 11.33%, and a net asset growth of 15. 62%. The values indicate the financial strength of the organization (Cleland & Ireland, 2006, p. 22). Weakness Despite the positives, the company has several key weaknesses that could lead to serious problem in case of the increase global financial crisis. The company relies heavily on overseas markets which may be affected by the increasing financial crisis and recess. The second major weakness is the product innovation time lag. For instance the company launched two new or redesigned vehicles. This is low compared to 14 in the three previous years. The result of the misjudgment may affect the brand visibility due to the increasing competition. Thirdly, the Japanese market does not use diesel as such diesel vehicles accounts for only 0.4% but the usage of diesel engines in the euro zone is high. The major problem is that the company has not invested in the development of the diesel engine leading to the technological drawback (Boone & Kurtz, 2011). Opportunity The major opportunity existing in the Asian market is low penetration and improved income levels leading to continuous jumps in the demand for vehicles. This is an opportunity that can be grasped to increase profitability. Secondly, the relocation of the manufacturing units to regions with lower production costs leads to the better and improved profits for the corporation. Additionally, manufacturing units in America and Europe have huge capacities in line with their vast domestic automobile output (Chilton & Bloodgood, 2010). The creation of the Renault-Nissan purchasing organization in 2001 helped in the combination of resources to create an efficient organization. Threats Cross-cultural disharmony is created through the integration of Renault and Nissan. The occurrence of disharmony creates a challenge for the corporation and may result in serious problems if not properly solved (Cleland & Ireland, 2006). Additionally, the rising commodity price is a major threat for the company because it increases the production cost. The rise of cost of raw material such as steel will create a vital threat to the corporation. Finally, market saturation can affect the corporation in line with the changes in the market demands. The rise of the SUV market is a testament of the change in the product and market innovation, which in turn affect the market composition (Anushree, 2012). Environmental Scan Environmental scan addresses the issues of political, economic, social, legislative and environmental concern for the company. After the global financial crisis experienced in 2007 to 2009, changes have been instituted in the financial and banking sectors. The revenue collection of the government was affected by the crisis resulting in the change of taxation. Increase in tax results, in reduction of profit margins of the company. The change in economic growth affects the performance of all the business firms regardless of the specialization. Changes in the social trends can affect the business by altering the demand of the product or service. Population changes can also affect the business. For instance the population in the UK has been aging as a result the demand for certain products are falling. The payments of pensions are extended due to increased life expectancy which in turn affects the company. Internal Strategic Position  Competitive Advantage (CA) Industry Strength (IS) Product Quality –5  Growth Potential 5 Customer Loyalty -6  Profit Potential 5 Market Share -1  Labor Cost 4  Average-4.00  Average-4.70 Total X-axis Score = 0.75  Financial Strength (FS) Environmental Stability (ES) Liquidity -4  Pressure from Substitutes -5 Cash Flow 4  Barriers to Entry -4 Return on Investment 6  Rate of Inflation -2  Financial Strength-Average-5.00  Environmental Stability-Average-3.70 Total Y-axis Score= 1.30 Internal Strategic Position Competitive Advantage (CA) Industry Strength (IS) Product Quality -5 Growth Potential 5Customer Loyalty -6 Profit Potential 5Market Share -1 Labor Cost 4 Average -4.00 Average 4.70 Total X-axis Score = 0.75 Financial Strength (FS) Environmental Stability (ES) Liquidity 4 Pressure from Substitutes -5Cash Flow 4 Barriers to Entry -4Return on Investment 6 Rate of Inflation -2 Average 5.00 Average -3.70 Total Y-axis Score= 1.30 Figure 1According to SPACE matrix above, NISSAN is located in the aggressive quadrant. SPACE Analysis recommends that business in such a strong position take the following actions (a) Grow within the market through acquisition. This can be observed when successfully acquire merger and corporation, it can eliminate its competitors by merging with Renault thus improve the survivability of NISSAN. (b) Continue to invest in innovation to sustain and build the competitive advantage. NISSAN can increase its research and development efforts as the technology of NISSAN is less innovative compared to Toyota which is excellent in innovation. Thus, NISSAN needs to develop unique technology for its product series. Conclusion The merger and dependence on overseas market has improved the global brand visibility of Nissan but there are still other areas that require development of strategy to ensure greater success for the corporation. The reduction in product development has affected the corporation negatively. Reference Anushree, B. (2012, June 20). Cannes Lions 2012: Five-points to a great marketing strategy. Retrieved August 26, 2012, from Cannes Lions: http://www.afaqs.com/news/story.html?sid=34444_Cannes+Lions+2012:+Five-points+to+a+great+marketing+strategy Boone, L. E., & Kurtz, D. L. (2011). Contemporary Business. London: John Wiley & Sons. Chilton, M. A., & Bloodgood, J. (2010). Adaption-innovation theory and knowledge use in . Management Decision, 1159-1180. Cleland, D. I., & Ireland, L. R. (2006). Project Management: Strategic Design And Implementation. New York: McGraw-Hill Prof Med/Tech. Read More