IMD International

The Renault-Nissan Alliance

A new model of partnership

November 24, 2014

Providing a presentation at IMD's Orchestrating Winning Performance in Singapore, Mr Toshiyuki Shiga, Representative Director and Global Vice Chairman of Nissan Motor Company, said that the title of IMD's program resonated deeply with the work that is undertaken at Nissan.

"What makes my company unique is the way we bring together the pieces of our business, as well as our partners to orchestrate a winning performance every day," he said.

Shiga presented on the strategic partnership between Nissan and Renault that launched in March 1999, and the value that the partnership had brought both companies as well as insights on how both companies had continued to maintain one of the longest strategic partnerships in corporate history.

Setting the context, Shiga explained the struggles that Nissan experienced in the 1990's, when the business was in danger of bankruptcy and analysts described Nissan as having 'lost sight of how to make cars.'With declining market share, accumulating debt, and a continued deficit, Shiga interestingly noted that despite the partnership, there was no perception within Nissan that the company was 'losing out to Renault.'

Media commentators and competitors were immediately critical of the partnership when it was first announced in 1999; it was described as so poorly conceived that "you would be better off dumping US $4 billion of gold bars into the Pacific."

Despite this, the partnership proved to be successful, as both companies came together with a mutual understanding and complementary strengths. Shiga said, "What we realised is that our partnership of one plus one did not equal two. One plus one equalled three, and we were stronger together."

The creation of both the Renault-Nissan BV (RNBV) as a strategic management company designed to oversee areas such as corporate governance between the two companies, as well as the launch of the Renault-Nissan Purchasing Organisation (RNPO) to increase economies of scale in purchasing and supply chain management, are two elements of the partnership that have enabled Renault and Nissan to successfully establish themselves as the 4th largest car manufacturing group in the world.

Shiga said, "When the partnership first launched, we decided to start from the bottom up, looking to create synergies across the business. The creation of the RNBV enabled the two organisations to effectively deliberate upon common strategy."

With the partnership between Renault and Nissan comprising a Japanese and a French company, Shiga explained that mutual respect for differing cultures was the cornerstone of the partnership from the very beginning.

"I once had a meeting with a French colleague and at the end of the meeting my colleague asked me, 'Why was this conclusion drawn without any discussion with me?' I asked, 'What other conclusion could you possibly reach?' It turned out there were other conclusions that could have been concluded, but I had been closed off to them. By collaborating effectively and by embracing our diversity, we were all able to achieve greater success."

Shiga concluded his presentation with some key lessons on how the Renault-Nissan Alliance has succeeded for so long, and how other business partnerships can avoid ending in divorce.

According to Shiga, the follow are crucial points to avoid divorce in a corporate partnership:

·         - Start with respect and an open mind

·         - Find common ground

·         - Focus on projects and performance

·         - Be disciplined

·         - Insist on win-win projects

·         - Most importantly, avoid win-lose projects

Mr Shiga was a keynote speaker at IMD's Orchestrating Winning Performance program in Singapore.

For more insights from the program follow on Twitter at #OWP2014 or check out OWP pictures on IMD's flickr account.

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