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6 Pages Minimum. No Plagiarism.

Turnaround at Nissan

In 1999, Nissan was in a state of serious decline and had lost money in all but one of the previous eight years. Only Renault’s willingness to assume part of Nissan’s debt saved the Japanese company from going bankrupt. As part of the deal, the French automaker appointed Carlos Ghosn to become Nissan’s operating officer. However, there was widespread skepticism that the alliance between Renault and Nissan could succeed, or that someone who was not Japanese could provide effective leadership at Nissan.

During the three months prior to assuming the position of COO at Nissan, Ghosn met with hundreds of people, including employees, union officials, suppliers, and customers, to learn more about the company and its strengths and weaknesses. From these meetings and earlier experiences with turnaround assignments, Ghosn understood the major changes would not be successful if they were dictated by him and the experts he brought with him from Renault. soon after assuming his new position at Nissan in June 1999, Ghosn created nine cross-functional teams and gave them responsibility for determining what needed to be done to revive the company. Such teams had never been used before at Nissan, and it was unusual in a Japanese company to involve a broad cross-section of manager in determining major changes.

The cross-functional teams examined different aspects of company operations to identify problems and recommend solutions to Ghosn and the executive committee. Several interrelated problems were identified, and they were mostly consistent with Ghosn’s initial impressions. The poor financial performance at Nissan was a joint result of declining sales and excessive costs, and weak management was the primary reason for the failure to resolve these problems. Management lacked a coherent strategy, a strong profit orientation and a clear focus on customer. There was little cooperation across functions, and there was no urgency about the need for major change.

One reason for excessive costs at Nissan was that only half of the available capacity in the company’s factories was being used; production capacity was sufficient to build almost a million cars a year than the company could sell. To reduce costs, Ghosn decided to close five factories in Japan and eliminate more than 21,000 jobs, which was 14 percent of Nissan’s global workforce. To simplify production operations at the remaining factories and make them more efficient, Ghosn planned to reduce the number of car platforms by half and the number of power-train combinations by a third. Plant closings can undermine relations with employees, and Ghosn took steps to ensure that employees knew why they were necessary and who would be affected. In general, he understood that most employees prefer to learn what would happen to them and prepare for it, rather than remaining in a state of uncertainty and anxiety. Ghosn attempted to minimize adverse effects on employees by selling subsidiaries and using natural attrition, early retirements, and opportunities for part-time work at other company facilities.

Purchasing costs represent 60 percent of the operating costs for an automaker, and Nissan was paying much more than necessary for parts and supplies used to build its cars. After comparing expenses at Nissan and Renault, Ghosn discovered that Nissan’s purchasing costs were 25 percent higher. One reason was the practice of purchasing small orders from many suppliers instead of larger orders from a smaller number of global sources. It would be necessary to reduce the number of suppliers, even though this action was unprecedented in a country where supplier relationships were considered sacrosanct. Higher purchasing costs were also a result of overly exacting specifications imposed on suppliers by Nissan engineers. The engineers who worked with the cross-functional team on purchasing initially defended their specifications, but when they finally realized that they were wrong, the team was able to achieve greater saving than expected. Excessive purchasing costs are not the type of problem that can be solved quickly, but after three years of persistent efforts it was possible to achieve Ghosn’s goal of a 20 percent reductions.
Years of declining sales at Nissan were caused by a lack of customer appeal for most of the company’s cars. When Ghosn made a detailed analysis of sales data, he discovered that only 4 of the 43 different Nissan models had sufficient sales to be profitable. Final decisions about the design of new models were made by the head of engineering. Designers were taking orders from engineers who focused completely on performance, and there was little effort to determine what type of cars customer really wanted. To increase the customer appeal of Nissan vehicles, Ghosn hired the innovative designer Shiro Nakamura, who became another key leader in the turnaround effort. The designers would now have more authority over design decisions, and Ghosn encouraged them to be innovative rather than merely copying competitors. For the first time in over a decade, Nissan began coming up with cars that exited customer both in Japan and abroad. Ghosn palled to introduce 12 new models over a three-year period, but the time necessary to bring a new model into production meant that few would be available until 2002.

Another reason for declining sales was Nissan’s weak distribution network. In Japan strong brand loyalty is reinforced by efforts to maintain close relationships with customer, and it is essential for the dealerships to be managed by people who can build customer loyalty and convert it into repeat sales. In 1999, many Nissan dealerships in Japan were subsidiaries managed by Nissan executives nearing retirement, and they viewed their role more in social terms than as a entrepreneur responsible for helping the company to increase market share and profits. Ghosn reduced the number of company-owned dealerships (10 percent were close or sold), and he took steps to improve management at the remaining dealerships.

Saving Nissan would also require major changes in human resource practices, such as guaranteed lifetime employment and pay and promotion base on seniority. Transforming these strongly embedded aspects of the company culture without engendering resentment and demoralizing employees was perhaps the most difficult challenge. The changes would primarily affect non-unionized employees at Nissan, including the managers. A merit pay plan was established, and instead of being rewarded for seniority, employees were now expected to earn their promotions and salary increases through effective performance. Areas of accountability were sharply defined so that performance could be measured in relation to specific goals, new bonuses provide employees an opportunity to earn up to a third of their annual salary for effective performance, and hundreds of upper-level managers could also earn stock options. These and other changes in human resource practices would make it possible for Ghosn to gradually replace weak middle and upper-level mangers with more competent successors.
In October 1999, Ghosn announced the plan for revitalizing Nissan. He had been careful to avoid any earlier leaks about individual changes that would be criticized without understanding why they were necessary and how they fit into the overall plan. The announcement included a pledge that Ghosn and the executive committee would resign if Nissan failed to show a profit by the end of 2000. It was an impressive demonstration of his sincerity and commitment, and it made what he was asking of others seem more acceptable. Fortunately, the primary objectives of the change were all achieved on schedule, and by 2001 earnings were at a record high for the company. That year Ghosn was appointed as the chief executive officer at Nissan, and in 2005, he would become the CEO of Renault as well.

Write a minimum of 6-page to maximum of 10-page opinion essay in content (Cover or Title page & References or Work Cited page cannot count as content). 

The paper should include the following:

1. An overview of the case:
· Describe the conditions that led to merger with Renault
· Identify and discuss the driving and resisting forces for change at Nissan in 1999
· Describe were the cultural challenges Ghosn faced
· Identify the steps taken by Ghosn to bring Nissan to profitability
· Discuss the motivational and organizational behaviors that were fundamental to Nissan’s poor performance.
2. Identify and discuss Ghosn’s leadership style(s):
· Describe leadership actions that were taken
· Describe leadership theories that Ghosn embraced
3. Identify and discuss the source of Ghosn’s power:
· Describe the sources of power he used
· Discuss how his was power gained
· Discuss how he utilized his power    
4. Identify and describe the change management practices used
5. Identify and describe the mechanisms used to change the culture 
6. As a result of analyzing this case, what new knowledge did you gain regarding organizational behavior and leadership practices necessary to implement change? (This question should be addressed in the summary/conclusion section of your paper.)
You are expected to use course readings, materials and other sources to assist in your analysis of the case. Be sure to provide attribution to those outside resources you use. Compose your response to these questions into a Microsoft Word document and upload your paper via Case Study in D2L.

Page Layout:
· First page with

· Your full name
· Course number and name – ORGL 3332  Behavior, Ethics & Leadership II
· Submission Date
· Title of case study

· Insert page number on the top right of each page
· Double Line Spacing & 0 pt Before/After Spacing
· Under Page Setup, make sure the page margins: Top = 1”, Bottom = 1”, Left = 1”, Right = 1”
· Font size = 12 & Font type = Times New Roman
· Each paragraph, apply 0.5” of First Line Indent
· Direct quote citation
· Reference page
Reference: This case study assignment has been adapted from Yukl, G. A. (2012). Leadership in Organizations (8th ed.). Pearson.

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Submitted By: Magnatie Soumahoro

Course number and name – ORGL 3332 Behavior, Ethics & Leadership II

Submission Date: 26th March, 2021

Turnaround at Nissan

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Turnaround at Nissan

Introduction

In 1999, the company Nissan almost lost its all business operations due to failure until the

firm involved a new operating officer, Carlos Ghosn. Before their partnership, the only company

Renault was agreed to develop a partnership with falling company Nissan. During the year,

Nissan faced many corporate problems and challenges, including huge debts of $22 million. By

the year 2001, the new chief operating officer reduced the number of debts by $4 million through

his unique strategies. Also, the company started growing its sales after a long time of failure.

This shows that the leadership of Ghosn saved Nissan from liquidation.

Overview of the Case

Nissan is a well-known automobile firm based in Yokohama, Japan. The corporate

operations of the Japanese firm started on December 26, 1933. After years of stable performance,

the company experienced a downfall in their sales and operational process in the year 1999. This

downfall condition damaged the company’s internal controls, for which the company increased

its level of debts in the gearing ratio (Yukl, G. A. 2012). The company decided to take this step

to pay its liabilities and loans. For saving the company from liquidation, Nissan merged their

operations with another automobile company Renault.

Conditions That Led To a Merger with Renault

The image and reputation of Nissan were reducing in the market, and their market shares

in the automobile industry were also decreasing. Due to low reputation, individuals started

choosing Nissan competitors over them, which decreased their level of sales. The management

of Nissan didn’t concentrate on these issues on time, and it leads the company to take debts of 22

million to pay their expenses. In this critical situation, only Renault was ready to develop a

I think you are trying to say that the conditions jeopardized the company’s solvency. The last sentence should read: Nissan merged operations with Renault to save the company from bankruptcy.

Most people call this brand identity.

Also, please avoid contractions in formal writing.

$22

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partnership with Nissan. So saving themselves from bankruptcy, the company merged with

Renault.

Identify and Discuss the Driving and Resisting Forces for Change at Nissan In 1999

After introducing Japanese culture inside the organization, the employees faced difficulty

in accepting this change. The employees at Nissan were familiar with human resource culture

and were working effectively under this culture. After introducing Japanese culture, the

management faced challenges in achieving objectives. Japanese culture altered the distribution

and purchasing manner of the firm. “Saving Nissan would also require major changes in human

resource practices, such as guaranteed lifetime employment and pay and promotion base on

seniority”(Yukl, 2012). This culture changed everything, including the rules and regulations of

the firm. For example, the motivation and promotion of employees depended on their age and

superiority.

Describe the Cultural Challenges Ghosn Faced

Ghosn itself faced many problems with the Japanese culture as he wasn’t familiar with

this culture before. He was born in Brazil and had multiple citizenships in France and Lebanon.

This made him fond of cultures other than Japanese culture. Therefore, he faced a hard time

accepting a diverse culture that follows strict rules. In the beginning, he faced challenges in

developing strategies and implementing those strategies (Yukl, G. A. 2012). Since he was a

foreigner with diverse culture and personality, many stakeholders of Nissan opposed this

decision of having a foreigner as COO. This was also a challenge for Ghosn as he faced

difficulty in building a relationship with many individuals at the workplace. Many individuals at

the workplace opposed his decision to implement different strategies.

Identify the Steps Taken By Ghosn to Bring Nissan to Profitability

Restate: Nissan merged with Renault to save the company from bankruptcy.

How would you define “human resource” culture?

himself

different

Spell out terms in formal writing.

in

NIssan

Do not use vague terms like workplace. Refer to the actual company – Nissan.

Also be mindful of “orphans” at the bottom of the page.

I would not think that motivation would be dependent upon age and seniority.

Also note seniority, not superiority.

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Before starting formal duties at Nissan, Ghosn arranged various meetings with the

shareholders of the firm. He discussed all the relevant issues that Nissan was facing at that time.

After which, he developed several cost-cutting strategies for the firm for improving the ratio of

profit. He also introduced processes for improving purchases and distribution processes.

Qualified team members of Renault also helped him in developing effective planning and

decision regarding the Nissan position. These techniques helped Ghosn in improving the

condition of Nissan by increasing profitability.

Discuss the Motivational and Organizational Behaviors That Were Fundamental To

Nissan’s Poor Performance

Nissan’s management lacked the strategies which promote innovation and growth; they

only focused on increasing profit. Lack of innovative processes leads the competitors of Nissan

to acquire more market share. Employees of the firm also lacked skills for achieving their goals

due to the firm’s inadequate culture. For example, the firm provided motivation and rewards

based on seniority rather than performance. Organizational leaders of Nissan also ignored the

poor corporate performance of Nissan. They focused on improving profit instead of improving

the quality of their products. All these conditions lead Nissan towards poor performance.

Identify and discuss Ghosn’s leadership style(s)

The leadership style of Carlos Ghosn was transformational. Transformational leadership

is a theory of leadership that inspires leaders to analyze the strength and weaknesses of

employees working under them. Under this leadership style, he identified the strength and

weaknesses of employees working under him (Yukl, G. A. 2012). After which, he developed

strategies for overcoming his employee’s weaknesses with their strength. This leadership style

helped the employees of Nissan to achieve their assigned objectives. This leadership style helped

that promoted

What would you call these strategies based upon the concepts and approaches presented in the course?

Citation?

possible bankrupcty.

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him in implementing strategies and decisions without following the Japanese culture of the

organization.

The features of an operative team leader include self-reliance, morality, motivation, and

interactive skills. All these traits were present in the leadership style of Ghosn. He encouraged

employees to work hard, which collectively helped Nissan in stabilizing their performance in the

market.

Leadership Actions

Ghosn always made sure that all of his employees and shareholders of the firm are aware

of his leadership style and strategies. He always communicated his goals of improving the

performance of Nissan with employees and shareholders. For this purpose, he used to develop

small meeting sessions with them. This helped Ghosn in establishing transparency inside the

workplace of Nissan. He also guided the shareholders of the company about the factors which

negatively impacted Nissan. This helped everyone understate the reasons behind failure, and they

established prevention strategies for overcoming these failures. He also established strategies for

analyzing customers’ needs and requirements for modifying their products according to that. He

also introduced rewards based on employee’s performance instead of their seniority.

Leadership Theories Embraced by Ghosn

After analyzing the leadership behavior and style of Ghosn, we get to know that he has

applied the leadership theory of the path-goal method. Under this method, leaders establish

strategies according to the organizational culture and their employee’s behavior. Under this

leadership theory, the leaders focus on motivating the employees to achieve their goals. In short,

this theory focuses on employees and organizations for achieving goals. Ghosn helped his

employees in understanding their weak points and motivated them to work effectively for

Be careful of works like “always” and “never.” No one always does anything.

Better to state, “He frequently communicated his goals…”

The sentence that follows, “For this purpose, he used to develop small meeting sessions with them.” is awkward. I am not sure what you mean by this.

understand

Avoid first and third person in a formal paper.

The reference to “path-goal method” also needs a citation.

leader’s focus is on motivating

Explain a little more about how working hard lead to stablishing performance. Did they work harder at their jobs or simply be more strategic about their work?

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achieving success (Yukl, G. A. 2012). Ghosn developed cross-functional teams of his employees

for developing clear paths for them.”Ghosn created nine cross-functional teams and gave them

responsibility for determining what needed to be done to revive the company” (Yukl, 2012). He

also established rewards and incentives for the employee who performed well in the teams.

Before forming teams, he guided his employees about the cultural difference and challenges as,

during teamwork, employees face these issues. He also guided them about the strategies which

helped in overcoming these issues.

Identify and Discuss the Source of Ghosn’s Power

Scholars state that there is a total of five sources of power or energy inside every

organization. These include legitimate power, expert power, reward, referent, and coercive

power.

Describe the Sources of Power He Used

Legitimate power is the power which an individual possesses due to his rank in the

organization. Higher the rank higher the legitimate power. Expert power is the form of power

that an individual gain due to his specific skill expertise. Coercive power is a form of authority

that leaders use over their employees to make them work towards the organizational goals (Yukl,

G. A. 2012). Reward power is the form of power that the organization provides to individuals for

their exceptional performance. Ghosn used four powers of legitimate power, reward power,

coercive power, and expert power in these five sources of power.

How His Power Was Gained

Ghosn gained legitimate power due to his higher position in the organization. He was

employed as Chief Operating Officer (COO) at Nissan. This power provided him the ability to

implement strategies and decisions. Due to his legitimate power, he gained reward power, as he

shared

shared different strategies for overcoming these issues.

Combine these two sections where you introduce the types of power and define them.

I do not see an explanation of how he gained coercive power below.

Ghosn’s

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used to provide a reward to employees who performed well for achieving their goals. Ghosn had

huge experience of leadership before joining Nissan; he served at various well-known

organizations in reputable positions. From this exceptional experience, he gained expert power

over his employees.

How He Used His Power

With his legitimate power, he formed cross-functional teams of employees and assigned

them objectives for achieving success. This helped the firm in improving its functional and

corporate processes (Yukl, G. A. 2012). With his reward power, he changed the Japanese

motivational or reward policies. He provided rewards to employees based on their performance

and achievement. “Fortunately, the primary objectives of the change were all achieved on

schedule, and by 2001 earnings were at a record high for the company” (Yukl, 2012). With his

expert power, he developed exceptional decisions for Nissan and empowered employees to

enhance their expertise.

Identify and Describe the Change Management Practices Used

Ghosn introduced cross-sectional teams and altered the organizational culture, and used

these processes like change management practices. Through these practices, the employees

understood the processes of other departments and helped each other in achieving goals. These

practices also guided the employees about their mistakes which impacted Nissan negatively.

After this, employees groomed their capabilities and worked hard for rewards and incentives that

Ghosn announced for his employees. Ghosn avoided the use of the electronic medium for the

communication process; instead, he encouraged face-to-face communication.

Identify and Describe the Mechanisms Used To Change the Culture

Ghosn

to

Again, avoid orphans.

made employees aware of mistakes

made

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The merger between Nissan and Renault created many challenges for the employees and

shareholders of the company. Nissan was a Japanese firm, and Renault was a French

organization; both included diverse cultures. Ghosn understood these cultural differences and

developed strategies for reducing these challenges. Ghosn guided his employees to accept these

differences and to respect diverse cultures (Yukl, G. A. 2012). He encouraged face-to-face

communication to avoid the concept of misunderstandings. For improving communication inside

the organization, Ghosn approved English as the official language inside the organization. This

mechanism reduced the barrier of different languages and cultures.

Conclusion

Through analyzing the results of this case, I understood that every organization faces hard

times even during performing well. Effective leaders can save organizations from various

problems, just like Ghosn saved Nissan from liquidation. His expertise helped Nissan in

achieving their previous place in the market. The study of Ghosn leadership in implementing

change shows the positive aspects of change management. The way he handled cultural

differences and language barriers inside the organizations shows his integrity towards the

organization. Through analyzing the Ghosn leadership style, I understood that communication

plays an important role in driving change. Changing or modifying Japanese culture is not easy,

but Ghosn approved English as their official language by altering the Japanese culture. Everyone

in the organization supported Ghosn in this step for achieving his motives towards the firm. I

realized that implementing change in an organization is the most suitable way through a

transformational leadership style. This leadership provides leaders the capability of changing

strategies based on current situations.

guide

reclaiming

style

Ghosn’s

Word choice – His dedication to the company? Or his understanding of the internal issues and challeges?

Do we know that everyone supported him? Even effective leaders have to work with people who are unwilling to change or be part of the change.

Ghosn’s

decision

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Reference

Yukl, G. A. (2012). Turnaround at Nissan. Leadership in Organizations, 8th Edition. Pearson,

8th Edition. Retrieved from

https://www.pearson.com/us/higher-education/program/Yukl-Leadership-in-

Organizations-8th-Edition/PGM151705.html

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