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Renault Acquires Nissan
Introduction
Many large companies and corporations expand their market base by getting the controls of the other smaller companies in the same industry. It takes a tedious decisions making process of the two or the several companies before a conclusion is made on whether to get together or not. Mergers and acquisition are the forms the many companies use in order to gain control over the small companies. The acquiring firm becomes the parent and the acquired one or the smaller one becomes a subsidiary. There is an agreed term on how much amount of shares in terms of percentage the acquiring company will be purchase in order to get over the control of the subsidiary.
As the acquiring firm has the control of much of the shares owned by the acquired firm, in the profit allocation and distribution of the dividends to the shareholders, the parent firm gets most of the dividends and the rest are distributed to the minor shareholders. The mergers and acquisition may also result on the acquired firm being operating with negative returns and may need some improved management in order to recover from the losses that it may be making over the past periods. The acquired firm admits the larger firms to subscribe to its shares in massive and gives up of its management duties to the acquiring firm. The inferior products of the acquired firm are distributed and sold in the company brand name of the parent firm (Kase & Slocum, 2011). The products are branded as per the agreements of the two managements. The brand name of the subsidiary company products may be maintained, or they may be semi branded to meet the names of the two companies in them.
The parent firm upon acquiring the subsidiary one, it makes a lot of changes in the acquired firm. The changes may be management criteria and the way the answerable processes flow from the top management to the lower level employees. These cases may be the ones which causes the company productivity and the sales of the company. This paper discusses the processes of management using the criteria in which Renault acquired Nissan in the year 1999. It discusses how the new CEO after acquiring the company the company i.e. Nissan changed the mode of management and the bureaucratic relationships among the employees and the management. The company which is based in japan was allocated with a new manager Carlos Ghosn who is still the manger to date and has seen the company prosper due to his excellent management style.
Unique management practices
Non dictatorship type of management
Due to lack of team and groups formed, it is not easy to control the employees and they also resist from being included in the groups. The type of management in japan involves employees doing what they feel is good. The employees do not take responsibilities that are not theirs. The problems of the departments are solved by their own members (Roggendorf, 2001). No individual employee from different department is told to undertake responsibilities of other departments and accepts.
No dedications on Team works
Despite oneness in problem solving, Carlos advocated for team works. Team work involves the classification of employees and labor forces in terms of their expertise and specifications. These employees are responsible to one person who is their leader and who forwards their grievances to the management. This mode of management is very effective and better since it is possible to monitor and review the actions of the employees. Though the employees resisted this, the CEO stressed it and made sure that it was implemented and still in operation to date. Carlos stated that engineers work well when they are together salespeople, marketer and many other works well and effectively while in a team (Roggendorf, 2001). Cross-sectional teams formed and objectives stated which is to be achieved within a specified period of time. The team leaders are to be furnished with the responsibilities to oversee that the teams achieve the targets set by them. As Carlos stated in the company, the commitment and the plans set should be worked toward and see their completion and attainment in the specified times. Inter-teams competition introduced and the most successful team rewarded. By doing so the management act becomes easy and viable.
Non-Involvement of all in decision making process
Before Carlos Ghosn was made the CEO of the company, the decision activities and the passing of resolutions lied with the top management. The lower level employees only got the information of the passed resolutions through the head of the departments. The lower level employees are at the grass root of implementing changes passed in every meeting. It is there necessary for an effective management to take place, to involve these employees in the decision making. Mails used in communication abolished and replaced with eye-to-eye communication which involves individuals from any level of management communicating among them. This criterion forms a better form of management since everyone in the organization feels as part of it. This is especially when an employee sees that their opinions or views are being applied by the management. Carlos abolished the impersonal mail communication in the organization and emphasized on meeting with the individual employees lively while explaining on what they feel is right or wrong and needs to be rectified. This has enhanced the decisions made as they are efficient and from the hearts of the implementers of these decisions.
No transparency in management
In the organizations, no one is aware of the colleague’s affairs. Departments and teams in the organizations and the stakeholders undertake duties and activities in their own way without involving others. Not only in the business organization, but everywhere including in the family matters. Transparency is the key to a successful organizations and unions where people meet to do a particular thing in common (Roggendorf, 2001). In organizations the acts of the customers and their feelings together with those of the suppliers should be taken into considerations and addressed well. Each stakeholder should make their action known by all. Carlos said by transparency from all the stakeholders, it promotes the morale of the employees.
Competitive in a changing global environment
The management practices followed by the Japanese companies as demonstrated by the Nissan Company is not suitable in today’s competitive world and unless changed the companies will not be able to gain a reasonable market share globally. The Japanese system where the company’s management delegate duties to the managers of the departments and leave them to solve for the problems encountered in their departments by themselves is not a wise one. This is because, organizations needs to work as one towards one goal and objective. Any problems associated with the organization are a particular department should be taken as organizational difficulty which should be handled by all the individuals in the organization (Ghosn et al, 2005).
The culture about individualism in the organizations is the killer of a competitive organization in the modern industrial and global business settings. Organizations are moving from individualism to team works settings where employees work in team managed by one responsible person. Since one individual is able to correct another one well when they are working in the same group, teams provide the best results as compared to individual works. Japanese companies should encourage their employees to form teams in the organizations and when undertaking tasks in order to achieve the best results. This culture which was adopted long time ago is not good at all and application of it makes the company lag behind their competitors who have initiated the team works among their employees (Mead & Andrews, 2009).
The non-dictatorship role is not the best sometimes but not always the employees need to be coerced in order for them to produce some reasonable results. The Japanese companies do not have the trend of manipulating the employees which is the role of the management to manipulate them to work as required in order for them to the required results as set by them. The theories x and y, that explains the nature of employees. Theory y states that the employees are lazy individuals who do not like work. It states that sometimes employees have to be coerced and dictated in order for them to work as required. In order for the companies to be competitive and produce products that do well in the market, the management of the enterprises needs to be harsh in implementing decisions passed.
The bureaucracy form of management used by the Japanese companies is not applicable in today’s organizational settings. The firms need the involvement of all and the transparency is required in order to achieve the required results. The managements need to use the opinions of every member of the organization, and to be used in a proper communication (Sugimoto, 2009). The chains of communication need to be broken in the Japanese organizations in order to have the involvement of all in the organization.
The need for the Nissan to appoint an outsider as the CEO
After the company got Carlos Ghosn as the CEO and introduced the NRP criteria, the company recovered the losses it had incurred and reported a 10.2%. As per the history of Nissan company before the year 1999 appointment of Carlos Ghosn was the perfect choice in that particular time. The introduction of fresh blood in the organization was the best that the organization required as per that time. The system of management which the company was using before it was acquired was a failure and basing on the Japanese traditions, it was hard to appoint a CEO from japan and enhance changes. In management, sometimes the owners of the company are forced to do an external recruitment in order to have new people in the organization to bring changes and new ideas (Ghosn et al, 2005). Though Carlos had some challenges with coping with the Japanese culture, his appointment was the most appropriate one.
Carlos was very intelligent in deciding on how to restructure the management and the activities of the organization in order to achieve the best. The combination of what he observed in the Japanese culture mixed with the French based type of management has breeded the best results ever in the company. The company perception as a result of being acquired by Renault changed from the short-term perception to long-term perception in the industrial world. This has enabled the company to produce some quality products with respect that they are doing so for the long range span of time for the organization.
Carlos brought cohesion among the stakeholders of the company where he introduced the transparency based mode of management. In an organization, this is one of the best types of management technique. This is because; all the views of the stakeholders are listened and taken consideration of. By the year 2005, Nissan had grown to the level that is desirable by many firms in the industry which was seen after appointment of Carlos (Mead & Andrews, 2009). Renault and Nissan have also started joint production where the two companies are producing vehicles branded in Renault and Nissan logos. When he joined Nissan, Carlos was only a CEO, but in 2005 to date he was appointed the chairman of Renault and still continues serving as the CEO of Nissan and not leaving until he finds a perfect person to replace him. These facts are clear indications that Carlos Ghosn was the right and perfect man for the job.
Despite the challenges faced in bringing the company to life again, Carlos did not give up. In the year 2003 when the profits of the company fall unexpectedly, he took 220 employees to the manufacturing and assembling point and solved the problem. In management, the managers and the leaders need to be strong hearted and problem solvers rather than problem absorbers. In case of any problem in the organization, the leaders should search for solutions. The act done by Carlos was against the culture of the organization where the enterprises problems are retained inside and the respected departments left to solve.
Challenges in managing two diverse two different cultures at Renault and Nissan
Managing two different cultures is the hardest task ever in manager’s duties and responsibilities. Two companies producing product with different specifications and managing people from two organizations’ set in different areas of the world is the hardiest task a manager or a CEO would encounter. The following are some of the challenges experienced by the managers and the possible solutions that can be recommended in order to ease the situation (Cameron & Quinn, 2002). The challenges are related in the Renault and Nissan context basing on their locations and organizational cultures.
Resistance
As experienced in the Nissan Company when Carlos joined as the new CEO, the members of the organization tried to publicly resist the new trends and forms undertaking duties and responsibilities. For example, the resistance of the employees to work in groups, the trend adopted from Renault was very challenging for Carlos. After the Nissan company has acquired quite good success and Carlos was appointed the chairman of the Renault Company and in the same time CEO of Nissan, the members of the French company would resist. However, Carlos knew has the solutions at the finger tips on how to handle them. The possible solution to this problem is the cross-transfer of employees (Sugimoto, 2009). This is a criterion where the employees from one company are taken to the other and work for a span of time and learn the skills there. Also, the employees will teach employees in the other company how they do in their company. This interchanges in experiences helps the employees to come into a consensus where they adopt similar methods after a span of time.
Influential ability by the management
The management finds it difficult to influence labor in two different cultures setting organizations. This is because the motivational techniques used in one organization may not influential in the other organization and vice versa. This is the case in Renault and Nissan settings where the tactics used to motivate the employees in japan I not acceptable in France where the plant company of Renault is located. The management faces this challenge in the day to day undertakings and this is cost non-effective also demoralizing on the management part. The solution that may be applied by the management is the motivational evaluation criteria (Sugimoto, 2009). This criterion involves evaluating employees from the two and getting what motivates them the most. The management will then looks at the similar motivational tactics in both companies and initiate them. This will help in reducing cost in the motivational costs and adopt a non-conflicting criterion. Using the same methods in motivating makes the employees feel that they are equal and no one is much valued than the other.
Introducing changes
In the cases when the management wants to introduce some changes in the organizations, it finds very difficult on how to implement them. This is a very challenging factor since the two cultures have different beliefs and one organization may rigid ta accept the change than the other. In the Nissan and the Renault companies, the change in the cultures that is the French organization company is very flexible to adoption of changes than the Japanese company (Cameron & Quinn, 2002). In order to curb this problem, the management can hold up discussions and live meetings with the employees and the employees have to present their views. This will help to break the bond of contention between the two cultures.
