Nissan Renault

Renault Nissan Partnership

In 1999, Renault bought a controlling interest in Nissan at 44% of the shares. This merger raised several questions about the two companies from different countries and their methods of manufacturing and business practices in how they could co-exist and profit from one another. Now, the merger has proven to be the "most successful partnership in the global automobile industry" (Nissan News, 2005). During research for this paper, not much if any negative information surfaced. There have been some difficulties along the way of factory closing and elimination of redundancies but overall, Nissan and Renault have improved their standing in the marketplace and have improved their profitability, technology utilized, and image within the automobile industry.

Nissan was on the verge of bankruptcy before the merger. The company had been unprofitable throughout the 90's and was in debt in excess of $22 billion. Since the merger, Nissan has turned around to one of the highest operating profit margins in the car industry at 9.2 percent (Nissan News, 2005). Additionally, Renault has more than doubled their market capitalization since the alliance and has increased their corporate value more than any other European producer. By this measure, no real problems are facing the companies that would not normally arise when considering the cultural differences and production methods between the two companies. As part of the merger, a cross company team was formed to handle such situations. This team shares knowledge, processes, and technology when needed and they work together on new strategies that affect both companies.

Both companies continue to act as separate entities with a sprit of independence yet do share several platforms in terms of technology and production along with customer services practices and communications. Sharing these platforms offer huge financial savings as a single platform could be used across two companies. Purchasing power of Renault is shared with Nissan which is a major source of cost savings. Overall, it's a win-win situation for both companies. The biggest recommendation one could make is to continue down the road of brand separation on the front end but sharing as much as possible on the back end. Sharing such practices as customer service, engineering techniques, research and design of new technologies, and cost saving practices.

Another recommendation that could be made to Renault Nissan is to compromise during differences. To this point, once a decision has been made that decision needs to be carried out to the fullest with no changing in mid-stream. If the initiative does not work to the expectation of the teams then the teams must work together for the solution and not point fingers or place blame. This is especially important on platforms that are shared between the two and has impact to both companies.

Balancing commitment to shareholders and the community is a very delicate task in this case considering each is from a different country with different