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Merger or Alliance?: Renault - Nissan case Observations


In light of the developments around the Renault-Nissan-Mitsubishi Alliance – including the controversies and allegations around its iconic leadership –  several relevant observations emerge for other strategic alliances.
Readdressing mutual strategic dependency
In Renault-Nissan’s case, the strategic goals of the two partners were divergent from the start. Nissan required emergency surgery, which it received with Carlos Ghosn’s Nissan Revival Plan, while Renault wanted access to the Asian growth markets where Nissan was already well entrenched. These goals do not add up to a recipe for long-term harmony. Indeed, Renault’s response to a strengthen Nissan becoming the larger of the two companies was to reinforce its own power position within the alliance.
Transitioning to alliance leadership
In the early days of the alliance, Carlos Ghosn clearly understood how to translate the differences and gaps between Renault and Nissan into highly successful management practices. His boundary spanning approach was a textbook example of how inspirational leadership can create common goals and lift the parties over and beyond the mere sum of the parts. The strategic, operational and management challenges for all layers in both organisations generated cohesion and commitment.
Yet once an alliance has achieved its “obvious” goals leadership legitimacy tends to be challenged. After all, the success of the alliance proves it has served its purpose. The implicit expectation of both parties is often a return to a more classical management model, including a self-effacing, humble role for alliance leadership. Further, the shift from visionary to collaborative leadership is a prerequisite for strategic re-adjustment, enabling senior executives on both sides to redefine the governance equilibrium.
It is a strong possibility, then, that Renault-Nissan has long outgrown Ghosn’s autocratic leadership style.
Trust and cultural awareness
Cultural fit is instrumental to the success of strategic alliances. It is probably the most complicated dimension in the overall relationship as it tends to surface in unexpected places at unexpected moments. Company culture and national culture are inevitably intertwined and tend to reinforce one another in dire times.
Japanese culture is sensitive to honor and its opposite, shame. This is especially true with affairs that are highly public, such as the fortunes of a prominent (and emphatically Japanese) firm like Nissan. In 1999, Renault had offered a cooperation model by which the two companies would retain their own identities, have their own corporate strategies whilst cooperating with each other as global partners. After seven consecutive years of losses and two failed internal turnaround attempts, Nissan’s alliance with Renault brought renewed success and, consequently, a restored sense of national-corporate pride. However, frustration has been building up among Nissan’s management in recent years, because of Renault’s refusal to equalize power relationships within the alliance.
Any unilateral attempt to alter the core philosophy of the alliance can be seen and exploited as a token of disrespect and create a trust breakdown. Ironically, the same abhorrence of dishonor that initially cemented Nissan’s compact with Renault now threatens to hamper relations between the pair.

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