HR Restructuring at Nissan Harvard Case Solution & Analysis

Introduction

Nissan Motor Company, Ltd. is a multinational automaker with its headquarters in Japan. It became independent from the Nissan group, after its restructuring in 2000. Nissan was established by Aikawa Yoshisuke in 1933, by taking over all the operations for manufacturing Datsun cars from the automobile division of Tobata Casting Co., Ltd. he then renamed it to Nissan Motor Co., Ltd. in June 1934.

Over the years Aikawa expanded his business and by the end of World War II, he had acquired more than 74 companies, and became one of the largest “Zaibatsu”. He had worked in the United States and was familiar with the American system of mass production, which he put in his experience for a good use.

He imported engineers and designs from the U.S. to manufacture small cars and trucks, in order to avoid competing with American segment, and became the second largest automaker in Japan. Although the World War II slowed down its growth, the growth resumed once the war was over, and by the end of 1960s it started exporting vehicles. Nisan had captured 33.7% market share by the end of 1972.

1.                  Critical Assessment of Restructuring Approach of Ghosn with Respect to Nissan’s Organizational Culture

Ghosn when joined the company, there were severe problems with the culture of the company. In order to deal with the problems, The CEO and Chairman of Renault appointed Carlos Ghosn to the position of COO at Nissan, who turned Nissan to the paths of success, which got him a lot of attention from the Japanese people and media. Hence, he was raised to the position of president and CEO, and Renault increased its stake in Nissan from 36.8% to 44.4%.

Aikawa after huge success in the automobile industry, began to diversify into other industries, however he did not give any guidelines for the culture shaping at Nissan. It hence had no proper HR policies and led to severed relationships between the management and workers, leading to constant union and management conflicts. These conflicts led to strikes and lockouts, however, this didn’t affect the management’s focus on markets and customers, and it didn’t consider the employee problems.

After the World War II, the company lacked direction by the management, and there was a discontinuity of top management, leading to the weakening of corporate culture. It saw seven presidents between 1933 and 1951, which gave it a reputation of being an unstable organization and led to the shortage of skilled managers in the organization. The simultaneous growth in the company led to more complexity and inefficiency.

The problems didn’t reach the top management, and growth led to specialization and departmentalization, this resulted in the decision-making being narrowed. There were complex rules and regulations burdening the employees and reducing their working abilities. This led to the business performance being suffered and hence less positive results.

Nissan followed all the Japanese practices and had a lot of advisers. The senior positions were filled by all senior people with high packages. Top performers were hired from best universities and contracted to work for their whole lives, hence there was no relation between performance and promotion. In addition to this, there was no concept of performance related rewards, and poor work-family life balance. The company also lacked team-work, which was contrary to the Japanese culture.

After the Japanese saw a boom in 1980s, Nissan doubled its production and for that raised its debt. The early 1990s brought with them the recession and so it was caught in a debt trap. This increased the company’s problems and hence it started suffering losses. This led to the worsening of its financial performance. Analysts believed that this was due to the absence of goals and vision in the company. This ultimately led it to the verge of bankruptcy due to the declining sales, poor margins, and $20 million in debt. The creditors then started putting pressure on the company to find a partner, in 1998.

The company’s poor performance could be attributed to its high involvement with Keiretsu (a conglomeration of companies organized around a single bank for their mutual benefits), its poor styles and design, infrequent model changes, and high manufacturing costs. The poor performance of the company gave rise to a desperate need of cash infusion and managerial expertise. This led to its alliance with Renault in 1999 in order to avoid bankruptcy.

The alliance provided Renault a market share to expand its business, and an expertise in quality and manufacturing productivity. Whereas, it provided Nissan with the cash to decrease its debts, and also secured it an entry in the European market. Nissan was also benefited by Renault’s innovative design, manufacturing, and financing of sales and services....................

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