Success in the Alliance

2. Stick on win-win principle

Renault-Nissan Alliance was built up on basis of long-term interests and its original goals was to join the two large companies in the automotive industry together sharing their own advantages with partners as well as learning from each other in order to obtain new development potential. Renault, from Nissan got its market, technology and sales experience, while Nissan was provided with financial support and manufacturing experience. However, due to the discrepancy of the market and comparative advantages of the two, there would inevitably be a win for one and a loss for the other. The priority of leaders was to ensure the balanced relationship within the Alliance instead of seeking the interest for one party at the expense of the other side since leaders should always remind themselves of the objective of building the Alliance. For Renault and Nissan, the long-term interests was how to maintain the partnership, to maximize the potential of synergy and to guarantee that the Alliance can continue to serve the benefits of both sides, rather than short-sightedly evaluate and pursue unilateral gain.

3. Mutual respect

The most important foundation for the formation and development of the Renault-Nissan Alliance was mutual respect. The two companies were equal in the Alliance although at the very beginning of cooperation, Renault acquired more capital of Nissan and helped it survive in the bankruptcy crisis. Renault and Nissan, respectively, represented two different corporate cultures and national cultures of France and Japan in which countries they came from. The cultural differences of western and oriental world and the uniqueness of corporate cultures led to the cultural diversity of the Alliance. Furthermore, the main areas of cooperation of Renault and Nissan focused on the exchanges and mutual learning in technology, personnel and management, the sharing of global purchasing and production platform in order to cut costs and take full advantage of economies of scale and the new synergies. However, at the same time the two companies maintained independent in the development strategy and decision-making, and guaranteed not to lose their brand identities. In market segmentation, Renault and Nissan on the one hand wanted to minimize the direct competition with the partner while exploring the markets where the partner had not presented, and on the other hand, tried to break the geographical boundaries to meet the market demand as possible and encouraged production and promotion of the products with more popularity in one particular local market. Therefore, if disagreement appeared in related to culture difference, brand identity or marketplace overlapping, managers’ decision making would play an important role. They had to always bear in mind that mutual respect was the core value of the Alliance, tolerating the coexistence of different viewpoints, respecting diversity, dealing with possible problems and differences based on the principle of equality and mutual respect. “In order for the combined share of ideas and strategic management to be effective, the employees of both companies must respect the identities of their fellow colleagues as well as their values. If this critical first step isn’t met and members in a particular team act disrespectfully and selfishly towards their teammates, an organization is bound to self-destruct in a short time of period.”

4. An international viewpoint

Similar with the intellectual skills talked about by Phillips, leaders of new generation should have a broad vision. The Alliance consisted of two companies from countries in different continents - Renault from France and Nissan from Japan. However, the business of the Alliance has gone far beyond of these. Renault’s sales covered all the Europe and South American area and Nissan's market was mainly in Japan and the United States. Furthermore, with the emerging markets gradually becoming the solution for the declining sales and profit and the closer cooperation of Renault and Nissan in the global procurement, the Alliance had actually expanded its scope to the whole world. As a result, leaders’ perspective should not be confined within the locations of the two Alliance members, but to be open, flexible and globalized.

5. Culture and language

Renault and Nissan represented two distinctive corporate cultures and their essence from which they generated - the national culture of the west and the east. In Phillip's theory, one aspect of effective international management was people skills. Therefore, in a cross cultural company, managers should have acquired a deep understanding, recognition and respect to those cultures. Cultural empathy was the basic criteria in coping with cultural differences and conflicts. The behaviour of employees was under great influence of the culture. The key of success for leaders to effectively handle interpersonal relationships with partner employees was how to get an inside look of different cultural backgrounds. If management did not give fully consideration to cultural differences, it would be quite difficult for managers to get along well with their cross-cultural teams and to receive support and cooperation from their co-workers. In addition to cultural influences, another major aspect of interpersonal skills was language. Language was an indispensable part of interpersonal communication. In the Renault-Nissan alliance, the day-to-day communication should be in a widely-used language, which employees of both sides well mastered and spoke fluently; otherwise, the handicap of language might impede the accuracy of information conveyed. Managers should be equipped with language proficiency to ensure daily business communication. Meanwhile, language proficiency would as well help in culture understanding.

If leaders were able to possess all the traits and skills stated above, they had basically met the requirement of the future development of Renault and Nissan. However, the real problem facing the Alliance was where these leaders could be found or how they could be trained to be qualified.

1. When recruit, select and promote employees, the companies should look for people with flexible personality, team work spirit and three-dimensional matrix.

2. Previous expatriates and employees with overseas working experience before would also be a choice. In general, people who used to work or live abroad might possess a broad vision, a global outlook, and a different perspective. When dealing with the problems, it was likely that they were able to come up with some creative solutions. After personally feeling the impact of cultural differences, they were also easier to understand, tolerate and respect other cultures.

3. In the Renault-Nissan Alliance case, managers should particularly be compatible with two corporate cultures and national cultures to enable themselves to pay equal treatment and mutual respect to one another and eventually reach the goal of win-win. The similar theories for expatriates could be applied here. “Picking up the earlier point about cultural diversity, the emphasis will always be on cross-cultural training that is designed to ‘get beyond the home country mentality’ (Handy and Barham, 1990). Organizations must engender a new level of cultural awareness in their managers and ‘management development must contribute to the creation of a new corporate culture and a new managerial mind-set’ (Barham and Oates, 1991)”. Therefore cross-culture communication could be achieved by trainings and personnel exchanges.

• Language training

In view of the popularity of English in the world and its wide use as a business language, the Renault-Nissan Alliance also adopted English as the official language of communication. As a result, the fluency of English, as a communication tool, had become a significant component of leaders’ interpersonal communication capacity within the Alliance. Therefore, English language training was essential and crucial. As part of management training, managers without fluent English needed to attend English courses, especially in business English, to improve their English until they had no difficulty in daily work communications. As an alternative, language proficiency would become a requirement for new employee or manager recruitment. Only new recruits achieving a certain English level would be eligible for the positions.

• Culture training

There could be various forms of cross-cultural orientation and training programs including seminars, case studies, group discussions, brief lectures, multimedia presentations and role-playing.

Philips got a positive outcome from its training programs. “It uses cross-national teams as part of its managerial training and development programs. Three task forces of eight people each (called ‘octagons’) work together for six to eight months on a specific study assignment. After a two-week seminar in Eindhoven, in Holland, senior management presents a number of important global projects; each group chooses one. The task force participants devote about 29 percent of their time to those projects, meeting regularly in various European locations. At the end of the project, the group presents its report to Philips’s top-level managers, who consider carefully the possibility of implementing their recommendations.”

Managers should be trained and prepared for the difficulties and building cross-cultural working relationships and improving communication and interpersonal skills. After special courses and training programs were organized, it might be even more effective to organize courses for managers of partners together. This would provide them a chance to discuss face to face the problems or obstacles they had encountered when communicating directly with people from another culture and to work out solutions for the possible culture shock. And this would encourage the building of informal cross-cultural contacts and help to remove their stereotypes and prejudice in recognizing cultural dimensions. Training to understand cultural backgrounds and working styles had three main focuses: communications, project management and how to overcome resistance and problems while maintaining a positive partnership. The training enhanced mutual understanding and best practices exchange. Through training programs, managers would be aware of the differences between Japanese and French culture as well as getting familiar with the working methods of one another.

• Personnel exchanges

Personnel exchanges aimed at increasing Alliance performance. These exchanges consisted of following categories:

1. Renault and Nissan expatriates exchanged to the other partner company. Such exchanges help reinforce the various functions through the sharing of best practices as well as encouraging mutual understanding.
2. Expatriates working in Alliance projects and people working in common companies such as RNPO and RNIS.
3. Personnel exchanges within a regional framework. For instance, Renault managers could be assigned to work in Nissan affiliates in European region. And on the other hand, Nissan sent employees to work temporarily in Renault Japan and the Asia-Pacific region.

Renault and Nissan could exchange managers with the same positions within each company. This enabled them to try their expertise and manager practices in the same business divisions but under another culture context and organization dealing with people having different value and way of communication.

Some other possible exchanges included: “choose to bring foreign nationals into their headquarters for a short- or medium-term assignment which would involve them in decision making, a process known as inpatriation. The head office would also be a forum in which they could share their more global perspectives with the parent company staff and expose them further to international views and values. Extensive travels including long business trips and international networking and teleconferencing are among other methods which serve as a mechanism to implement and sustain the process of internationalization of management staff.

In conclusion, the fundamental reasons for Renault-Nissan Alliance’s success and moving on to the next development stage lied in its creative leadership. From Carlos and the top management board to the intermediate and lower management levels, leasers of the Alliance tried to maintain neutral and equilibrium of the Alliance while taking a middle course but considering from both sides. They kept an open-minded and moderate attitude on their partners’ opinions and decisions and never imposed their own wills on the other. Therefore, no matter what qualities and skills future leaders would possess, they should always hold a right attitude towards the Alliance.

Bibliography:

Human Resources Management, Sixth edition, Derek Torrington, Laura Hall, Stephen Taylor, Essex: Pearson Education Limited, 2005

Human Resources Management – A contemporary approach, fourth edition, Ian Beardwell, Len Holden, Tim Claydon, Essex: Pearson Education Limited, 2004

International Human Resources Management – A Multinational Company Perspective, Monir H. Tayeb, Oxford: Oxford University Press, 2005

Nissan-Renault alliance still going strong, CEO says

Renault-Nissan Alliance, December 2005

Renault-Nissan Alliance Case Study, Slide share,

The Renault-Nissan Alliance in 2008: exploring the potential of a novel organization from, Stanford Graduate School of Business, Case: SM-166

The Renault-Nissan Alliance, MBA lib,

What makes for a good marriage? - Manufacturing - Renault-Nissan alliance

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