Analysis of Macro Environment and Internal Environment of Nissan

This report analyzes the impact of macro environment on Nissan and evaluates its internal environment to assess its weaknesses and strengths. It also applies Porter's Five Forces model to evaluate competitive forces. The report provides insights into Nissan's business strategy and its application of various frameworks and models.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................................3
LO 1.............................................................................................................................................................3
Analysis the impact of macro environment on an organization and its strategies....................................3
LO 2.............................................................................................................................................................6
Evaluation of internal environment in order assess its weaknesses and strengths of an organization
structure, internal capabilities and skill set..............................................................................................6
LO 3.............................................................................................................................................................8
Porter’s Five forces model for evaluating competitive forces.................................................................8
LO 4...........................................................................................................................................................10
Range of theories, models and concepts to interpret strategic planning.................................................10
CONCLUSION.............................................................................................................................................14
REFERENCES..............................................................................................................................................15

INTRODUCTION
Business strategy refers as formulation of strategic plans and implementation of strategic
tactics in order to achieve business objectives and goals. Business strategies help in decision
making process of manager and allocation of resources. Nissan is automotive industry. It is
founded on 26 December in the year 1933. The founders of Nissan are Masujiro Hashimoto,
Kenjiro Den, Rokuro Aoyama, Yoshisuke Aikawa, Meitaro Takeuchi and William R. Gorham.
It deals in the products of automobiles, commercial vehicles, luxury vehicles, forklift trucks and
outboard motors. The headquarters of firm are situated in Nishi-ku in Japan. The firm is
officially registered in Kanagawa-ku and Yokohama.
The project report will apply appropriate framework in order to analyze the influence of
macro environment in organization and on its strategies. It will analyze the internal environment
in order to asses’ weaknesses and strengths of company and for identifying its structure and
internal capabilities. The study will apply Porters five forces for evaluating the competitive
forces in organization. The report will apply a range of concepts, models and theories to interpret
devise strategic planning for the company.
LO 1
Analysis the impact of macro environment on an organization and its strategies
Pestle analysis is framework and tool that helps to monitor and analysis the macro
environment of a business and also helps to indicate the impact of these factors on an
organization performance. Hence, Pestle analysis if Nissan is done to evaluate the impact of
macro environment factors on its business operations and strategies.
Pestle Analysis of Nissan
 Political Factors - To Nissan business need to take care of Brexit adjustments while
operating their business in United Kingdom. The company wants expansion in Iranian
market. There is political influence in those markets which the company is trying to enter.
The level of political stability is also beneficial for Nissan (Akter, Wamba, and Childe,

2016). There are trade protectionist policies in United States. Thus, the Nissan is getting
affected by these policies.
 Economical Factors -. The inflation rates in various countries are influencing the
business of Nissan. Exchange rates of various countries are another economical factor
that is influencing the company's costs. Nissan is also affected by the taxation system of
different countries. Various countries have different interest rates that also restricted the
loan taking capacity and finances of firm. In countries where unemployment rate is high,
this provides an opportunity to Nissan to offer those jobs and increase productivity of the
company.
 Social Factors - The social factors such as purchasing power of the customers is
influencing the business of Nissan. In developed countries the class structure and
hierarchy is good. Thus, the Nissan is not facing any problem in developed countries but
in under developing and developing countries the people are not self sufficient to pay
such a huge amount to purchase the vehicles of Nissan. Thus, Nissan strategy is to
produce low costs cars and vehicles in order to gain competitive advantage.
 Technological Factors - The technology helps Nissan to gain the competitive edge.
Nissan Company is producing latest technology cars and vehicles. The company uses
various software’s and machineries to implement fast delivery in their organization
(Leonidou, Christodoulides and Palihawadana, 2017). The Nissan use advanced
technology in their vehicles through which they are able to meet their customers’
expectations. Nissan currently using Seamless Autonomous Mobility system that is
developed by NASA, this will provide firm a competitive edge. Technology like ICE
systems in the cars also facilitates the customers.
 Environmental Factors - The Nissan need to meet the emission standards in various
countries. They are setting a specific pollution limit to do production of the automobiles.
The emission includes hydrocarbon, monoxide and sulfur oxide. These emissions are
harming the nature and the surroundings. The company is also working hard to fulfill the
safety standards. The safety and precautions have taken on earlier basis before the Nissan
vehicle go on the roads and markets. The company is also taking various measures to
control environmental pollution

Figure 1 Pestle Analysis (Source: Pestle Analysis, 2019)
.
 Legal Factors - The legal factors that influence the business of Nissan are various laws
and regulations which are enforced in various countries. The health and safety laws in
UK also impacts the company (Gattorna, 2017). Nissan should take care of these laws
while doing test drive. They also ensure the health and safety of their workers. Other laws
regarding equality, Nissan ensure that there will be no discrimination happen in
recruitment and selection process of employees also they take care of the no bias decision
are taken in organization. They assure to give equal rights to all the employees of Nissan.
Beyond this they also take care of minimum laws of wages. The company gives adequate
salary and wages to its employees and workers.
Nissan strategy is to introduce innovative technology in the market and to build sleek
aerodynamics for increasing the customer satisfaction in the company. Hence, there is influence
of government policies on the Nissan strategies. There is also influence of environmental factors
on the company. Hence, the Nissan strategy is to cut down their carbon emission from the
vehicles. For this they are manufacturing electronics vehicles to reduce the carbon emission.
These vehicles are environmental friendly cars, which are fuel free. Economic factor also

influence Nissan business. Nissan another strategy is to balance the economics of scale for this
they are purchasing raw material in larger quantity. Hence, this is helpful for the company to
reduce cost of the production and also helps the firm to attain competitive advantage.
Stakeholder analysis
It refers to a process of assessing the potential and system changes. These provide a brief
about how stakeholder’s interest should be addressed in a program, project plan and policy of
company. The stakeholders of Nissan include shareholders, customers, communities and
employees. They help in creating economic values for the business of Nissan. They also tend to
help in contributing towards the development of sustainable environment and society (Chen,
Eshleman. and Soileau, 2017).
Communities are affiliated by the environmental factors they are keeping eye on the
environmental policies of the Nissan. They want to reduce carbon emission to make environment
safe. Social factors are also influencing the customer’s safety. Nissan has to manufacture the cars
and vehicles which ensure the safety of their customers. Nissan is also abiding by the
government rules and regulations they have to publish their financial statements on yearly or
quarterly basis in the print media to provide accurate information to their shareholders. The
shareholders spend their money in the company so it is important to provide those accurate and
timely data and information of the company. Legal factors also influence the Nissan. Nissan has
to follow the legal rules related to the employees. They have to ensure health and safety of their
employees. Also, need to maintain equality at the workplace and need to follow employment
laws.
LO 2
Evaluation of internal environment in order assess its weaknesses and strengths of an
organization structure, internal capabilities and skill set
VRIO Analysis of Nissan
VRIO model helps to evaluate the performance and internal capabilities of the firm. This
analysis is focused on gaining competitive advantage rather focusing on competitive
environment. Thus, VRIO analysis of Nissan is done as follows –

Valuable - Nissan try to keep their production cost to the minimal. Nissan have global marketing
team and cross functional team which are operating the functions of organization. They also
receive the feedback from the retailers about the quality of automobiles and gather knowledge
about customer satisfaction.
Rare - Nissan is using Just in time production system in their business which makes them rare
from its competitors. Nissan is using Joint distribution platform (Soltanizadeh, Rasid and Ismail,
2016).
Imitate - The competitors of Nissan such as Hyundai are successfully managed for recreating the
systems and alternatives which the company is producing. Moreover, Nissan is marinating the
position to remain world’s best manufacturer of Electronics Vehicles.
Organized to capture value - Nissan works in very organized manner in order to capture the
values. Nissan is working with global engineering teams which support the costs. The company
is working in organized systems, policies, strategies and processes in order to utilize the
resources potentially.
Capabilities and
Resources
Valuable Rare Costly to
Imitate
Organized to
capture value
Brand Equity Yes Yes No Yes
Capital Access Yes No No No
Network
capability
Yes Yes Yes Yes
Ansoff matrix of Nissan
 Market penetration - In this business is more focused on selling the goods and services
in existing markets (Amran, Ooi and Hashim, 2016). Nissan is planning to increase its
market share in their current product line. They are achieving this through doing
combination of advertising, sales promotion and by using various pricing strategies.
 Market development - This name is given for growth strategy. In this the company
seeks to sale their existing product in new markets. Nissan is going globally and wants to

open there stores and manufacturing units in various locations all over the globe. They
are also using new distribution channels which simply moving from selling through using
E-commerce.
 Product development - The Company tries to introduce new products in the existing
markets for gaining competitive edge (YuliansyahRammal. and Rose, 2016). Nissan
highly invest their money in research and development. There motive is to introduce a
new product in the marketplace for these they are gathering detail insights of the
customer choices and preferences.
 Diversification - In this strategy completed new product is launched in new markets. It is
a riskier strategy because the company is moving completely into a new market where
there is no idea about product will work out or not. Thus, for this Nissan is doing
planning and also making plans for further innovative products and capturing new
markets in developing countries.
LO 3
Porter’s Five forces model for evaluating competitive forces
Porter's five forces model
1. Threats of new entrants - The Company’s power is also affected by the coming of new competition in
the market (Porter's Five Forces, 2020). The money and time will be consumed less if a competitor will
enter into the existing market and can become an effective competitor, if the Nissan’s position will be
static then will be more effective this could be significantly weak position. An industry with having
strong barriers can become a negotiable competitor for existing companies within that industry, since the
company would also be able to charge higher prices and can negotiate better terms.
2. Competitive rivalry - The initial model of porter is about the number of competitors and their various
abilities which are helpful in growth of the company (Cubas‐Díaz and Martinez Sedano, 2018). If the
number of competitors will be more, also with the number of similar products and services they use to
offer, there will be less power of the company. Buyers and suppliers of Nissan will bring out a big
competition if they will be able to find a better deal with low prices. Similarly, if competitive rivalry is
less, a company will have big power to charge higher prices on existing products and can mark terms as a
return to achieve higher profits and sale.

3. Bargaining power of Suppliers - The third factor in the five forces model is about how easily
suppliers are able to change their cost of input. This is affected by the number of suppliers of that are in
the key inputs of a service and goods, also uniqueness of these inputs, and how much it would cost a
company to change the existing supplier of the company. If there will be fewer suppliers of Nissan in an
industry, then the dependence of a company would be more on a supplier. As a result, the supplier will
have more power and can charge high input costs and can go for other advantages in this trade. On the
other hand, when there are number of suppliers or there is very less switching costs between rival
suppliers, a company can keep the cost of inputs lower and at last will be able to enhance his profits.
Figure 2 Porters Five force analysis (Source: Porters Five Force analysis 2019)
4. Threat of Substitutes - The second last factor of this model has a focus on substitutes. Substitute
services or goods are that which can be used as a replacement of a company’s service or product and can
be a bigger threat. Companies like Nissan that only produce goods or services which have no more close
substitutes will have more power to increase prices and can easily manage those in favorable terms. When
close substitutes are available, customers will have an option to refuse buying a company's product, and
can a cause for weakened company's power.

5. Bargaining power of Customers - The ability of customers to adjust prices lower or according to their
level of purchasing power is one of last factor in the five forces model (Yuan, Lu. and Yu, 2018). This
is affected by how many customers or buyers a company has, and how significantly each customer can
affect them, and how much it would cost a company to find new customers in the existing market for
higher outputs. A smaller and more potential customer base of Nissan means that each customer will have
more power to bargain for low prices and better deals. A company with having many, independent and
small customers will have an easy task of charging higher prices to increase profit margin.
Evaluation - According to Porter's five forces model the overall position of Nissan in the market
can be evaluated. The competitive rivalry is more in the industry of automobile and thus
disadvantageous for Nissan. The new business units don’t give a strong competition to Nissan as
the company is having a potential trustful customer base. Bargaining powers of both customer
and suppliers affects Nissan but the affect of suppliers is less as there are a number of suppliers
in the automobile industry, the customer power affects the company as the customer base of the
company is huge. And the threat of substitute didn't affect Nissan as there are no close substitutes
for products of Nissan.
LO 4
Range of theories, models and concepts to interpret strategic planning
Porter's generic strategies
 Differentiation strategy - A differentiation strategy is the approach to develop products
with new style in order to provide the customers with something unique, distinct and
different items from the competitors that they are already offering in the same market
segment. The main objective of implementing a differentiation strategy is to increase
competitive advantage. A business unit like Nissan will usually aim towards achievement
of this by analyzing its strengths and weaknesses, the needs of its customers and the after
sale services that they provide to their customers. The differentiation strategy is mostly
used by the large firms having a wide variety of products.
 Cost and price leadership strategy - Cost Leadership strategy is for establishing a
competitive advantage by having the lowest cost of production in the industry. This
strategy is beneficial in a market where the price is one of the important factors (Bentley-

Goode, Newton and Thompson, 2017). The initial objective of a firm is to attain cost and
price leadership; this is for becoming a producer with lowest cost of production in
comparison to his competitors. This is usually done to achieve large scale production
which helps the firm to take benefit of economies of scale or by a new technique of
production at low costs. For acquiring quality raw materials at low price is the initial goal
of a cost and price leadership strategy. Also, there is an additional requirement of quality
personnel who will be responsible to convert these raw materials into finished goods for
the ultimate consumers.
 Extended model of Bowman's clock - The Bowman’s Strategy Clock was developed by
the two famous economists Cliff Bowman and David Faulkner. The main focus of this
model is to make the companies aware of their position in the market as compared to
their competitors. It is just a purely marketing model that helps the companies to analyze
their position in the market (Anwar and Hasnu, 2016). As per Bowman, the main factor
of competitive advantage is the reason for having the cost advantage; it works as a
distinctive element in the company overall value in its output and helps in the strategic
positioning and the overall marketing of the product in the market. Bowman’s Strategy
Clock is a model used by a Nissan company while designing marketing strategy to
analyze its competitive position in comparison to its competitors. It is a diagrammatic
representation which shows relationship between prices and customer value. Michael
Porter developed Generic Strategies which are also known as Porter marketing technique
and are similar to these. The Bowman's clock strategy represent those three ways in
which a company can compete with other competitive firms and can provide customer
satisfaction at a better price, or more effectively than its competitors.
Tool management which can apply on strategies
 Diversification strategy - A diversification strategy is the strategy that an organization
adopts for the purpose of development of its business. This strategy can be used by
Nissan Company which involves widening the scope of the organization across different
products and market sectors. This strategy is helpful if the Nissan Company wants to
enter into a new market or industry which the organization is not currently in. It also
includes creating a new product for the new market. Diversification strategy is a form of

growth strategy which also helps in organizational growth of the business. It enables the
company to have new possibilities of growth for the organization. By adopting this
strategy, the organization not only diversifies its products offerings in the target markets
but also expands its business all over the world (Xie and Cooke, 2019). The strategy
helps the business unit to increase revenue and sales while keeping costs to lowest
possible level.
 Hybrid Strategy - The problems of the incompatibility of cost and differentiation
advantages is considered wrong due to hybrid strategy (Angeloska-Dichovska and
Petkovska-Mirchevska, 2017). To achieve both high productivity and quality at the same
time the hybrid strategy can be used by the Nissan Company. More importantly, pursuing
individual factor generic strategies is considered to be no longer sufficient for growth in
today’s competitive environment. Increased competition and cost pressure has created
side effects of globalization as well as changing customer expectations require companies
to adopt a multidimensional strategic approach. Hybrid strategies that are about
integration of cost and differentiation advantages that represents a way for companies to
cope-up to these changes in the competitive environment more effectively and flexibly.
 Vertical and horizontal integration strategy - Vertical integration is a competitive
strategy by which a company like Nissan takes complete control in one or more stages in
the distribution and production process of a product. A company like Nissan opts for
vertical integration to ensure full control over the supply of the raw materials to
manufacture its products. The company can also use vertical integration to take control
over the process of distribution of the products. Horizontal integration is another
competitive strategy that companies use. Horizontal integration is the acquisition of
business activities that are all belongs to the same level of value chain in different or
similar industries.
Nissan will pursue diversification strategy in order to expand its business across the globe.
The company can easily grow in its business of automobile manufacturing as the company is
using latest technology in his production process. The external environment of the company is
also favorable as the need of small size and other featured cars is increasing day by day. The
company can implement this strategy by analyzing the need of diversification and with a proper
outline plan to implement these more effectively. For example, in North parts of Asia there is a

emergent need of family size cars due to increased pollution, Nissan can be the first company to
setup its industries there with the help of diversification.

CONCLUSION
It has been summarized that Nissan is taking necessary steps and making strategies in
order to overcome the rapid economical changes. Nissan is also facing various challenges from
its competitors such as Toyota. Although there are challenges in global market but Nissan is
identifying its external and internal environment through which they are able to cope up with the
threats and can gain opportunities. They are implementing strategies to produce environmental
friendly vehicles and to achieve competitive advantage. Nissan is capable to introduced robotics
cars and vehicles which make them differ from their competitors and also help to increase the
business profits.

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