Environment Analysis of Nissan

This report analyzes the environment of Nissan Motors in the UK automobile industry after Brexit. It examines the impact of political, economic, social, and technological factors on Nissan's operations. The report also presents three scenarios for Nissan's future operations and provides strategic recommendations.

Running head: ENVIRONMENT ANALYSIS OF NISSAN
ENVIRONMENT ANALYSIS OF NISSAN
Name of the Student
Name of the University
Author Note

1ENVIRONMENT ANALYSIS OF NISSAN
Executive Summary
The report is based on the analysis of an automobile organization named Nissan Motors that
has its operations in different countries of the world. The operations of Nissan Motors in the
automobile industry of the United Kingdom has been examined in the report in detail. The
macro environment based factors related to the United Kingdom that are able to affect the
operations of the organization has been analysed in detail. The PESTLE framework has been
implemented for the purpose of analysing the macro environment factors that have occurred
in the country after implementation of Brexit. The effects of Brexit on the automobile
industry of the United Kingdom has been analysed with the help of the Porter’s five forces
framework. The analysis of macro and micro environment based factors of the United
Kingdom are able to depict the position of automobile industry after Brexit. The three major
scenarios that can be developed by Nissan Motors within the year 2020 have been developed
in the report. The recommendations have also been provided in the report based on the ways
by which the organization can manage its future operations in the automobile based industry
of the United Kingdom.

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Table of Contents
Introduction....................................................................................................................3
Section 1 – PEST analysis of Nissan.............................................................................3
Section 2 – Porter’s five forces analysis of Nissan........................................................6
Section 3.........................................................................................................................8
Scenario development................................................................................................8
Strategic recommendations........................................................................................9
Conclusion....................................................................................................................10
References and bibliography........................................................................................11

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Introduction
Nissan is multinational automobile manufacturing organization that has its origins in
Japan. The headquarter of Nissan is located in Nishi-ku Yokohama. The organization sells
that cars under brand of Datsun and Nissan Infiniti. Nissan is a part of Renault-Nissan-
Mitsubishi Alliance from the year 1999. Nissan has gained its position as the largest
manufacturer of cars in the world with the help of its global sales of greater than 300,000
electric vehicles in the year 2018 (NISSAN MOTOR Co. 2019). The top-selling electric car
manufacturer based position has been gained by Nissan in the industry. The organization was
founded by Masujiro Hashimoto in the year 1911. The car model of Nissan was named based
on the acronym of the names of three founders of the organization, Kenjiro Den, Rokuro
Aoyama, Meitaro Takeuchi (NISSAN MOTOR Co. 2019).
The report will be based on the external macro and micro environment of Nissan. The
external factors related to the conditions in the United Kingdom that can affect the operations
of Nissan will be discussed in detail. The recommendations will be provided based on the
potential scenarios that are based on future operations of Nissan in the automobile industry.
The macro environment will be analysed with the help of PEST framework and micro
environment can be discussed by implementing Porter’s five forces framework (Sampson et
al. 2016).
Section 1 – PEST analysis of Nissan
Political factors – As opined by Bailey and De Propris (2017), the political condition
in UK has a major impact on the profitability levels and operations of Nissan in the country.
The decision based on Brexit that had been taken by the United Kingdom in the year 2016
was implemented in the month of March in 2019. Brexit had an impact on the operations of
various multinational organizations in the country. This had led Nissan to make a decision to

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reverse the plans of making more investments in the United Kingdom. The plan of
developing the X-Trail model at the plant of Nissan in Sunderland was also cancelled due to
this factor. According to Bailey, Driffield and Kispeter (2019), the new model based plan of
Nissan was developed in the year 2016 after the Brexit referendum was passed. The increase
in levels of uncertainty that had occurred in country due to the exit of UK from the European
Union was a major reason behind the negative influence on the relationships of the
organization. The future plans of the organization had been affected in negative manner by
the Brexit. As discussed by Chang (2018), the ways by which Brexit was handled by the
Prime Minister of UK Theresa May was criticised in a huge manner after a major
organization like Nissan had decided to stop its production based process. The Brexit related
strategy of the government was questioned and the government was under huge pressure. The
expectation levels of job losses due to the decisions that were taken by the organization in
this case. The number of employees who are a part of the Sunderland plant of Nissan. The
UK partners and team of Nissan will be influenced by the decisions that have been taken by
the organization related to different factors (Theguardian.com 2019).
Economic factors – As discussed by Ciuriak et al. (2015), the economy of the United
Kingdom had been affected negatively by the lack of investments that are made by Nissan.
The automobile based industry has been able to provide major levels of contribution based on
the development of the economy. The car industry of the country had experienced low levels
of low production figures and drop has taken place in the investments as well. The jobs that
have been created by Nissan have reduced in the last few years and this has been a major
blow to the communities in the country. According to Cloyne (2018), the Labour’s Shadow
Brexit Secretary Keir Starmer had also discussed about the issues that have taken place in the
industry. The economic condition of the United Kingdom had forced a major organization
like Nissan to reconsider the decision based on levels of investments that can be made. The

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company also expected assurances from the UK government based on the ways by which it
can operate in the industry. The tariff that has been imposed by the European Union on the
products and sales of Nissan is around 10%. This is considered to be a major reason behind
the withdrawal investments of the organization (Bbc.com 2019).
Social factors – As discussed by Coulter and Hancké (2016), the social condition and
choice of the consumers in the United Kingdom have changed in a huge manner due to the
exit of the country from EU. The influence of French people on the people of the country
have reduced and their demands and needs had also faced major levels of changes. The
dynamics that are a part of the approach of the consumers have an impact on the choice based
on products that are offered by Nissan.
Technological factors – As discussed by Cumming and Zahra (2016), the Brexit
based vote that was provided in the year 2016 had been a major shock for the car
manufacturing industry of the United Kingdom. The uncertainty levels in the country had
reduced future access to the single market of European Union. The levels of efficiency in the
Sunderland factory of Nissan have been affected by costs based on technologies. According
to Dhingra et al. (2018), the process of sourcing of the assembly from different European
countries have become expensive for Nissan. Supply chain efficiency of Nissan has been
influenced by restrictions that have been developed due to Brexit. The trade tariffs have an
impact on the ways by which different components of car manufacturing process are sourced
from various countries. The costs based on assembly parts have increased in the United
Kingdom. This has further led to the increase in production based costs of Nissan in the
country (Theguardian.com 2019).
The macro environment analysis of Nissan has been able to depict that the United
Kingdom has not been able to provide major opportunities based on growth to the

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organization. For example, the lack of proper support by the government has led to the
increase in levels of cost based on the production. The organization is also facing high tariffs
in the operations that are conducted in different countries within the European Union itself
(Dhingra et al. 2016).
Section 2 – Porter’s five forces analysis of Nissan
As opined by Driffield and Karoglou (2019), Porter’s five forces framework can be
used in order to analyse external competitive environment of an organization. This model can
be considered to be a strategic tool that is able to help the analysis of attractiveness of the
structure of the industry. The strength based on the competitive position that has been
developed by an organization can be analysed effectively with the help of this model. The
model is mainly based on five major competitive forces that have an impact on the operations
of different organizations. The competitive environment of Nissan can also be analysed with
the help of this framework (IJtsm et al. 2018).
Rivalry in the industry – As discussed by Keane (2018), the intensity of the
competition between the organizations that are a part of the automobile industry is high.
Nissan has to face a lot of struggle in order to maintain its position in the industry. The
automobile industry consists many small and large sized organizations that are able to
increase the levels of competitiveness. The small competitors of Nissan include, Toyota and
Honda. The switching based costs in the industry are low as the industry is in the growing
phase. The high levels of competition in the UK automobile industry leads to advertising
wars, price wars and levels of product differentiation. The country is currently home to more
than 50 car manufacturing organizations that develop 200 models. General Motors and Ford
are two other major competitors of Nissan in the UK (Liddle 2018).

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Threats based on new entry – As opined by Yueh (2017), the threats in the industry
are based on the barriers related to entry and exit in the market. The new organizations that
enter the automobile industry are able to affect the levels of diversification in the industry.
The threats based on the entry of organizations in the United Kingdom are quite low in case
of Nissan. The entry and exit based barriers in the industry prove to be a major hindrance to
new organizations. The major issues that are faced by the organizations that enter the
automobile based industry of the United Kingdom include, high requirement of capital,
difficulties in finding the suppliers, high customer switching costs and the highly
differentiated products. The UK automobile industry is highly capital extensive and
demanding in nature. Brexit has led to the increase in levels of investments that need to be
made by a major organization like Nissan (Keane 2018).
Threats based on substitutes – As discussed by Crafts (2018), the products that are
offered by competitors of Nissan are considered to be substitutes that are able to fulfil the
similar needs and demands. The competition in this case can be either the existing
organizations that plan to diversify their operations and the new organizations that can enter.
This force is not powerful in case of Nissan as the new organizations do not have the levels of
capabilities that can help them to challenge Nissan.
According to Chang (2018), the brand value that has been developed by Nissan is
considered to be a major factor that is able to provide an advantage to the organization.
However, the organizations that have been already operating in the industry are able to
provide substitutes of the cars that are developed by Nissan. The major competitors of the
organization include, Toyota, Hyundai, Honda, General Motors and Ford. Customers of the
organization can be attracted easily by the other major companies that operate in the United
Kingdom.

8ENVIRONMENT ANALYSIS OF NISSAN
Bargaining power of the suppliers – As opined by Ciuriak et al. (2015), the position
that is developed by an organization is based on the number of suppliers who are a part of the
company. The bargaining based power of the suppliers of Nissan is quite limited. The
transaction based costs and switching costs based on the ways by which Nissan is able to
switch the suppliers are controlled by the organization. The suppliers in UK have now joined
hands with different suppliers from countries like China and India which has led to the
reduction of their power.
Bargaining power of the buyers – As discussed by Pissarides (2017), the prices of
products that are offered by different organizations in the automobile industry cannot be
controlled by the buyers or the customers. The major reason behind low bargaining power of
the buyers is based on the high costs based on shipping. The customers in the automobile
industry are highly fragmented and the cars are mainly sold with the help of different
authorized dealers all over the world. The differentiated products offered by Nissan are able
to reduce the bargaining power of buyers. The competition levels between organizations in
UK have increased due to the demands of the consumers.
For example, the effect of Brexit in the UK automobile industry has led to the decline
of the car manufacturing industry. The organizations like, Land Rover and Jaguar have cut
more than 4000 jobs, Honda has planned to close its plants and Nissan has decided to stop the
investments that were planned (Sampson et al. 2016).
Section 3
Scenario development
The future operations of Nissan in the UK automobile industry are based on the
support that can be offered by the government that is formed after Brexit. The future
scenarios and operations of Nissan in the industry can be pessimistic, middle or optimistic in

9ENVIRONMENT ANALYSIS OF NISSAN
nature (Skeete 2017). The three major scenarios that can be developed in the case of future of
an automobile organization like Nissan are as follows,
Pessimistic – As opined by Driffield and Karoglou (2019), the pessimistic
scenario that can be faced by Nissan Motors in the United Kingdom is based
on the withdrawal of investments from the country. The organization is
already planning to stop the future investments in the United Kingdom after
implementation of Brexit. Nissan Motors has also planned to stop the product
of Nissan X-Trail model. The Sunderland factory and the workers who are a
part of this factory will suffer in the future. The organization can thereby plan
to stop the production of cars in the United Kingdom by the year 2020 (Bailey,
Driffield and Kispeter 2019).
Middle – According to Bailey, Driffield and Kispeter (2019), the middle
scenario that can be faced by Nissan Motors in the future after Brexit
implementation is related to decreasing the levels of investments that can be
made by the organization in the UK. The organization can manufacture some
selected model of cars in the country that will be based on low investments
and the company will have to pay less taxes as well (Cumming and Zahra
2016).
Optimistic – As opined by Bailey and De Propris (2017), the optimistic
scenario that can be developed by Nissan Motors by the year 2020 is related to
the development of more factories of the organization in the UK. The
government will also provide support to the organization based on the ways by
which the tariffs based on taxes can be reduced. This will help the
organization to develop a strong position in the automobile industry of the
UK.

10ENVIRONMENT ANALYSIS OF NISSAN
Strategic recommendations
The recommendation that can be provided to Nissan Motors based on the
future operations in the UK automobile industry is based on the reduction of
investments and employees in the country. The reduction of investments and
job cuts of employees will reduce the costs based on operations.
The strategic recommendation that can be provided to Nissan Motors in case
of the Middle scenario is based on the development of a differentiation based
strategy in order to maintain the value of its brand that has been developed in
the last few years.
The strategic recommendation that can be offered to Nissan Motors in the
optimistic scenario is based on the proper usage of support that is provided by
the government. The prices that are set for the cars also need to be based on
the extra tariffs that need to be paid by the company after Brexit
implementation.
Conclusion
The report can be concluded by stating that the external macro and micro environment
based factors of the automobile industry of the United Kingdom have a major impact on
Nissan Motors. The organization has been affected in a huge manner by the political and
economic situation that has been developed in the country after implementation of Brexit.
The turmoil that had taken place in the country is considered to be a result of the exit of the
United Kingdom from European Union. The industry based forces have also played a major
role in the development of effective levels of revenues. Nissan Motors has been affected by
the Brexit based factors and the scenario that will be developed in the car manufacturing
industry within the year 2020 will be related to various changes that have taken place due to
Brexit.

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References and bibliography
Bailey, D. and De Propris, L., 2017. Brexit and the UK Automotive Industry. National
Institute Economic Review, 242(1), pp.R51-R59.
Bailey, D., Driffield, N. and Kispeter, E., 2019. Brexit, foreign investment and employment:
some implications for industrial policy?. Contemporary Social Science, pp.1-15.
Bbc.com 2019. How could the UK help Nissan?. [online] BBC News. Available at:
https://www.bbc.com/news/business-37804238 [Accessed 17 Mar. 2019].
Chang, W.W., 2018. Brexit and its economic consequences. The World Economy, 41(9),
pp.2349-2373.
Ciuriak, D., Xiao, J., Ciuriak, N., Dadkhah, A., Lysenko, D. and Narayanan, G.B., 2015. The
trade-related impact of a UK exit from the EU single market. Available at SSRN 2620718.
Cloyne, J., 2018. Brexit: New Evidence and Policy Perspectives. Fiscal Studies, 39(4),
pp.549-553.
Coulter, S. and Hancké, B., 2016. A bonfire of the regulations, or business as usual? The UK
labour market and the political economy of Brexit. The Political Quarterly, 87(2), pp.148-
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Crafts, N., 2018. Industrial policy in the context of Brexit. Fiscal Studies, 39(4), pp.685-706.
Cumming, D.J. and Zahra, S.A., 2016. International business and entrepreneurship
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Dhingra, S., Ottaviano, G., Rappoport, V., Sampson, T. and Thomas, C., 2018. UK trade and
FDI: A post‐Brexit perspective. Papers in Regional Science, 97(1), pp.9-24.

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Dhingra, S., Ottaviano, G., Sampson, T. and Van Reenen, J., 2016. The impact of Brexit on
foreign investment in the UK. BREXIT 2016, 24, p.2.
Driffield, N. and Karoglou, M., 2019. Brexit and foreign investment in the UK. Journal of
the Royal Statistical Society: Series A (Statistics in Society), 182(2), pp.559-582.
IJtsma, P., Levell, P., Los, B. and Timmer, M.P., 2018. The UK's Participation in Global
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Keane, J., 2018. Brexit and Global Value Chains: The costs of transition to new trade
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Liddle, R., 2018. Brexit: A Consequence of Globalization or a Case of British
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NISSAN MOTOR Co. 2019. Nissan Motor Corporation Global Website. [online] Nissan-
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