Strategic Analytical Report on Nissan

MANAGEMENT

Contents
Executive summary....................................................................................................................3
Introduction................................................................................................................................3
PESTLE framework-..................................................................................................................3
Porter`s five forces-....................................................................................................................6
Potential future scenarios and recommendation........................................................................9
Conclusion................................................................................................................................11
References................................................................................................................................13

Executive summary
This report brings out a strategic analytical report on Nissan. Nissan is ranked on sixth when
it comes to automakers in the globe. Moreover, it stands on the second position when it
comes to manufacturing either in terms of volume and offer huge range of vehicles such as
SUVs, Sentra cars and sports car. This report interprets the organisation`s environment and
other key strengths and weaknesses which affect the Nissan`s strategic conduct, design and
finally analyse its current corporate and business level strategy and provide future
recommendation for improvement.
Introduction
Nissan is named as world`s top electric plug-in vehicles selling brand. Various products
offered Nissan includes business transport vehicle, fork life trucks, and luxury vehicles.
Nissan is well known brand that has been struggling from less market share (Nissan, 2017).
In order to acquire the market, this report includes strategic analysis of internal and external
business environmental analysis. Under external analysis, this report undertakes competitor`s
analysis, Pestle framework, and Porter`s five forces model and finally give recommendation
so that company can change business environment in the automobile industry. This analysis
will help the company to figure out future tactics to have a stable future growth.
PESTLE framework-
Political factors- UK is ruled by constitutional monarchy with a parliamentary. Nissan is
exposed to several political risks that affect the profitability of Nissan (Nissan, 2017).
Government around the world favours low emission vehicles. EU and UK provides
government subsidy for low emission vehicles. Political factors affect the laws and
legislations relating to environment problems, competition policies, and taxation. The

government of UK and EU is stable and supportive to this sector. UK`s government help
automotive industry through Automotive Assistance programme (AAP). UK`s is integrated
within EU. Recent challenges related to UK Brexit voting had negative impact on the
operations of Nissan as 60% of motor parts supplied for the cars manufactured in the UK are
imported. UK government has introduced financial measures to favour the manufacturing of
cars with least CO2 emissions. If any automobile has high Co2 emission rate, it will have to
pay high Tax charges. It is important for Nissan to evaluate the free-trade legislations in the
country it wants to enter. The government can promote some rebates to the industry in order
to use their local resources for benefits of the company as well as the country (Sarwar,
Ramachandran, and Hosseinian-Far, 2017). This is because to the fact that certain territories
do not allow high performing vehicles such as Nissan Skyline model as a driver may misuse
that vehicle for illegal street racing (Atighechian, Maleki, Aryankhesal, and Jahangiri, 2016).
Economic factors- Economic factors influence the purchasing power of the customers and
cost of capital. Certain factors such as inflation rate, trade distribution, wealth, GDP, personal
disposable income, and interest rate (Nissan, 2017). Immense economic growth of UK
economy enhances more sales and increases its related sector. For instance- US is the largest
market of Nissan but recently the company has faced issues for 930000 Nissan cars named as
“Altima.” Moreover, 768000 issues have been reported for crossovers model and SUVs
(Mittal, 2017). (Nakamichi, and Warnock, 2014). UK is fifth largest economy in the world
with its nominal GDP. Many British households faced many challenges in 2017. Price of
motor parts of automobile industry increased at fast rate as the pound started getting weak
that has increased the cost of importing goods. The inflation rate rose to 3.1% in 2017, which
further increased the interest rate too.

(Source: BBC, 2019)
The rise of GDP of UK is-
(Source: statista, 2019)

Social factors- The changing demand of the customers in a country affects the profitability.
Higher disposable income of the customers and leasing options affects the purchasing
decisions of customers. UK is a big consumer market. The population of UK is 66.96 million
in 2019. The population in UK is getting older by 18% that are aged 65 and 2.4% people are
above 85 and over, which further affect the healthcare system and labour market of the
industry. Level of education and literacy rate is very high nearly 99% among 15 age and
older. Nissan can be benefited from some dynamics such as consumer approach towards
Nissan cars and high urbanisation rate can help the company to earn more profits (Farfan,
2014). Unique selling proposition of Nissan can be easily modified according its
performances, as the UK`s population is multicultural. UK and EU countries are amongst top
10 countries that are most educated. Majority of population of UK is in situated in England.
Social dynamics include demography; social preferences, urbanisation, and rate of growth
affect the company sales. For example- High-class of UK`s population think of car model,
which can be a status symbol and looks sporty as per the preferences of youngsters. INFINITI
luxury model is an sophisticated car and position itself as a flagship in the whole company`s
range (Parmer, and Dillard, 2015).
Technological factors- UK and EU countries are one of most technological advanced
country in the world. Organisations often develop technologies that can offer best solution for
the UK customers. Advance technology and infrastructure of UK offers businesspersons to
expand business. It has been reported that £28 billion investment in technology has been
attracted in UK, which is much more than France and Germany in 2011 (SMMT, 2019).
Research and development is an important driving force for UK Automotive. In 2015, £ 2.4
billion was invested in British automobile`s R&D and £41.5 billion per year that has
enhanced the sector. The company can bring new models with enhanced technologies in
order to retain new customers (Ho, and Tsai, 2018). Apart from this, the company can adopt

many innovative security features that can upgrade Nissan models so that it can satisfy the
changing wants of the customers. Improving the quality will help the organisation to become
competitive (Parmer, and Dillard, 2015). The company should adopt JIT ordering approach to
improve the product quality. (Riasi, 2015). SMMT works to support innovation in UK`s
automobile industry. Core areas of supporting includes automotive council, innovate UK,
EPSRC, and Advanced Propulsion centre that has encouraged the alignment on important
issues (SMMT, 2019).
Legal factors- Few legal policies have imposed by UK government are as necessity and
fitment of electronic stability control and the tyre pressure monitoring system in the Nissan
cars that are produced. UK government have committed to reduce the greenhouse emissions
so that they can encourage fuel-efficient initiatives. Moreover, sometimes these
environmental initiatives increase the production cost for car manufacturers and this cost is
further passed to price sensitive consumers or it will decrease the company profitability
(Widya Yudha, Tjahjono, and Kolios, 2018). Nissan can take advantage of this situation by
familiarizing more such car models that run through electricity and bypassing the political
regulations of UK by associating it with greenhouse gas emissions. Legal implications come
up with safety of passengers and environmental issues. Apart from this, legislations often
differ from country to country such as labour act and wage act implies that labour must safe
enough while producing the products. Governmental rules are the main streams domain,
which must be followed by local customary laws so that Nissan can think of long-term
investment in UK (Salavou, 2015).
Environmental factors- UK has some crucial improvements in order to reduce the negative
impact of pollution. Nissan meets Emission standards as complied by UK, as it is a
requirement, which set a specific limit of pollution produced by the cars. Government,
newspaper, local councils, and charities have taken huge number of initiatives in order to

create environmental awareness and minimise the impact of environment. Nissan is using its
position to become an excellent leader to achieve the ultimate goals such as zero emissions
by eliminating CO2 emissions from the Nissan vehicles (NISSAN MOTOR CO., LTD.
2018). The main goal is to treat the automotive emissions, which is being regulated in each
country. Moreover, in order to prevent Co2 emissions during the operations, the company has
used Nissan LEAF and other EVs, which remains an effective road to reduce the air pollution
in the urban cities (NISSAN MOTOR CO., LTD., 2018).
Porter`s five forces-
Threat of new entrants- The intensity of threat by the new entrants is less as it requires huge
capital investment. However, probably new organisations can affect the profitability of
Nissan. For instance- the though process of Indian customers is quite same regarding small
car segment. In 2009, Indian customers induced Nissan to produce small cars that further
accounted for the sale of nearly 900000 small cars in India. In order to avoid the threat of
new entry, Nissan started producing small car named as “Micra” (Mittal, 2017). For any of
the new emerging competitors of the Nissan, there are many barriers such as high capital
requirement in order to start the business, difficulties in searching the sources of funds and
also the suppliers to make various components, differentiated products and switching cost.
For further market growth, it is seen that demand for luxury cars have been increased in
China as it is already one of the largest automaker of the world. Moreover, other growth
opportunities have seen that 16.6 million vehicles have been sold in 2014 that has beaten the
US estimates (Stefano, Sancho, and Busch, 2016).
Bargaining power of suppliers- while evaluating the bargaining power of suppliers, there
are many factors such as concentration of suppliers in particular area, forward integration,
improvement in information of suppliers, and new other ways of coordinating the suppliers.
On the bases of these factors, the power of suppliers is determined. Nissan has been scored

3.2 rating attractiveness that implies that Nissan has low bargaining power of suppliers as
there are less of suppliers and they are not in condition to integrate (Nissan, 2018b). As this
industry needs raw materials such as components, labour, equipment, electronics, assembly
line employees, tires and other small component supplies (NISSAN MOTOR CO., LTD,
2018). The statistics related to 2.3 million units in the 2015-2016. This shows that the
demand resulted in increasing from 36% to 45% (Nissan, 2018b). Customers have started
preferring diesel cars as the price gaps between diesel price and petrol price has been
widened. In order to search some effective suppliers, their information has been reformed
hugely as various suppliers can be viewed online. Few sites have complete list of directory
that includes suppliers with their differentiation on the bases of segments (NISSAN MOTOR
CO., LTD., 2018).
Bargaining power of customers- As there are large number of buyers and their disposable
income decides the affordability of the customers. Power of customers means how much
control the customers have in order to drive the products price (Parmer, and Dillard, 2015). In
case of Nissan, buyers have low buyer power because the shopping cost of car is high. Buyers
are fragmented and distributed all over the world due to which cars are sold to authorised
dealers so ultimately the customers have relative low power (Parmer, and Dillard, 2015).
Customer`s power is generally low especially while offering differentiated products. Nissan
generally faces huge crisis as bargaining power of customers is low. For example- according
to the concentration of the buyers, in 2010, the company started with 14 dealers in India.
After some time in 2012, Nissan opened 50 dealership in nearly 20 months. In 2013, the
company accomplished to target 100 dealership stores for the next 12 months (Sölvell, 2015).
However, the changing demand of the customers affect the profitability of the customers. The
impact is high because of spread of population as Nissan dominates 75% of the Indian market
with two most popular car models (Sevilgen, and Kilic, 2013).

Threat of new substitutes- This threat means that how conveniently customers switch to the
competitor`s product. The threat for substitute goods for Nissan is high. Apart from its
competitors, there are other modes of transportation such technology has made easy access to
rental cars, ola and uber cars. Level of switching cost is about the customer`s tendency to
switch from one brand to another brand. Due to availability of substitutes, the switching cost
for some customers whose needs are fulfilled Nissan products is moderate (Suksantilap,
Leelasantitham, and Glesner, 2017). Apart from easy access concerns or switching cost,
increased population has led to construction of metro and other public transportation system,
which has reduced the demand of the customers due to increasing traffic. Moreover, another
reason of increasing demand for comfortable substitute is due to economic substitutes that
can be easily figured out from Nissan where Honda who produces (premium car) that has
dropped the market share of Nissan to .77% in 2012 (Zhang, and Qin, 2018).
Threat of existing rivalry- Apart from high concentration ratio in the automobile industry,
rivalry in the automobile industry is intense due to many factors. The rivalry is extremely
high. This nature of industry is affected by technical capabilities that has been acquired over
the last few years of gestation under which international players have been collaborating. The
intensity of the rivalry depends on number of competitors. Rivalry power is high as
customers have huge number of choices of the cars such as sports cars and luxury cars.
Nissan is one of the major national car brand. Important and largest markets include China
and North America. Nissan has achieved the revenue of 5.6 million vehicles in 2017 whereas
its revenue in 2016 is seen as 2.1 million vehicles (MITTAL, 2017). On the other hand,
Toyota`s revenue accounts for 32% of total industry sales nearly 8970860 in number. Major
competitors such as Volkswagen, Toyota, Hyundai, BMW, FCA, Honda, and Mercedes.
Whereas, VW has lost its market because of ethical scandal created in the name of gas
emission. This scandal had led VW to pay huge fines that have affected its brand equity in

long term; the company has set a sale of 10.8 Million vehicles in 2017 but it could derive
230.7 Billion Euros that is higher than the previous year (Anwar, 2018).
Potential future scenarios and recommendation
From the above evaluation of environmental factors, it can be identified that use of LEAF
(Leading, Environmentally Friendly) for Nissan and other EVs (exposure values) produces no
CO2 while engaging in the operation. In order to become a leader, Nissan is encouraging
construction of air pollution in urban cities and zero emission mobility (Evans, 2016). With
the emergence of Autonomous technologies that is projected to be used in 2020 and here the
drivers are expected to spend more money in their products so that they can make it more
safe and pleasant. NGP 2022 calls research and development not only to exhaust emissions
cleaner but also to improve the quality of experience of being in-cabin. Apart from this, the
plant used an innovative three-wet paint procedure as a “Showcase project” as a part of US
department of building better plant challenges so that Nissan can remain committed to reduce
the energy intensity in three US plants by 2020 by 25% (Park, Park, and Jang, 2006).
With an aim to pursue company`s success, Nissan will have need to attain a sync with a
particular strategy. The main challenge is to improve the corporate capacities and value so
that it can win competition battle. Diverse Nissan`s strategy involves high risks with high
level of competencies. Business strategy helps the organisations to locate resources and
maximise the profitability (The Heritage Foundation, 2014). As industry`s Nissan market
segment, the company focuses on certain market. In future, the company has to adopt market
penetration strategies through effective marketing strategies such as price strategy, and
promotion strategy. In rapidly developing global market especially where China and India
aims to permit Nissan to have a rapid penetration in these markets. In near future, Nissan
aims to be careful have competitive advantage and edge in the automotive industry. In order
to achieve competitive edge, the company has to define its mission and vision and finally

realise the diversification and form a flourishing business strategy. Nissan will have to
recognise where the company stands such as a star, cow, or dog. In order to consider the
above analysis and interpretation, BCG will assist Nissan to implement the business
strategies. Identification of category in which Nissan falls-
Stars- financial services strategic business lies in star category of BCG matrix. The company
operates in market, which has high potential in near future. The company earns a crucial
amount of the income from the SBU. The company should integrate it by acquiring other
organisations in its Supply chain. Famous brand name “Nissan” and its strategic business is a
star in the matrix. The potential in the market is as high when customers demand same type
of products. Nissan should undergo product development strategy for SBU where it can
develop innovative features with the help of research and development (The Heritage
Foundation, 2014).
Cash-cows- The supplier’s service management lies in cash cows in the matrix. The market
share of Nissan is high but low growth rate as its overall market is declining as companies are
managing its suppliers rather than outsourcing it. For this stage, company should stop its
further investment strategy of business and enhance its operation through a strategic business
unit as long as it becomes profitable.
Question marks- local food strategy business is a question mark in the matrix. A recent
trends say that in the market, consumer have been focusing on local foods. However,
recommended strategy for Nissan is to invest in research and development in order to feature
innovation. Product development strategy ensures strategic business unit to turn into cash
cows and bring huge profit in future. Under question mark, it is noticed that strategic business
unit has been facing huge losses in few past years. Apart from this, the company attempted to

make innovation with the help of development and research team. The strategy is to divest
and prevent any other future loss occurring.
Dogs-this strategic business unit is dog in BCG matrix in Nissan. The company operates
where the market is declining because of environmental concerns. As a recommendation,
Nissan should divest this strategic unit and reduce the losses. With increasing health
consciousness, people generally refrain consumption of artificial flavours as the market is
shrinking, the recommended strategy to call back the products.
Apart from differentiation strategy and cost leadership, Nissan has to grade up its supply
value chain in order to accomplish competitive strategy. On the basis of differentiation
strategy, the company has to extend the sustainable mobility technology to all types of Nissan
cars by using the hybrid technology which further aims to respond to environmentally
friendly and minimise the operational cost in order to achieve the low price advantage in the
industry (Nissan, 2018b). By improving each logistics function and the performance can help
Nissan to get more competency. By analysing the threat and opportunities, it is important to
analyse the suppliers and customers so that it can determine the demand and supply. It will
further help in enhancing the operational process of Nissan that will significantly minimise
cost and advance the consistency of stock holding, material supply, and distribution. Some of
the more recommendation for support activities, Nissan has to undertake to design cost-
effective MIS with good understanding of customer`s preferences in automobile industry.
Conclusion
All recommendations in this report suggests that Nissan has to offer the most significant
shopping environment to the customers by simplifying the managerial layers and offering
them high-quality products. It is important to design effective strategy that can unify business
environment in order to achieve competence and unique capacity as Nissan faces fast

changing environment because of political and economic changes in the environment of the
country in which it operates so finally changing environment force it to adjust business,
corporate, and operational strategy.
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