MBA401: Leadership Strategies for Overcoming the Nissan Crisis

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This presentation examines the Nissan crisis, focusing on the likely causes stemming from financial misconduct by former CEO Carlos Ghosn, and the potential consequences including reputational damage, declining revenues, and decreased profits for Nissan and its alliance partners. It assesses the advantages and disadvantages of applying an ethical leadership style to address the crisis, highlighting its role in promoting integrity and ethical decision-making while acknowledging the challenges of implementation and potential for blind trust. The presentation concludes with recommendations to improve the effectiveness of ethical leadership, such as facilitating communication, integrating ethics into the organization's long-term vision, and involving staff in the ethical compliance program. Desklib offers more resources like this to aid students in their studies.
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Nissan’s Crisis1
NISSAN’S CRISIS
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Nissan’s Crisis
1. The Likely Cause of the Crisis
Carlos Ghosn(Former Nissan chief) was arrested by prosecutor in Japan despite being the most
authoritative automotive chief executives in the industry
The company suspected him of understating his pay in the company’s financial statements
Prosecutors estimate that he was responsible for $15 million losses in the company between
2015 and 2018(Ma and Nussbaum 2019)
$5million of the above amount is suspected to have been utilized for personal expenses
However, Mr. Ghosn considers his arrests as arbitrary and outrageous
He denies any wrongdoing and was freed on bail after spending 108 days behind bars
He contends that his arrest is an attempt by some Nissan’s stakeholders to silence him and
mislead the prosecutors.
Therefore, Nissan’s crisis is attributable to financial misconduct by its chief executive officer,
Mr.Carlos Ghosn.
2. The potential consequences of the crisis
X-Nissan’s chief executive officer arrest has attracted worldwide attention
Carlos Ghosn is acknowledged as the man behind the alliance between Mitsubishi,
Renault(French carmaker), and Nissan
His arrest has resulted in significant damage to the alliance including decline in revenues,
damaged reputation, and decline in the price of its shares
The alliance spent two months dealing with damage to its reputation caused by the arrest
of Ghosn.
The scandal resulted in the decline in sales in China and the United States.
Competitors in the industry including Toyota Motor Corp and Volkswagen are taking
advantage of the negative publicity to increase their sales and widen their market share
Nissan’s is the most affected because Ghosn allegations are attributable to his tenure in
the company
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Nissan’s Crisis3
Nissan’s profits are expected to decline by 10% (that is from 517.1 billion yen to $ 4.7
yen)( Ma and Nussbaum 2019)
Renaults profit are expected to decline too by 8.8%(approximately $ 3.93billion)( Ma
and Nussbaum 2019)
3. The Advantages of the Selected Leadership Style in Solving Nissan’s Crisis
Ethical leadership style was applied in solving the crisis because Ghosn had breached the
trust that the alliance had in him
Ethical leaders are concerned with the long-term benefits, drawbacks, and outcomes of
their decisions(Mihelic, Lipicnik, and Tekavcic 2010)
They take responsibility, are humble, pursue fairness, and influence ethical behaviors and
values in the organization
They also demonstrate integrity, are trustworthy, honest, and courageous
Leaders with these attributes do the following for their organizations
Promote integrity
Design positive standards that promotes an honest and positive
work environment
Reduces incidences of legal lawsuits
Promotes ethical decisions in the workplace.
4. The Disadvantages of Ethical Leadership Style in Solving the Crisis
Ethical leadership requires comprehensive support by both staffs and management to
make it effective
It is expensive to implement because it requires the designing, executing, and retaining of
a compliance program that reflects the vision and mission of the organization
Compliance programs are expensive to design and maintain
Besides, they require regular updates and review
Leaders must be charismatic and inspirational to influence followers into adopting ethical
behaviors and values
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Nissan’s Crisis4
However, followers might trust their leaders to the extent that they become blind to their
mistakes.
Clarity is mandatory to avoid role confusion
5. Three Recommendations On How Those Disadvantages Could Be Overcome
Facilitating communication effectiveness is mandatory
It helps in increasing employees awareness regarding the importance of ethical values in
enhancing the competiveness and success of the organization
Leaders should integrate ethics in the long-term vision of the organization so that staffs
can embrace it (Mihelic, Lipicnik, and Tekavcic 2010).
Staffs should be responsible for reviewing and updating the ethical compliance program
in the organization.
Their involvement makes them feel valued by the organization
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Reference List
Ma, J. and Nussbaum, A.(2019) The Ghosn Effect? Nissan, Renault Unveil First Results Post-Crisis.
Bloomberg[Online]. 11 February. Available from: https://www.bloomberg.com/news/articles/2019-02-
11/ghosn-effect-nissan-renault-unveil-first-results-post-crisis [Accessed 2 June 2019]
Mihelic, KK., Lipicnik, B. and Tekavcic, M. (2010) Ethical Leasdership. International Journal of
Management & Information System. 4(5), pp. 31-41.
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