Nissan Aims to Restore Pole Position in Electric Car Market Case Study

This case study analyzes Nissan's position in the electric car market, highlighting challenges such as competition from Tesla, market performance decline, and leadership issues following the departure of Mr. Ghosn. The analysis covers market dynamics, including the impact of Porter's Five Forces, supply and demand drivers, cost structures, and pricing strategies. The study also examines leadership behavior, financial performance, and the need for strategic adjustments, such as competitive pricing and technological innovation, to regain market share and profitability. Recommendations include leveraging brand value, improving customer service, and adapting to economic regulations to enhance decision-making and innovation within the company.

NISSAN AIMS TO RESTORE POLE POSITION IN ELECTRIC CAR MARKET
CASE STUDY 3
Explanation
As per the analysis of the case study
it can be determined that Nissan
faces considerable amount of
challenges in the electric car market.
• Nissan failed to compete with
the competitor like Tesla,
Mitsubishi and other car
companies after the exit of their
ex-chairman Mr Ghosn.
• Nissan’s electric car faced
considerable amount of
challenges from the Tesla cars,
as they acquire maximum
percentage of market share
from the market.
• To attract customers, Nissan
reduce their electric car price
by 435. The company also
started offering leases as low
as $199 per month.
• The exit of Mr Ghosn caused a
serious problem in American
market. The level of
competition that Nissan faces
is very high, in spite of almost
new entrants in the market.
• The drop in the percentage of
the sales hit the financial health
of the company.
• In the battery market also
Nissan has been dethroned
from its position.
• Leaf, which was one of the best
electric car for Nissan, saw a
steep drop in sales from 2013.
During the end of 2018 and the
beginning of 2019 the company
saw a little bit rise in the sales,
but still it is marginally low in
comparison to the total industry
sales.
Market Analysis
Nissan in recent five years have not
performed well. The market
performance and financial
performance of the company started
to reduce in last five years. The main
reason behind the below average
performance was due to the sales
structure. The company’s main
product, Nissan Leaf, which is an
electric car was the fans favorite
back in 2012 and 2013, but the level
of favoritism decreases in later
stage. During 2014 the sales of
Nissan Leaf EV decreased by
considerable means, which marked
the starting of the downfall of the
company.
On the other hand the electric car
industry performed very well in these
five years. The main reason behind
the decrease of the sales revenue of
Nissan is the involvement of too
much competitor in the electric car
market. The rise of Tesla is also one
of the major factors that affected
Nissan’s financial performance.
Nissan failed to implement the new
technology like AI and robotics in
their production process, which in
long run cost them to loose a
considerable percentage of customer
base.
The losing of customer base affects
the sales structure of the company.
This ultimately became the reason
behind the downfall of the financial
health of the company.
Market Analysis
Porter’s Five Forces Model
Threat of New Entrants
• The economies of scale is fairly
difficult to achieve in the industry
in which Nissan operates. This
makes it easier for those
producing large capacitates to
have a cost advantage. It also
makes production costlier for new
entrants. This makes the threats
of new entrants a weaker force.
Bargaining Power of Suppliers
• The number of suppliers in the
industry in which Nissan operates
is a lot compared to the buyers.
This means that the suppliers
have less control over prices and
this makes the bargaining power
of suppliers a weak force.
Bargaining Power of Buyers
• The number of suppliers in the
industry in which Nissan operates
is a lot more than the number of
firms producing the products.
This means that the buyers have
a few firms to choose from, and
therefore, do not have much
control over prices. This makes
the bargaining power of buyers a
weaker force within the industry.
Threat of Substitute Product
• The very few substitutes
available are of high quality but
are way more expensive.
Comparatively, firms producing
within the industry in which
Nissan operates sell at a lower
price than substitutes, with
adequate quality. This means that
buyers are less likely to switch to
substitute products.
. Threat
of New
Entrant
s
Threat
of
Substit
ute
Produc
t
Bargai
ning
Power
of
Supplie
rs
Bargai
ning
Power
of
Buyers
Very
Good
Good
Normal
Poor

NISSAN AIMS TO RESTORE POLE POSITION IN ELECTRIC CAR MARKET
CASE STUDY 3
Supply and Demand
The concept of supply and
demand can be explained by
determining the relationship
between the quantity of the
commodity that the manufacturer
wishes to sell at various prices
and the quantity that the
consumers want to buy. The price
is one of the major factor that
depends on the demand and
supply of the commodity in the
market. The demand of the
commodity also depends on
incomes and preferences of the
consumers, and pother seasonal
effects. Supply of the commodity
also depends on the prices of the
substitute goods, the technology
that is used for production and
even the availability of cost.
In case of Nissan the demand and
supply drivers for the company
are the innovation, diversification
of the business in terms of
geographical areas and also the
well-established brand name. The
prices of the substitute goods for
electric cars are not efficiency in
comparison to its counterparts.
The company must consider
reducing the cost of the product
by implementing the artificial
intelligence or robotics in the
manufacturing process. The
introduction of the new technology
will reduce the cost of the product.
The reduction in the price of the
product will also increase e
the demand of the product.
Supply Demand
The introduction of new technology and
the high competition in the electric car
industry reduces the demand for Nissan
manufactured electric car. In order to
mitigate such problem Nissan must use
price cutting strategy. The priced cutting
strategy will assist Nissan to attract new
customers towards their new electric
car.
Elasticity of demand can be referred to
as the slight change in the price will
lead to change in the demand of the
product. The same can happen when
Nissan will reduce the price of the
upcoming electric car with modern
technology. The inelastic demand can
be stated as the demand where change
in the price of the product does not
affect the demand of the product. This
is a hypothetical situation where the
consumers often ignores the fall price
of the product and may shift to another
product.
Cost Analysis
Long run costs can be termed as the minimum cost at
which given level of output can be produced. Nissan
failed to reduce the cost, which actually affected the
output of the company. The company is destined to
release the new version of electric car by 2022. In
long run, the company is planning to implement new
technology in their manufacturing process. The
implementation new technology may reduce the cost
by certain percentage, which ultimately increase the
profit margin of the company.
Short run costs, on the other hand is the accumulated
costs that are mainly being collected in real time. This
mainly happens in during the production process.
Only the variable costs affect the production cost of
the company. Thus, the company needs to check the
production costs, so that the sales revenue can be
increased by considerable means. Nissan needs to
check their variable costs, so that the company can
see a considerable rise in the profit margin after the
launch of new electric car by 2022.
The electric car industry in the
United States of America has high
rate of competition. The demand for
the electric cars is also very high in
comparison to the other markets in
the world. Nissan holds the third
position in the electric car market of
United States of America. In order to
outperform the competitor the
Japanese car giant needs to
reconsider the costs and quality of
their product. The price of the
product should also be reduced, so
that they can regain their customer
base. This will help the company to
regain their position in the market.
Budgeting
The forecasting of the cost and
revenue will assist the
company to gain considerable
amount of advantage over its
competitor. The implementation
of Activity based costing in the
system of Nissan can reduce
the labor costs. The reduction
in labor costs and other costs
can affect the profit margin of
the company.
.
Leadership Behavior
As per the case study it can be
determined that Nissan use to have
one of the most successful
chairman namely Mr. Ghosn. After
the sudden termination of the
chairman, Nissan losses its
governance over the stakeholders of
the company and thus, the fall of the
company started. Thus, the
leadership behavior in the company
can be stated as very lousy, as they
are following the footsteps of Mr.
Ghosn instead of creating new
strategy.

NISSAN AIMS TO RESTORE POLE POSITION IN ELECTRIC CAR MARKET
CASE STUDY 3
Financial Analysis
As per the analysis of the financial statement of
Nissan it can be determined that the liquidity ratio of
the company is as high as 1.53 in 2018. In spite of
going through a bad phase Nissan was able to hold
their current assets, which is sufficient enough to
pay-off the short-term obligations. The profit margin
ratio shows that the company has the profit margin of
only 16%. Though this percentage are likely to
change within The only concern that can be identified
is the high lo years as the company tries to reduce
their costs and increase their customer base. Nissan’s
fixed turnover ratio is high. This is the good sign for
the company as the company can expect a return
from the investments like property, plant and
equipment and other investments. It can be seen that
the operating expense of the company in 2018 is
comparatively low than 2017. This indicates that the
competitive advantage of the company is high in the
market.
Pricing Strategies
Nissan should increase the extent of
the additional benefits like
warranties, delivery and credit sales.
The company should also increase
the after self-service. The company
should use the competitive pricing
strategy. The competitive pricing
strategy will increase the profit
margin of the company. The
competition in the market will
decrease if the competitive pricing
strategy is adopted then the
company will see a considerable rise
in the profit margin. The introduction
of new technology in the electric car
market will assists the company to
gain instant success in the market.
Nissan also holds a good brand
value and brand reputation in the
market. These will help the company
to win back the trust of the
customers that will ultimately assist
the company to gain big customer
base. The packaging service of the
company needs to improve, so that
the products can be visually
appealing to the customers. Thus,
competitive pricing strategy will not
only reduce the cost of the company,
but it will also reduce the level of
competition in the market. In this
way the profitability of the company
will increase and hence the market
share. The increase in market share
will lead to the increase in the
profitability of the company.
Leadership Behavior
As per the case study it can be
determined that Nissan use to have
one of the most successful
chairman namely Mr. Ghosn. After
the sudden termination of the
chairman, Nissan losses its
governance over the stakeholders of
the company and thus, the fall of the
company started. Thus, the
leadership behavior in the company
can be stated as very lousy, as they
are following the footsteps of Mr.
Ghosn instead of creating new
strategy.
• Economic Regulation
• The market should not allow any
company to directly increase or
reduce the cost of the products.
There should be a cost allocation
procedure. The company having
numerous ranges of product at
different price range will increase
their customer base. As Nissan is
already have numerous products at
different price range, so the
decisions if the car industry will
benefit the company, as they can
get acquire all types of customers.
Decision Making
Nissan should increase the additional
benefit. The decrease in cost can
result in getting more customers from
the market. Innovation is also one of
the major reason that will reduce the
company’s losses and increase the
company’s profitability.
• Economic Regulation
• The market should not allow any
company to directly increase or
reduce the cost of the products.
There should be a cost allocation
procedure. The company having
numerous ranges of product at
different price range will increase
their customer base. As Nissan is
already have numerous products at
different price range, so the
decisions if the car industry will
benefit the company, as they can get
acquire all types of customers.
• Conclusion
After analyzing the above data set it
can be observed that Nissan may
faces a high competition in the
market due to which the sales of the
company reduced, but in coming
years if they started to implement the
new strategies. The main challenges
that can also be observed is that the
company’s lazy behavior towards the
development of the technology may
cost the company’s market share. To
increase the market share Nissan
must introduce several products at
different price range, so that the
financial performance of the
company can increase, which
ultimately increase the financial
health of the company.
CURRENT
RATIO
GROSS
PROFIT RATIO
FIXED ASSETS
TURNOVER
RATIO
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2018