Case Study: Analyzing Leadership Strategies at Renault and Nissan

This report provides a detailed analysis of the leadership strategies employed by the CEO of Renault and Nissan. The report highlights the challenges faced, including the integration of two distinct company cultures and the need for improved performance. The CEO implemented cross-functional teams and cross-company teams to foster open communication and collaboration. Key strategies included boosting employee morale through direct engagement, revamping the compensation system to incentivize high performers, and addressing the lack of accountability. The report also examines the successful implementation of joint purchasing, research and development, common platforms, and distribution strategies. These initiatives led to cost reductions and enhanced market access. The analysis emphasizes the importance of strong leadership in navigating organizational challenges and achieving successful outcomes in a global business environment.

Summary
The retirement of CEO of Renault, Louis Schweitzer, Carlos Ghosn was in a dilemma of how to
run Renault and Nissan at the same time in a successful manner. Carlos Ghosn was posed with a
challenge of implementing successful techniques and utilising his experience so as to run both
the companies in a profitable manner. The first step was to use the Cross Company (CCT) along
with Cross Function Teams (CFT) for creating open communication between both the
companies. The experience of Ghosn was highly successful in proving the efficient profitability
of Renault. Secondly, Ghosn had to boost employee engagement and employee morale for
creating a productive company culture. Therefore, he walked the plant floors at Nissan and
interacted with the various employees and talked regarding their culture. He further assured the
employees that no layoff would be performed and engaged with them to increase the
productivity. Ghosn cleared out the importance of corporate culture right and mentioned that
culture is important than the resources of the company. He dumped the seniority rule and started
promoting the capable younger employees. The whole team reviewed performance records of the
employees and changed the long-standing practices.
The whole compensation system was revamped so as to focus only on the performances as there
were no incentives in the system. The previous system did not give a considerable amount of
incentive to the upper management. Nissan changed it all and offered high incentives to the high
performers which amounted more than one third of their annual pay packages along with various
stock company incentives.
One another problem encountered during the whole scenario was inability of accepting any
responsibility. In the case of poor performance, the company blamed another one. The sales
department saw to blame product planning which in turn blamed engineering and engineering

department finally blamed finance. Therefore all the managers were seen not do perform well in
their areas of responsibility.
The company performed the following actions:
1. Joint Purchasing: 82 percent of purchasing were performed in 2007 and shared over 64
percent of same suppliers. This joint purchasing resulted in the gain of 4 percent of price
reduction.
2. Joint R&D: The Alliance led to the pooling of resources so as to pursue new designs and
fuel cell technologies for fuel-efficient engines.
3. Common Platforms: The Alliance led to having seven platforms, and Nissan reduced all
its platform from 25 to 15. It led to design specifications, common parts and
manufacturing processes.
4. Joint Distribution: When Nissan merged all its operations with Renault it obtained a
greater access to the South American market, and Renault found it easier to invade
Taiwan, Australia and Indonesia. This made an easier access for both the companies in
the new marketplace and benefitted in the cost reduction.
Therefore Ghosn in order to run both the companies successful used his earlier experiences from
Nissan and implemented that in Renault which included: Implementation of Cross Functional
Teams, Implementation Cross Company Teams and clearly defining the culture of the company.