Carlos Ghosn and Nissan Motor Co., Ltd. (A)

In March 1999, Renault, the ninth largest car maker in the world, announced acquisition of a 36.8 percent stake in Nissan Motor for $5.4B. Second, Carlos Ghosn would take charge of the struggling company. The news shocked Japan as well as the global business community. Would a Westerner be able to bring about change in a Japanese company with a deep-rooted tradition of bureaucratic behavior and a consensus-building style? Case A describes the steps that led to the acquisition of Nissan. Case B covers the story of Carlos Ghosn and how he changed the company and brought profitability to Nissan. The case discusses such techniques as the art of listening and understanding in depth, formation of cross-functional teams, and Ghosn's three management principles: transparency, 5% strategy and the rest execution, and communication of company direction and priorities. Excerpt UVA-OB-0826 CARLOS GHOSN AND NISSAN MOTOR CO., LTD. (A) In March 1999, CEO Louis Schweitzer of Renault, the ninth largest car maker in the world (see Exhibit 1), announced that his company was taking a 36.8% stake in Nissan Motor Co., Ltd. for USD 5.4 billion, and his right-hand man Carlos Ghosn would take charge of the struggling company. The news shocked both Japan as well as the global business community. It was one thing for Renault to take control of the number two automaker in Japan, descended from the legendary Datsun; it was another thing altogether for an outsider, non-Japanese hardliner with a nickname “le cost killer” to be sent in so quickly and assume the commanding position. Many questioned whether Ghosn could create change at Nissan. They wondered whether a Westerner would face crippling hostility and revolt from the Japanese, who were accustomed to a bureaucratic and consensus-building style steeped in a deep-rooted tradition of techniques once revered by business gurus everywhere. Nissan was in bad shape. The company had suffered its fourth straight year of losses, posting an USD 834 million loss for FY1995 (see Exhibit 2). FY1996 brought profits for Nissan for the first time since 1992, in part the result of cost-cutting moves, sales to countries with currencies stronger than the yen, and the launching of new models. In 1998 Nissan received an USD 827 million loan from the government-owned Japan Development Bank to restructure its debt. Nissan, by then, had no other choice but to invite major carmakers to buy into the company. Could Carlos Ghosn be a savior to Nissan and turn around the company? Could Nissan regain the reputation and brand prestige it once held? Could Ghosn transform Nissan without destroying its identity and keeping stealing (?) the soul of its people? History of Nissan Motor Corporation . . .