- The potential costs and benefits of the Nissan actions
- The costs and benefits of alternative responses to the disaster
- Assessing the risk of disruption in the Nissan supply chain
- Nissan’s product line strategy and recover from the disaster
- The 2012 operational changes and exposure to future disruptions
The ability to function in a crisis situation is perhaps the key to the survival of any successful business venture. In a situation where one is talking about a company whose scale of operation can be viewed on a national or transnational scale, it is important to present the work of the company as a coherent system full of internal connections. If one of the links involved in the work of the company experiences interruptions in functioning, this dysfunction somehow affects the entire work of the company and jeopardizes its effective performance.
An example of such a crisis situation can be found by paying attention to how the Nissan company coped with the economic consequences of a natural disaster that shook the nation and disrupted the usual order of life and economy. Auto trade and overall revenue in Japan at the time had declined 25% in six months, and the three major auto companies were forced to seek emergency strategies to overcome the crisis.
The potential costs and benefits of the Nissan actions
The first and perhaps the most obvious reaction from the point of view of Nissan managers in Japan seems to be an attempt to overcome the supply problems that have arisen. a catastrophe such as an earthquake should have obviously affected not only individual retail outlets, but in the first place, deal a significant blow to logistics at various levels. Due to the magnitude of the problem caused by the disruption of actual material communication, the fact that measures to resolve supply problems began to be taken in the first place seems extremely sensible and logical.
The company’s ability to quickly make consistent strategic decisions in a difficult situation of a large scale is understandable if one pays attention to the history of the company. Nissan is a company that emerged in an era of crisis and their philosophy as a brand and company is expressed in the ability to find a way out of a critical situation. flexibility is the credit of the company’s employees and its general direction, which probably ensures its continued existence in the economic market. Adaptation to any environment and the desire to survive is a rather serious philosophical concept that determines the company’s actions at the level of large, basic goals and objectives.
One of the basic principles of Nissan’s survival and competitiveness is the ethics of its employees, which is based on the task of sharing news and disseminating information. Nissan is a multinational corporation and sees itself globally in terms of governance. Their functioning is based on the principle of constant communication between brand representatives from all over the world, and their logistics is well-adjusted in such a way that it passes through the entire globe. Thus, at the structural level, the Nissan company is a system with an impressive number of internal connections. The company is guided by the principle of mobility and flexibility in order to avoid stagnation in various business sectors.
It should be noted that Nissan has significantly changed its recruitment policy as part of the Cultural Diversity Program. Many employees of representative offices and their subordinate franchises are foreign employees. The company deliberately makes recruiting culturally diverse as in this way employees bring professional experience in global communication with them. This perception of the company as a moving system of global proportions certainly leaves a lot of imprints on the principles of the company. The professionalism of Nissan employees and their desire for excellence, however, it should be noted that there are some shortcomings in their concept that impede their functioning, often putting the future of the company at risk.
Nissan’s ability to withstand adverse business conditions seems remarkable for its complex and layered approach. Nissan employees interact with each other from different countries, striving to perfectly synchronize in time in order not to stop activities even in the event of a disaster (Schmidt & Simchi-Levi, 2013). In addition to understating the consequences of any disruptions in communications and supplies of food and materials, company employees are adapting to similar situations in the possible future. In the aftermath of the earthquake in Japan, the company focused on strengthening the foundations of its factories and offices, while employees were required to complete a disaster management course at work.
Forecasting and trying to stay ahead of the time are among the company’s top priorities. The ability to plan the consequences, both the most probable and hypothetical, allows the company to build a strategy that will predict the outcome of events. Strategists and crisis managers of the company understand that it is necessary to separate the dependent and independent events in order to always be aware of their level of ability to influence the situation.
Thus, the digging seeks to prevent not only the problems themselves, but also their very occurrence. Readiness for a crisis as a kind of philosophy stimulates the company to improve and renew itself, regardless of the external situation in society or the economy. The advantages of the decisions made seem to be necessary and unconditional benefit as they prevent the possibility of a catastrophic situation of this level. However, it should be assumed that the costs and human efforts devoted to overcoming the crisis are extremely high, since they seek to take into account all possible risks.
The costs and benefits of alternative responses to the disaster
One of the formal conceptual changes that would probably make sense to implement is a reorientation to a more local level. The close coherence of companies with each other is ensured by the company according to the parameters inherent in the epoch of globalization with its desire to unite representatives of the company from different countries. Nissan firms from different countries find themselves forced to make regular substantial expenses providing supplies of parts internationally.
However, the global approach of the company is not limited to this problem, since the crisis philosophy of Nissan seems to some extent due to the way their system of international relations is built. Due to the desire for the closest possible integration between enterprises at the global level, their information security and logistic impeccability are always under threat. In the event of a disaster beyond the control of the company, an event that damages supply, production, and sale, the company is forced to do fundamental work to correct the disruption.
Of course, strategists from the Nissan company do their work as professionally as possible, providing not only crisis consequences, but, in principle, any hypothetical scenarios for the development of events. However, one might suggest that if such close ties between countries were to be defused, production could only improve as a result. The Nissan company could have tried to ensure the autonomy and maximum possible independence of each of the manufactures so that all the company’s activities do not come under attack. Probably, the search for alternative and closer logistics solutions would be more effective and less costly than an attempt to restore the communication system in full form by any means.
Assessing the risk of disruption in the Nissan supply chain
Professional training of personnel at the local level through the preparation of a unified qualification program could provide the required standard level of professionalism at each workplace. It is also required to determine the needs of the consumer in each individual district and to ensure independent or at least the most independent production at each manufacturing facility that allows it. The transnational supply of parts should be reduced as much as possible, while achieving a material quality standard that is equal in all countries. This solution in the long term would save a lot of finance and time spent on deliveries. At the same time, the high environmental ethics of Nissan would be emphasized, since the reduction or shutdown of the entire global supply system would significantly reduce the level of toxic emissions into the environment.
The global supply of parts could only be used as an emergency fallback in the event of a similar crisis in the implementation of such a plan. The Nissan company could provide the arrangement of production of each individual enterprise and the independent development of the industry within a particular city or country. At the same time, the company would need to closely monitor current processes, not just improve at the micro level, but ensure the same quality of parts and assemblies.
Thus, Nissan’s global transportation system appears to be outdated because their method of communication is overly traditional and complicated in today’s era of transparent access to digital information. The desire for global methods of communication in the company is complicated by the need to involve too many agents in the interaction, which makes the entire information system vulnerable. In this regard, it is proposed to transfer all possible databases to reliably protected cloud storages, in which information is stored confidentially and with password-protected access levels. The creation of such an internal integrated system would make it possible to have access to all statistical data and reports from every part of the world as soon as the information is updated.
Nissan’s product line strategy and recover from the disaster
In the case presented in the article, a disruption to supplies from Japan could fatally affect absolutely the entire company on a global level. The work of logisticians and analysts, as well as the coherence of the company in a crisis situation, seems professional and admirable. However, preventing the very situation in which a number of crisis solutions are required, affecting all sectors of the company, perhaps seems more relevant at this time. More valuable in the fragmented realities of the global economic and social situation seems to be the ability not to interact at the monumental level of a coalition of countries, but to strive for economic self-sufficiency.
Nissan has already shown an example of how their company can adjust supply logistics and production technologies and tasks depending on the specific production location. The company correlates the supply of parts and assembly of models depending on the immediate needs of the client in a particular city or country. In Japan, for example, immediately after the ecological cataclysm, Nissan increased the supply of Global Positioning Systems for cars due to their shortage at the location (Schmidt & Simchi-Levi, 2013).
It seems logical that for a real crisis preparedness a company should achieve maximum independence as a separate cell not dependent on other agents. Nissan has made remarkable strides in building transnational ties. Their work collective often employs foreign personnel adhering to the policy of cultural diversity, which improves and hones the experience of professional global communication.
However, this perception of the company on a global and not a local scale puts all the company’s activities at too great and constant risk. Thus, Nissan’s crisis philosophy is in a sense a condition that puts them at greater risk of a critical situation. Preparing for possible similar situations proves that the company learns from previous experiences. Despite this, an impression may be created that it is the concept and organizational structure chosen and supported by Nissan that to a significant extent justify the crisis experience of dysfunction at the local level.
That is, by choosing to function at the system level, dependent on each individual element scattered across the planet on a global scale, the company makes itself more vulnerable. An impressive amount of effort is constantly expended by the company to prepare for a possible crisis situation, but to some extent the company’s management itself creates more difficult and crisis-sensitive conditions for it. One might get the impression that the crisis mentality has somewhat deformed the principles by which the company operates.
The 2012 operational changes and exposure to future disruptions
The company is already taking some of the proposed solutions to the situation, but so far it is only implementing them at the local level where the disaster occurred. In addition to preparing employees for emergency management and ensuring greater safety, the company’s logistics has also undergone changes. The production of parts in Japan, that is, at the place of distribution, began to gradually increase, which further reduced production costs relative to financial profit.
However, the business plan developed by the company’s crisis management does not plan to isolate the branches of the company from each other. The changes are perceived by the company as necessary, but evolutionary and gradual as opposed to drastic and fundamental. The gradual change in strategy expresses the compromise of the company’s management approach. Despite the realization of the obvious need to localize production, the company seeks to develop a strategy that would affect the activities of the entire hierarchy of intermediaries in order to maintain the quality standard.
Thus, the Nissan company obviously proved itself as competent as possible, trying to neutralize the consequences of the experienced economic catastrophe. Moreover, the company’s management has already begun to work on reorienting supplies in such a way as to make production more local. It is possible that more radical changes in product distribution and access to information could prevent such disruptions in the company. However, the evolutionary approach of the company has its own logic, since cautious decision-making has already ensured the preservation of their position in the world market.
Nevertheless, the company has to do a lot of consistent work on restructuring production aimed at a more locally oriented level. Access to information within the company seems to be still quite vulnerable and not quite flexible for modern realities. Information from Japan did not automatically enter the world’s databases, which could have a positive effect on the speed of decision-making.
The worldwide distribution of goods and production parts also seems like a waste of money and complexity. Especially the counter-productiveness of this type of distribution becomes noticeable when you consider that Nissan is committed to maintaining the quality standard everywhere. Adapting to the aftermath of the disaster demonstrated not only Nissan’s willingness to continue working in extreme conditions, but also the need to thoughtfully change its core principles.
Schmidt, W., & Simchi-Levi, D. (2013). Nissan Motor Company Ltd.: Building operational resiliency. MITSloan Management, 13(149).