The building blocks of a successful global business company starts with a sound strategy, which incorporates structural, leadership and cultural forces the business needs to take into consideration. Before one is set to implement a new strategy there are short and long term parameters that he should consider to ensure that there will be continuity in the product. The future is unpredictable and so even the smallest details about something should be interpolated before starting up. It will be appreciated that a company with properly shaped psychological contracts embraces a system that allows employees to air their views to the higher leadership.
Conducting an internal analysis helps a company to understand its marketing position and the opportunities than can be utilized to enhance its performance. Nissan selected sound strategies for that reason, as well as the exceptional marketing and operational structures in place. With these strategies, it has been able to expand its business operations in the international market. The implementation plan for these strategies allows the business to compete in the global market by producing quality products at low cost hence growing shareholder value.
Achieving the implementation plan takes utilization of critical success factors as well as knowledge of the plant capacity and production output maximums. Identification of risks associated with the strategies and plans to combat the risks allows the business to make necessary provision to address situations when they occur. This paper gives an overview of Nissan motor company and the automobile industry. It also gives some of the marketing strategies implemented by Nissan that have helped to enter into the international market and also retain its position in Japan. These strategies are based on environmental factors affecting the company and its surroundings.
Nissan Motor Overview
Nissan was founded in December 1933 as an automotive company. Its headquarters are in Nishi-ku, Yokohama, in Japan. It is an international company that serves the global market. Nissan’s products include; automobiles, forklift trucks, and outboard motors. In the year 2009, its estimated revenue was $80.92 billion with an operating income of $3.35 billion; It employees about 200 employees some on consolidated basis, and others on non-consolidated basis (Cusumano 40).
Nissan is one of the companies in the automobile industry that has advanced technologically (Markus 2). With the increase in economic integration, low-income countries have managed to venture into the global market more so on division of labour thereby putting a lot of competitive pressures on the countries relying on the tradition production of automobile. New automobile producers have emerged from central Europe, Asia and Latin America.
The German and Japan automobile industries have gone to the extent of outsourcing for labour intensive segments to improve their value chain on the national level. Globalization has changed the face of automobile industry especially in the countries that relied on traditional production. In the world, there are three major automobile production countries that have for a long time been relying on traditional production; these are the United States, Germany, and Japan. With globalization, competitors have entered into the automobile industry forcing the traditional producing countries to adopt new technology and skilled labor.
The automobile industry is now flooded with new producers and exporters of its products and this has been made easy because of availability of outsourced skilled labor. According to United Nation Conference on Trade and Development (UNCTAD), the automobile industry is one of the sectors that have taken advantage of globalization. This view is supported by the increased network of alliances among automobile companies and also the increase in shareholding within regions and between regions (Anon. “From remarks at an UNCTAD conference” 2003).
Since 1990s, many automobile companies have been merging with others while others have acquired some of the small companies (both suppliers of input and end-producers) in order to increase their competitiveness in the global market. For instance, in 1966, Nissan merged with an international motor company called Prince to help fight with global competition. With this strategy, it was able to market new brand of cars under the names Skyline and Gloria.
Nissan Marketing Strategies
Global marketing strategies call for development of strategies that build upon the brand image and customers loyalty. This includes developing positioning strategies as compared to competitors worldwide. Nissan has a strong and close relationship between its suppliers and distributors. It has expanded its markets in the social and cultural contexts and this has contributed to its success. It has been using high technology which has been rising over the years leading to success in all its activities. An effective procedure is followed in order to establish new and attractive ideas for the success of the organization.
Sometimes it is not able to make the expected profit margins due to competition. Nissan uses effective technology to manufacture its vehicles and sells them at an affordable price for the consumer (Anurag 4). Its technology is based on four rights, that is, proving products using the right technology, at the right time, in the right place and for the right value to the customer. The company believes that it has a social responsibility as a global automaker and that is to provide right technology and at the same time meeting the customer and the society needs.
The company aims to be a “sincere eco-innovator”. It has involved itself in vigorous activities all of them aimed at achieving a sustainable environment. Many innovations have been made by the company on ways of reducing the impacts caused by its vehicles on the environment. The recent innovation is the Electric vehicles that are aimed at boosting the company’s sales revenue. Nissan endeavours to invest in differentiation and low prices in comparison to competitors. As a result, they have adopted the hybrid strategy, which has enhanced their competitive advantage. Nissan has realized a high turnover growth which offsets its low profit margins and enables sustainability of the cooperation’s price-based competitive advantage.
In addition to reinvestment of margins, Nissan has achieved differentiation through its products as well as imperfect mobility of its brand name, which is inimitable. Hence, Nissan enjoys market dominance and first mover advantages through technological innovations. From its initial existence, Nissan has developed its strategy through Market Penetration, Consolidation, Product development, Market development and related diversification. It has therefore capitalized on its core competencies through vertical integration, horizontal and geographical diversification. In line with its marketing strategy, Nissan has achieved diversification inorganically through acquisitions, strategic alliances and the associate program, as well as organically through new product development and technological innovation.
Market Strategic Alliance for Market Development
Nissan’s strategy of international market development through a strategic alliance is an example of a business strategy that is strategically chosen. This is because it meets both the company’s expectations as well as the expectation of the external environment. For instance, in 2008, Nissan entered an alliance with Renault S. A. Renault is based in France and owns about 40% of Nissan’s shares while Nissans owns an approximate of 15% of Renault shares. Each country that Nissan enters into has its own challenges and opportunities for the company. This calls for different strategies of entry into the market.
In general, the goal is to seek mixed strategic alliance. The advantages of strategic alliances are significant not the least of which is the opportunity for even greater economies of scale. Mixed Strategic alliances are effective at managing uncertainty, risks, and sharing cost. Through strategic alliances, Nissan has been able to compete in the international market to be ranked among the best automotive companies in the world alongside Honda and Toyota. In Japan, Nissan is the third largest automotive company with Honda holding the second position and Toyota first.
However, this strategy is associated with certain risks which include; adverse selection, moral hazard, and hold-up. Adverse selection occurs when alliance partners misrepresent their capabilities. This happens when the company is unable to provide access to target industries or markets. Knowledge of industry or markets is considered intangible as such Nissan should take steps to protect against this form of cheating.
Moral hazard occurs when the capabilities of a partner is lower than promised. This can be the result of deliberate misrepresentation or even simply market conditions change. A hold-up occurs in a strategic alliance when one partner does not match the investments in the alliance as the other. Companies can guard against most forms of cheating with Joint Ventures. In the case of the risk of adverse selection, which may be a greater risk, company can develop a framework of steps and timeline for completion of each step. A strategic alliance is also an effective method to measure the ability of a target firm to deliver product, services, and market access before acquiring the company.
Nissan has also been able to enter the international market through subsidiaries. In the United States, it has a subsidiary called Nissan Motor Corporation U.S.A. which was formed in 1959. It also has factories in Australia, South Africa, and Mexico which were created to meet increased demand for cars. Global organizations must balance the need for autonomy and integration. Subsidiaries need some autonomy to react to their domestic situations; and integration to fit within the company’s global market strategy. Global businesses are best served with a centralized authority for development of products, marketing and global competitive moves. This calls for extensive coordination between subsidiaries. Subsidiaries should share technology and the company will need a global information system. The information system needs to include supply chain management and customer account management capabilities.
Innovative Technologies of Nissan
The company aims to be a “sincere eco-innovator”. It has involved itself in vigorous activities all of them aimed at achieving a sustainable environment. Many innovations have been made by the company on ways of reducing the impacts caused by its vehicles on the environment (Union of concerned Scientist (USC), 2010). Nissan has defined three critical issues that it wants to address; reducing the emission of carbon dioxide, reducing other emissions that may contaminate with the air, soil or water bodies and last but definitely not least, recycling of resources.
Nissan gives reduction of carbon emission the first priority and it is in the process of addressing the same. According to the Nissan sustainable report produced in 2010, technical innovation is essential for reliable progress in reducing CO2 emissions. We are unlikely, however, to reduce them to sustainable levels with technology alone; this will require cooperative efforts by all of society. Even in the area of technology, we cannot pursue only CO2 reductions. We will not achieve real sustainability unless consideration is given to basic performance and cost, allowing the technology to be put into widespread use.
Based on this awareness, Nissan considers the environment from the perspective of the entire lifecycle of its vehicles, and is working to reduce CO2 emissions in all its corporate activities (Anon. “Electric cars and noise: The sound of silence” 2). We have made zero-emission vehicles the core of our strategy in our product range in particular and we want to turn these environmental challenges into an opportunity to contribute to a sustainable society (Nissan sustainable report 5).
To reduce the use of fossil fuel and the emission of carbon dioxide, Nissan introduced QCT-C (Quality, Cost, Time, and CO2) management. The element of CO2 (C) was added to the traditional QCT to signify the efforts being taken by Nissan to reduce CO2 emission. Nissan has already set targets for the reduction of carbon in all areas of operation so as to create a new value for both the society and consumers (Hively 6).
Nissan Green Program
Nissan automobile company is in the process of making more innovations to help the company achieves its environmental action plan, otherwise referred to as Nissan Green Program 2010. The purpose of this program is to see that a sustainable environment is achieved to enable vehicles and people to coexist with nature. The process of production of motor vehicles involves the use of resources that are powered by fossil fuels, for instance diesel. Nissan is a global manufacturer of automobile which takes a lot of care to identify the impacts that the production process may have on the environment and takes necessary measures to minimize the negative impacts such as emission of carbon dioxide.
The ultimate goal of Nissan automobile company is to minimize the environmental impact caused by its operation and also from the Nissan vehicles to significant low levels that can be absorbed by the earth through natural practices. Nissan Company has realized the importance of maintaining a healthy environment and it now aims at being the leader in environment conservation. This can only be achieved through the adoption of proactive measures that reduces the impact of the gases released to the environment both through its operations and the vehicles produced.
To address this issue, Nissan has introduced other types of vehicles known as electric vehicles that use batteries which releases very little amount of carbon dioxide. The sale of these cars is expected to start towards the end of the year and it is likely that they will attract a large population. With the current level of literacy and the advancement of technology, almost every person has been cautious of his/her health and the need to conserve the environment and the electric vehicles are the solution to the current effect of globalization in the automobile industry. It would be good for Nissan if it concentrates more on the zero-emission vehicle, for instance, those that use battery because very soon the fossil fuel vehicles may become outdated.
These strategies are aimed at enhancing the production of fuel-efficient vehicles. It was estimated that if all automobile companies agreed to produce fuel efficient vehicles, then the level of carbon dioxide emissions would reduce by 25% come the year 2020 and the fossil fuels would be preserved. Currently, the world is changing at a very high rate and the economic situation continues to deteriorate, not to mention the growing environmental measures that are becoming a challenge to many businesses. To overcome these challenges, companies have to come up with creative environmental technologies in order to increase and strengthen their global competitiveness (Spatz 6).
The contemporary economy is characterized by rapid advancements in transportation, communication and technology which have reduced the world diverse and geographically unattached economies into one global market. This has prompted regional authorities to formulate strategies through which they assist the process of restructuring and adjusting the automotive sector as well as the global economy as a whole with major focus on labour market policies and extensive training in leading technologies. The process of production of motor vehicles involves the use of resources that are powered by fossil fuels.
Nissan automobile company is in the process of making more innovations to help the company achieves its environmental action plan, otherwise referred to as Hybrid technology. In its expansion Nissan is pursuing a global strategy which is a combination of international business and strategic management. Strategic management involves formulating and implementing strategies that enable the organization to reach its objectives. Therefore, it is important that an organization measures its success in the formulation and implementation of its strategy and this is called strategy evaluation.
Anon. “Electric cars and noise: The sound of silence“. The Economist. 2009. Web.
Anon. From remarks at an UNCTAD conference in February 2000, in Johan Norberg, In Defense of Global Capitalism. Washington: Cato Institute, 2003.
Anurag. “Globalization and Its Impacts on the Automobile Industry.” 123eng, 2006. Web.
Cusumano, A. Michael. The Japanese Automobile Industry. New York: Harvard University Press, 1985.
Hively, Will. “Reinventing the wheel – A flywheel may be the key to a car that’s both powerful and efficient“. Discover, 1996. Web.
Markus Diehl. “International Trade in Intermediate Inputs: The Case of the Automobile Industry,” Kiel Working Papers 1027, Kiel Institute for the World Economy, 2001.
Nissan sustainable report. “Protecting the environment Achieving; a Symbiosis of People, Vehicles and Nature”. Nissan global, 2010. Web.
Spatz, Julius. “Globalization of the automobile industry- traditional locations under pressure?”. Repec. 2010. Web.
Union of Concerned Scientist. “Clean Energy Blueprint: A Smarter National Energy Policy for Today and the Future.” Ucsusa, 2010. Web.