Strategic Management Of Nissan Motor Corporation Marketing Essay

In this global recession period, it is extremely crucial to the global automotive industry to set a strategy to analyze the future business trends and to foresee opportunity and threats in their organizations in order to bring back the customers and to achieve competitive advantage. In this assignment, I have chosen Nissan as my case study.

Political factors refer to the government policy that will affect the organization in terms of laws and regulations, taxation policies and trade restrictions. For instance, in year 2008, the Ministry of Finance in Vietnam had announced that the Ministry of Industry of Trade had a new proposal of another rise in imported car tax at the level of around 80-85%. This tax levels of 80%, 85% and 90% are considered to be appropriate in accordance with the World Trade Organization (WTO) commitments.(http://www.hanoitimes.com.vn/print.asp?newsid=4945). This heavily imposed tax on imported car will lead to the sales of Nissan fall because the demand for imported car in Vietnam will drop. Besides, the government of Malaysia also implemented a new proposal for citizens to sell off their old car of 15 years old and above to get rebate of RM5000 to buy a domestic car, Proton and Perodua. (http://www.bernama.com/bernama/v5/newsindex.php?id=391499).These government policies will affect the citizens consider to buy domestic car rather than imported car and will affect the sales of Nissan to drop as well.

2.2 Economic factors

Economic factors include interest rates, disposable income, unemployment rates, retail price index (inflation), gross domestic product (GDP), and exchanges rates. (Henry, A., 2008, pp.54). In this financial crisis period, the unemployment rates had increased tremendously. This is directly influences the automotive industry, for instance, the sales of United States big three automotive, General Motors(GM) had fell 53% on the month of February. According to Michael DiGiovanni, the executive director of global market analysis for GM, this is because Americans are afraid about losing their jobs, as a result, the consumers buying power dropped. (http://www.businessweek.com/bwdaily/dnflash/content/mar2009/db2009033_589719.htm).Nissan also affected by the economic crisis by 37% of dropped its division sales while 48% dropped in the sales of Infiniti. (http://www.businessweek.com/ap/financialnews/D979SEQO0.htm)

2.3 Social factors

Social factors often include cultural changes within the environment and referred as socio-cultural. (Henry, 2008, pp.56). For instance, Japanese consumers prefer smaller, defect-free vehicle and with a high level of after-sales service from dealers. In response to this cultural changed, Nissan which is also the domestic brands is facing challenges to compete in terms of quality and price with others local brands such as Toyota and Honda. Besides, typical Japanese consumers purchases new vehicles and trade in used vehicles after 3 to 5 years. (Industry and trade summary: Motor vehicles, September 2002. International Trade Administration, “Automobile Industry” (DC 20436) Washington). In addition, Nissan have to launch new model of car in every 3 years in order to meet the consumer various demands.

2.5 Technological factors

Nowadays, the global is the midst of technological revolutions, as a result, most industries are affected by major technology changes. (Hubbard, 2000). For examples, the rates of obsolescence, technological advances in using the Internet and etc. In the year 2008, Volkswagen has demonstrated its “Park Assist Vision” system at Hanover Fair. This “Park Assist Vision” system can let the driver to get out from car and watch how their car can be park in the skinniest of perpendicular spaces using high technology of computerized steering and drive systems. (http://www.gizmag.com/volkswagen-demonstrates-fully-automatic-reverse-parking-system/9217/). In order to be competitive, Nissan also developing a futuristic car technology in one of the model car, Pivo2. Pivo2 is designed with a robot that has face detection to cheer up driver while driving to prevent bad mood that can cause accidents. Besides, it also has a safer seat belt, which can automatically tighten when brakes are pressed hard, and the car will brace itself in the event of an accident. (http://www.indianexpress.com/news/nissan-gives-iitdelhi-taste-of-futuristic-car-technology/410077/)

3. SWOT analysis

SWOT analysis includes strength, weaknesses, opportunities, and threats. SWOT analysis allows organization to assess its current strategy in the changing environment and turn potential threats into opportunities and weaknesses into strengths. (Henry, 2008, pp.61).

3.1 Strengths and weaknesses

Strengths and weaknesses analyze the organization’s internal environment. Nissan is undergoing Nissan Green Program 2010 which is based on “3Rs”- reduce, reuse and recycle method to effectively utilize resources. Nissan’s management directive is “QCT-T” which means more quality, less cost, more speed and less carbon dioxide(CO2). This is the strength point for Nissan as Nissan is aiming to become a “sincere eco-innovator” through this Nissan Green Program to address environmental challenges. Nissan is targeting on the issue of reduction in CO2 emissions by developing cars that will run on electric-power such as hybrid cars, plug-in hybrid cars, fuel-cell vehicles and electric vehicles. In order to promoting Nissan Green Program 2010 and to fulfill its objectives, Nissan also set up a “Nissan Global Environmental Management System” that can linked to their various divisions, such as design, production, R&D, logistics, marketing, sales, etc. Whereas, the weaknesses of Nissan is that, in order to run this new revolution of hybrid cars in reducing CO2, it will need a lot of research and development that will cost a lot of money and time consuming. This prolonged period of research and development will cause over cost to the company. Besides, in designing this hybrid car, Nissan will have to consider it to be competitive yet is safe and economical for the consumer. This is because hybrid car technology is using a combination of internal combustion engine and fuel cell powered which generates electricity with no emitting of CO2, which no doubt can save fuel but hybrid car cost more than the electric car in term of price and the batteries used by the hybrid car are highly toxic and would have significant environmental impacts.

(http://www.nissan-global.com/EN/ENVIRONMENT/GREENPROGRAM_2010/MANAGEMENT/index.html)

3.2 Opportunities and threats

Opportunities and threats study the organization’s external environment. In this economic downturn period, the U.S automotive industry such as General Motors and Ford are having losses. Japanese’s car manufacturer such as Nissan is also depends on the America’s market for their sales and having production line and share parts suppliers who are vulnerable to this crisis over there. According to the Mainichi newspaper states that both General Motors and Chrysler lack a “sure seller”, for instance, an environmentally friendly vehicle, and there is also no clear recovery in sight for these two companies.

(http://www.businessweek.com/ap/financialnews/D97914203.htm). As a result, a major collapse in the U.S economy and automotive industry could hurt the operations of Nissan in U.S and this will be the threats for Nissan but at the same time, the collapse of U.S top automotive such as General Motors will lead Nissan to have a broader market in the U.S. Moreover, the development of Nissan on the Nissan Green Program on hybrid car also will be the opportunities for the company in the long run as more and more people are environmental conscious nowadays but on the other hand, Nissan is investing a lot of money in this research and development for hybrid car and the production cost for this car might not be economical for the consumers. Nissan also need to hiring new generation of people in terms of technology to educate all the workers for this new technology in the production line and this will cost another sum of money for the company. This lack of experiences of new technology will be the pioneer teething problems towards the company. Besides, the new launched of the world’s cheapest car, Tata Nano from Tata Motors Ltd. in India will be the rival and threats for Nissan as Tata Nano will be the affordable alternative for the low and middle cost families, where they would prefer to choose an economical car which is affordable in terms of price for them.

(http://biz.thestar.com.my/news/story.asp?file=/2008/1/11/business/19977430&sec=business)

4. Conclusion

Nissan have to be alert to the rapid economy changes in order to face the challenges from the competitors and the global market. Even though the global economies are not stable but Nissan can also identify their company future trends through PEST analysis and understand their company’s internal and external environment by the SWOT analysis. By using this two analysis, Nissan can analyze their company and make necessary plans and implement strategy to achieve competitive in the market and producing environmental friendly cars to protect the earth and make profits to the company. (1498 words)

References

Henry, A., 2008. Understanding strategic management. New York: Oxford University Press.

Hubbard, G.., 2000. Strategic management: thinking, analysis and action. Australia: Prentice Hall.

Electronic sources

FRANKLIN, Tenn, 2009.March auto sales: Nissan. BusinessWeek, [internet] April 1.

Available at:

http://www.businessweek.com/ap/financialnews/D979SEQO0.htm

(Accessed 4 April 2009)

Industry and trade summary: Motor vehicles, 2002. International Trade Administration, “Automobile Industry” (DC 20436) Washington. [online] September.

Available at:

http://the.decline.of.d-troit.de/pdf/(industry)PUB3545.pdf (Accessed 2 April 2009)

Nissan gives IIT-Delhi taste of futuristic car technology. Indianexpress, [internet] 13 January 2009.

Available at:

http://www.indianexpress.com/news/nissan-gives-iitdelhi-taste-of-futuristic-car-technology/410077/ (Accessed 5 April 2009)

Sell Off Old Cars, Buy New Ones At Discounted Price. Bernama, [internet] 22 February 2009.

Available at:

http://www.bernama.com/bernama/v5/newsindex.php?id=391499 (Accessed 5 April 2009)

Tata unveils world’s cheapest car. The star online, [internet] 11 January 2008.

Available at:

(http://biz.thestar.com.my/news/story.asp?file=/2008/1/11/business/19977430&sec=business) (Accessed 6 April 2009)

Volkswagen demonstrates fully-automatic reverse parking system. Gizmag, [internet] 23 April 2008.

Available at:

http://www.gizmag.com/volkswagen-demonstrates-fully-automatic-reverse-parking-system/9217/ (Accessed 5 April 2009)

Welch, D., and Kiley, D., 2009. Auto sales: Worst February in 40 years. BusinessWeek, [internet] 3 March.

Available at: http://www.businessweek.com/bwdaily/dnflash/content/mar2009/db2009033_589719.htm (Accessed 4April 2009)

http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm (Accessed 1 April 2009)

http://www.hanoitimes.com.vn/print.asp?newsid=4945 (Accessed 2 April 2009)

http://www.nissan-global.com/EN/ENVIRONMENT/GREENPROGRAM_2010/MANAGEMENT/index.html (Accessed 5 April 2009)

Stage 2 – Strategic Formulation

4. Introduction

Nowadays, automotive industries are increasing pressure and facing competitive challenges as consumers’ demand and taste changed rapidly. In order to remain competitive yet retain profit, it is vital for the organization to formulate a competitive strategy that suits the company well in both business and corporate level to meets the needs of all ranges of the consumers.

4.1 Strategic formulation

Strategy formulation is the analysis of the firm’s internal environment and the needs of the external environment. It allows the firm to assess where the strategic can be best achieves and fit between the two environments. (Henry, 2008, pp. 9). It includes three aspects which is business level strategy, corporate level strategy and international strategy and globalization.

4.2 Business level strategy

Business level strategy is to formulating a competitive strategy at the individual business unit. It focuses on a particular market for its product and services which known as strategic business unit (SBU). (Henry, 2008, pp. 185).

5. Generic competitive strategies

Generic competitive strategies (see Figure 1) are developed by Porter (1980) in order to help the organization to outperform rivals within an industry. It consist of overall cost leadership strategy, differentiation strategy and focus strategy.

Competitive ScopeThree Generic Strategies

Competitive Advantage

Differentiation Low Cost

Differentiation

Overall Cost Leadership

Focus

Industry wide

Particular

Segment only

Figure 1: Three generic strategies (Porter, 1980)

5.1 Overall cost leadership strategies

Cost leadership strategy refers to the organization to be the lowest cost position in the industry and gain competitive advantage without sacrificing its product quality and hence earn profit. (see Figure 1) (Henry, 2008, pp.187). For instance, the Tata Nano car from India had became the world’s cheapest car by minimizing the car components, particularly using lighter steel, made the car’s engine smaller and used fewer materials which is made according to the safety policies.(http://www.businessweek.com/globalbiz/content/jul2008/gb20080728_760559.htm). Besides, Nissan, Renault SA of France and Bajaj Auto Ltd. of India also will form a joint venture to develop and produce market cars which the price will as low as $2,500. Nissan also will launch new electric vehicles (EVs) in fiscal year 2010 in United States. and Japan while in fiscal year 2012 in other markets. These ultra low-cost vehicles will be the main engines for the future profit growth of Nissan. (http://search.japantimes.co.jp/cgi-bin/nb20080514a2.html)

5.2 Differentiation strategy

Differentiation strategy aimed at broad market by competing on a unique or different product which sufficiently valued by customers to pay for a premium price. (Henry, 2008, pp.191). For example, Honda and Toyota’s pioneering on hybrid gasoline and electric drive trains in finding solutions for greater fuel efficiency and lower emissions. (Tay, H.K., 2003, pp.25). This is a unique product for Honda and Toyota as the price of fuel has gone up and consumers will willing to pay for this unique hybrid car and at the same time protect the earth with the lower emission from the car as people nowadays are very environmental conscious. Nissan also came out its own differentiation product by offering the keyless entry on its latest model, March / Micra in United Kingdom and Japan. These model had bring convenient to the customers by having keyless entry and also offer climate control, auto headlights-on function which will automatically turns on the headlights when natural light is reduced in darker place. (http://www.nissan.co.nz/pdf/micra.pdf).

5.3 Focus strategy

Focus strategy is an organization undertakes the cost or differentiation strategy within a particular scope of the market. (Henry, 2008, pp.195). Basically, Nissan knew that Europe and United States is the domain market for luxuries car, however third world country are not able to afford on those luxuries car. Nissan aim is to target those third world automotive buyers with medium capital income which only afford to low cost cars. For instance, Renault-Nissan has tied-up with Bajaj Auto, the India’s second largest motorbike manufacturer, to create an “ultra low cost” car t to put the Third World on wheels by selling cars that will cost about $2,500 before taxes to compete with Tata Nano. Nissan plans to concur more on low cost automobile share market in Third World in order to make sustainable growth in the company. (http://business.timesonline.co.uk/tol/business/industry_sectors/engineering/article3918590.ece). On the other hand, automotive such as Volkswagen also plans to sell a $3,500 car based on the Polo in India from 2010.

6. Corporate level strategy

A corporate level strategy refers to the scope of the different industries and markets that the organization competes within in order to achieve its organizational purpose. (Henry, 2008, pp.220)

6.1 Portfolio analysis

Portfolio analysis is about allowing the organization to assess to the competitive position in order to identify the rate of return it received from various business units. Two of the famous portfolio analyses are Boston Consulting Group (BCG) Growth-Share and General Electric Business Screen. (Henry, 2008, pp.239)

7. Boston consulting group matrix (BCG)

Boston consulting group (BCG) matrix (see Figure 2) involves the market growth and relative market share. It characterized into four strategies categories which is a star, question mark, cash cow, and dog. (Johnson, Scholes and Whittington, 2008, pp 279)

Market share

High Low

Stars

Question marks

Cash cows

Dogs High

Market

growth

Low

Figure 2: Boston consulting group (BCG) matrix (Johnson, Scholes and Whittington, 2008, pp.279)

7.1 Stars

Star is a business unit which is high in market growth and market share. This business unit will have heavy spending to keep the business growth and need sufficient profits to fund in investments.

7.2 Question marks

Question marks which also known as problem child is high in market share but not yet in high market share. In order to develop a question mark to a star, heavy investment is needed.

7.3 Cash cows

Cash cows are business unit which is low in market growth and needed less investment. However, it is high in market share meaning that the business unit should be profitable in order to helps fund investments in question marks.

7.4 Dogs

Dogs are business unit which is low in both market growth and market share. It is the worst among all the combinations and in declining market. Business unit in this stage is recommended in divestment and closure stage.

According to the Nissan’s half year report as of year ended April 1 to September 30, 2008, in my opinion, the stars of Nissan in the Europe market would be the Tiida and Qashqai model. Whereas the stars of Nissan in China would be the Teana model which increased 23.5% of sales. These Tiida, Qashqai and Teana models were in high market growth and market share to other models of Nissan and will create a potential sales in the future market.

On the other hand, the question marks for the Nissan in the Europe market would be the newly launched Maxima models such as Versa and Rogue which is a fuel efficient models. Although these two models were good sellers and in high market share but it will also need a heavy investment in order to gain high market growth and become stars of Nissan in BCG stages.

8. Conclusion

All in all, Nissan Corporation aim to reduce cost of production, on the other hand, increase productivity by reducing the timeframe per end product, the business idea is to target third world automotive demand with affordable offering to lower per capital income consumer. In terms of internal restructuring to meet automotive industry competitiveness, Nissan slash the top management with hard time and practice faster decision making among the top and lower management to inject new ideas and technology from successful organization to develop better future technology and superior knowledge transfer.

(1264 words)

References

Henry, A., 2008. Understanding strategic management. New York: Oxford University Press.

Johnson, G.., Scholes, K., and Whittington, R., 2008. Exploring corporate strategy: text & cases.

Porter, M.E., 1980. Competitive strategy: techniques for analyzing industries and competitors. New York: Free Press.

Electronic souces

Blakely, R., 2008. Renault- Nissan team up with Bajaj auto in rival to Nano car. Times online, [internet] 12 May.

Available at:

http://business.timesonline.co.uk/tol/business/industry_sectors/engineering/article3918590.ece (Accessed 11 April 2009)

Nakata, H., 2008. Nissan business strategy aims high and low. The Japan Times Online, [internet] 14 May.

Available at: http://search.japantimes.co.jp/cgi-bin/nb20080514a2.html

(Accessed 13 April 2009)

Nissan, 2008. Half-year report April 1- September 30 [online]

Available at:

http://www.nissan-global.com/EN/DOCUMENT/PDF/BUSINESS/2008/HYR08_E2.pdf

(Accessed 14 April 2009)

Rowley, I., and Srivastava, M., 2008. The Nano: Tata’s Costly Promise. BusinessWeek, [internet] 28 July.

Available at:

http://www.businessweek.com/globalbiz/content/jul2008/gb20080728_760559.htm (Accessed 12 April 2009)

Tay, H.K., 2003. Achieving competitive differentiation: the challenge for automakers. [online] 30(4), pp. 25.

Available at: www.emeraldinsight.com/10.1108/10878570310483951

(Accessed 13 April 2009)

http://www.nissan.co.nz/pdf/micra.pdf (Accessed 11 April 2009)

Stage 3 – Strategy Implementation

8. Introduction

In this competitive automotive industry, strategy plays a very important role in achieving the company goal and to make profits. In other words, appropriate implementation of formulated strategy will be the key successful of the organizations.

8.1 Strategic implementation

Strategic implementation involves the use of managerial and organizational tools to direct the resources towards achieving strategy outcomes. (Daft, 2006, pp.278). It includes organizational systems and strategic change, strategic leadership and corporate governance.

9. Organizational structure

Organizational structure is about the division of labour into specialized tasks and to coordinate between these tasks. (Henry, 2008, pp.303). According o Chandler (1962), structure is followed by strategy. Organizational structure and strategy are inter-related. The tools of creating ethical organizations is through code of ethics, ethical structures and mechanisms in supporting whistle-blowers (Daft, 2006, pp.175) Organizational structure include entrepreneurial structure, functional structure, divisional structure, matrix structure and network structure.

9.1 Divisional and functional structure

A divisional structure is includes individual business units that have their own functional specialisms which have direct responsibilities for own performance. (Henry, 2008, pp.307-308). Managers in each division have the authority to make decision on their local market conditions. The divisions also categorized into geographical locations.

In order to respond to the global financial crisis, Nissan have adopted the divisional structure and functional structure in their organization in order to guide through the current challenge and future direction. Nissan is announcing in changes to its executive management structure to focus on both regional and functional activities of the organization. Besides, the divisional structure of Nissan also categorized into geographical area. For instance, there are different Executive Vice President in responsible for different regional such as the Executive Vice President, Mr. Hiroto Saikawa is responsible for only Japan, China and the Asia-Pacific markets. There are also different Executive Vice President in taking responsibilities on different business department. Morover, each of the Executive Vice President have to report the CEO of Nissan which is the practice of functional structure.

(http://www.nissan-global.com/EN/NEWS/2009/_STORY/090209-02-e.html)

9.2Strategy change

Strategy change involves changing the way the organization deal with its external environment. It is important for the organization to ensure a fit between the internal resource and capabilities and changing competitive environment to the organization. (Henry, 2008, pp.319)

10. Corporate governance

Corporate governance is the process which corporation is responsive to the rights and wishes of the stakeholders. Besides, it also about the way the organizations are directed and controlled. (Henry, 2008, pp.380). The corporate governance policies of Nissan are to ensure the transparency of Nissan’s operations is the key part of the corporate social responsibility. The belief of Nissan is “the power comes from inside” which means every employees of Nissan will have the same mindset that is to put customer satisfaction in the first place. Nissan also learn from different people in the society to enhance greater improvement towards the organization.

(http://www.nissan-global.com/EN/DOCUMENT/PDF/SR/2008/SR2008_E_p38-45.pdf)

10.1 Shareholder and stakeholder theory

Shareholder theory is the way the organization view about the shareholder’s internet as paramount. (Henry, 2008, pp.387). Stakeholder theory is the view of the corporation on how it should be run in term of interests of the stakeholders. (Henry, 2008, pp. 390). The stakeholders of Nissan include customers, shareholders, employees, dealers and suppliers, and the communities Nissan work and operate with. Nissan had a highest standards of transparency in the disclosure of the firm commitment and provide detailed information about the company’s strategy, vision and plan to all the investors and stakeholders of Nissan. This is to build the market trust of the stakeholders and shareholders to the company. Nissan also maintain good communication to the shareholders and investors by making full use of the feedback provide by them to enhance customer’s satisfaction.

(http://www.nissan-global.com/EN/DOCUMENT/PDF/SR/2008/SR2008_E_p55-57.pdf)

10.2 Corporate social responsibilities

In the corporate social responsibilities, Nissan have the vision to create value to the stakeholders through its provision of products and services. Nissan also have the environmental philosophy which symbiosis of people, vehicles and natural to express their image of a ideal social responsibilities. Nissan also participate in environmental friendly program by producing environmental friendly car such as hybrid car to protect the future generations and to create a better future. (http://www.nissan-global.com/EN/ENVIRONMENT/)

11. Conclusion

In order to be the top in the automotive industry and at the same time create awareness of the environment and protect the benefits of the company and customers, Nissan have to implement a competitive strategy to sustain the profitability of the company and to protect the shareholders and stakeholders as well.

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(3513 words)

References

Daft, R.L., 2006. The new era of management. International ed. China: Thomson South-Western.

Henry, A., 2008. Understanding strategic management. New York: Oxford University Press.

Schermerhorn, J., Hunt, J. G.., & Osborn, R. N., 2008. Organization behavior. 10th ed. United States of America: Wiley.

Electronic resources

Nissan takes further action amid global crisis, [internet]. 9 February 2009

Available at:

http://www.nissan-global.com/EN/NEWS/2009/_STORY/090209-02-e.html

(Accessed 18 April 2009)

Sustainability report: Performance and corporate governance. [internet]. 2008

Available at:

http://www.nissan-global.com/EN/DOCUMENT/PDF/SR/2008/SR2008_E_p38-4 5.pdf (Accessed 20 April 2009)

Sustainability report: Enhancing value for stakeholders. [internet] 2008.

Available at:

http://www.nissan-global.com/EN/DOCUMENT/PDF/SR/2008/SR2008_E_p55-57.pdf

(Accessed 21 April 2009)

4. http://www.nissan-global.com/EN/ENVIRONMENT/ (Accessed 21 April 2009)

Appendix

Nissan Motor Corporation is a multinational automaker headquartered in Japan. The brand is known for crafting vehicles that emphasis on edgy styling and performance. The automaker got its start in 1933 as the Jidosha Seico Co., Ltd., predecessor of Nissan Motor Co., Ltd., and established in Yokohama with paid-in capital of ¥10,000,000. In 1934, the Company name is changed to Nissan Motor Co., Ltd. The vision of the company is ‘shift the way you move’.

The lineup of vehicles of Nissan includes sporty coupes, family sedans, minivans, trucks and SUVs. This model of the car are Nissan X-Trail, Nissan GT-R, Nissan 370z, Nissan Maxima, Nissan Murano, Nissan Latio, Nissan Sylphy, Nissan Livina, Nissan Sentra, Nissan Urvan, Nissan Frontier, Nissan Serena MPV, Nissan C22 Vanette, Nissan C22 Pick-Up and etc.

In the year 1999, Nissan motor and Renault of France signed and agreement for global partnership to achieve growth for both companies. Nissan also very support and protect the earth by producing car that are environmental friendly to the environment.