Reinventing Nissan Essay

Decent Essays
Acar Niar April 15, 2000
Case: Nissan

Reinventing Nissan
1) What benefits will Nissan gain if its procurement of parts is combined with Renault’s parts procurement on a global basis? Are there any costs to this change? What problems does Nissan create if it abandons the keiretsu system for purchasing parts? In what ways might the Internet facilitate this change? Ghosn’s plan to combine, centralize, and globalize Nissan and Renault’s parts procurement would cut costs by 20 percent! Before this change, Ghosn estimated Nissan’s parts procurement costs were around 10 percent higher than Renault’s. To accomplish his goal, Ghosn had to prove that the precious keiretsu system of Japan was promoting
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He is at great risk for violating Japan’s cultural norm, but things like this need to be done at one point or another within a company in order to succeed and be profitable. If he abandoned his plan to cut jobs, he would sacrifice his goal of reducing Nissan’s total costs by approximately $10 billion. If people like Carlos Ghosn do not stand up to the “cultural norms” of other countries, companies like Nissan would never improve. We are moving into a world where global business is big and there are plenty of countries now working together for one, single business, and all participating countries must learn to cooperate for the best of the business.
3) Given Japan’s culture, will the introduction of performance-based compensation schemes create any problems for Nissan in Japan? If so, what is the nature of these problems? Do you have any suggestions for overcoming these problems? Ghosn plans to incorporate American-style compensation plans for Nissan in Japan such as stock options and bonuses based on profitability and performance for all managerial and nonmanagerial employees. The tradition of Japan has long been to pay strictly based on seniority, so this will bring out a lot of changes! This would bring about some problems for Nissan in Japan because their tradition is being changed and they are leaving their cultural norm. To help
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