Nissan Structure Case


1. From exhibit 10.1 Dominant growth patterns of large corporations, what structure type is Nissan using?
2. Which business level competitive advantage is Nissan seeking?
3. Nissan is failing at which value chain elements?
4. This article states Nissan’s move to independence or interdependence?
5. How has Nissan failed to be “ambidextrous?”

Nissan Pins Revival on Leadership Trio

Auto Maker Says Recent Changes Will Allow It to Spot Problems Earlier

Wall Street Journal, November 21, 2013

TOKYO— Nissan Motor Co. 7201.TO -2.41% ‘s top executives say the root cause behind surprisingly weak profit isn’t on the factory floor, in the design studios or in overly ambitious goals.

The organizational chart is to blame, they say.

A move earlier this month to shuffle who runs what should improve the outlook for Japan’s No. 2 auto maker and put it on track to hit bold market-share and profit targets in the next few years, a number of Nissan executives said in interviews this week on the sidelines of the Tokyo Motor Show.

Specifically, Nissan is carving up areas of responsibility into more manageable pieces, rearranging the management team so it can spot problems and correct course faster, and making sure the company is putting its resources in the right place at the right time, the executives said.

“We reorganized our management structure because the most important thing now is to raise our ability to execute,” said Hiroto Saikawa, who became Nissan’s de facto No. 2 following the shuffle Nov. 1. “It’s an extremely big growth plan, so we have to be able to execute with close to 100% efficiency.”

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Mr. Saikawa is part of a triumvirate of three executive vice presidents who will oversee the new structure.

One of the three, Trevor Mann, who previously had been in charge of a chunk of the world spanning from Europe and Africa to India, said that one big problem with the past arrangement was that executives in charge of such regions had too much to watch over, and thus couldn’t focus properly.

“Even within one region it’s very, very dynamic,” he said. “In my previous role, I was responsible not only for the dynamic in Europe but also Africa, the Middle East and India, which have their own dynamics.” Now, Nissan is dividing each of the three big global regions in half, and Mr. Mann himself will from January be in charge of overall regional operations.

Nissan top brass blame poor execution and management for a range of problems—from a costly recall to poor sales in Russia—which the company disclosed in the beginning of November when it announced disappointing earnings.

The cumulative impact of those problems led Nissan to cut its profit forecast by 15% for the fiscal year ending March 2014. Disillusioned investors pushed the stock down nearly 10% the next trading day, while analysts pointed out that Nissan wasn’t making much progress toward its goals of an operating-profit margin and global auto-market share of 8% by March 2017.

At a Wednesday news conference at the Tokyo Motor Show, Nissan Chief Executive Carlos Ghosn said the goals were still achievable—as long as the right team was in place. “We need a management team that delivers,” he said.

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Nissan top brass blame poor execution and management for a range of problems—from a costly recall to poor sales in Russia Nissan has put electric vehicles at the center of its push into green cars, plowing some €4 billion into its Leaf electric-car project. But sales of the Leaf have been poor, and rivals including Toyota Motor Corp. 7203.TO -2.25% insist the technology itself is a non-starter.

Mr. Ghosn defended Nissan’s push into electric cars on Wednesday, saying that governments are slowly starting to support the technology with subsidies and charging stations, and sales will pick up as that happens.

Mr. Saikawa says Nissan’s previous structure—with one chief operating officer overseeing a rapidly expanding set of investments and geographies—meant the company didn’t do a good job at spotting problems during the planning stage, and wasn’t nimble enough to respond quickly when things on the ground went wrong. Instead, when problems cropped up, projects would be sent back for tweaking—a time-consuming process.

In the new three-person structure, executives in charge of planning and execution will work more closely together from the beginning to scope out potential flaws, Mr. Saikawa said.

In plotting out investment in factories, for instance, Andy Palmer —the executive in charge of planning and the third member of the trio—would get an early reality check from Mr. Saikawa, who handles manufacturing, and Mr. Mann, who knows the situation on the ground, to decide whether the plan is feasible, Mr. Saikawa said.

“Let’s say there’s an opportunity, but the hurdles to implementing are high,” explained Mr. Saikawa. “We should be debating whether to change how we’re going to do it, or whether to do two projects rather than three.” Mr. Palmer said that making sure resources are properly balanced will be one of his main jobs in the new order.

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Factory investment was one area where Mr. Ghosn conceded the company has overstretched its resources, with nine projects under way at the same time.

Some industry experts say that even if Nissan does have management issues, Mr. Ghosn may not be the best person to fix them. Mr. Ghosn is revered for bringing Nissan back from the brink of bankruptcy in the late 1990s, and is peerless at restructuring, says Satoshi Nagashima, an automotive strategy consultant and partner at Roland Berger Ltd. in Tokyo. But Nissan’s challenges now aren’t about cost-cutting, but making and selling cars that people want to buy, he says.