Nissan Motors is a multinational automobile manufacturing company based in Japanese (Stopford, 1992). Their headquarters are located in Nishi-Ku, Yokahama. The company was founded in 1934 by Aikawa. In June the same year, Nissan Motors came to be owned by Hitachi and Nihon Sangyo (Morck, 2007). Like any other company, Nissan Motors faced a lot of difficulties at the beginning and also during the years it has been running. In 1999 for example, it faced a serious decline and had lost a lot of money. At this time, a French automaker by the name of Renault’s seemed to be the only hope for the company. He appointed Ghosn as the chief operating officer for the company. The turnaround at Nissan can be analyzed and therefore explained in relation to the superb leadership of Carlos Ghosn. This paper analyzes the turnaround of Nissan under the leadership of Carlos Ghosn.
According to Magee (2003) the first step that Ghosn took in order to help reduce the debt that the motor company had was to try and increase efficiency, human relations and adaptations. To improve efficiency, Ghosn started by shutting down five factories belonging to Nissan. This led to the termination of about twenty one thousand jobs. He hoped that this would reduce wastage and maximize production. He then cut down the number of power trains by 33% and also the number of car platforms by 50% (“Nissan case study,” 2013) . As a result of job termination for the many employees, Ghosn knew that human relations would be a potential trade off that had to be well handled. Ghosn did this by employing attrition and imparted part time work or early retirement for facilities at the organization. He hoped this would help boost the morale of the remaining employees and also those who had left. Employees who had been find could apply for part time jobs at the company before they found steadier jobs and this had a good impact on human relation.
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According to Liker (2004) Ghosn also tried to improve efficiency through cutting down of buying costs by twenty percent by increasing the sizes of orders and cutting down the number of suppliers. This ensured that the company benefited from purchasing discounts. The resulting trade off however, was that this cutting down of suppliers worsened the relationships between these suppliers. This was a bad thing for the company as the sustenance of a good working relationship with suppliers is a very important aspect for companies in the Japan and in the business world at large. As a result of this negative relationship stats created, the dealership of Nissan was reduced by ten percent. This was not a good thing for any company located in Japan. This is because high brand loyalty is established through good customer relation (Schmitt 2013). This had been made a trade off by the reduced number of dealerships caused by Ghosn. To deal with this trade off, management had to be enhanced when it came to the dealerships that had remained. According to Ghosn (2007), good administration of the remaining leaderships would ensure that Nissan became more entrepreneurial regardless of the business social roles.
As for adaptation, Ghosn first started by correctly identifying the major changes that his plans would impact on the employees ( Northouse, 2013) . He then released his plans at once and explained the need to make this changes. He aimed to reduce criticism and judgments by the employees and make it easy for them to adapt. The tradeoff here was that this would again negatively affect human relations for the company. To counteract this, Ghosn resulted to the use of cross functional teams to improve human relations through interactions across departments. This would help employees identify the major changes themselves and this would reduce the feeling of dictation amongst themselves.
Effective management change was also another thing that Ghosn considered (Jones 2001). According to him, improving the management strategies used and placing the right effective changes would be essential for the survival of the business. Ghosn used planned change, and this is famed for having both driving and restraining forces that affect the state of equilibrium within concerned organizations during its implementation (Thomas, 2010). The first step to making this effective change taken by Ghosn was introducing cross functional teams that would help identify the changes the company needed. He then increased the willingness of company members to change by creating a vision for the company and empowering employees to also identify the changes needed. The most effective changes according to Ghosn was reducing the appropriate tools and techniques that were initially being employed in the company. Among these changes included the reduction of both workers and suppliers in order to reduce wastage and reduce purchasing cost respectively. Ghosn also noted that planned changed faced a lot of restraining forces such as structural inertia. The appointed cross functional teams would help deal with this structural inertia. Ghosn employed the Lewin three step model of change to implement these changes.
Ghosn stands out as an effective leader and he is responsible for the turnaround at Nissan. The first character trait that made him a successful leader at Nissan was his courage. He was not afraid to cut down the number of employees even though he knew that this would result to a negative working environment and people would dislike him. Instead he sought a way to counter the negative effects of the strategies he implemented. Ghosn was also a focused leader when it came to implementing the planned changes that he had in mind for Nissan. As a result, Ghosn managed to implement effective change management strategies for the company through this planned change. Another trait that made Ghosn a successful leader in implementing his strategies was his managerial ability. Strategic leadership requires a leader with good managerial ability (Magretta 2012). This allowed him to anticipate change and maintain flexibility when it came to implementing and managing his strategic changes. Ghosn also had technical skills which can be seen in his plans to reduce power train combinations and car platforms. The two processes required a lot of technical knowledge. He also possessed conceptual skills which were seen when he was able to reduce production cost. He was able to see that the many factories Nissan had and the employees, suppliers and dealers were leading to a lot of wastage in the company. He therefore made a decision to cut down on each of these aspects and as a results, Ghosn used his conceptualization skills to improve efficiency for the company. Finally, was his best character trait when it came to improving the success of the company was his commitment to achieving the tasks that he had set for the company. He ensured that he implemented all the changes that he put in place and even threatened to quit if the changes were not met in a certain period of time, in just the same way as all other good leaders do (Yukl, 2013).
From this case study, it is clear that effective leadership requires a strong leader who is not afraid of change. Ghosn recognized the need for change and quickly made the changes where he saw fit. He tried to involve the employees in implementing these changes so that they could not feel dictated by their senior executives. This is another characteristic of an effective leader.
References
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Morck, R. (2007). A history of corporate governance around the world : family business groups to professional managers . Chicago, Ill: University of Chicago Press National Bureau of Economic Research.
Nissan case study. (2013). Retrieved March 6, 2017, from http://www.researchomatic.com/nissan-case-study-177796.html
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Stopford, J. (1992). Directory of multinationals . London New York Basingstoke, Hants England: Macmillan Stockton Press Distributed by Globe Book Services.
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