Nissan's Case Study: Nissan Motors: The Future Of The Company

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Background: During 1998 the auto industry was in a difficult situation where the demand for the past three years have been flat and the industry was consolidating in the developed market. Renault was the 2nd largest auto manufacturer in the France. Although a 100 year old company it ran into financial difficulties in early 1980’s where it has to take series of steps like closing of the plants and layoffs to cut down its cost and make profit. (Weiss, 2010) Similarly, Nissan Motors a 90 year old 2nd largest Japanese auto maker was in the losses in the 5 consecutive years. With rising burden of debt (D/E ratio of 5, $33 Billion in current liabilities by 1999) and operations in 22 countries the situation was increasingly becoming difficult for the company. (Weiss, 2010) During May 1998 the announcement of the merger of Daimler and Chrysler made the top management of the Renault to think about the future of the company. It had two choices – to enter alone in the U.S. market and plug the holes with small companies in the U.S. or look for the international tie-ups. The company considered Nissan Motors for this. (Weiss, 2010) Although Nissan was amongst the top Japanese automakers in the U.S. and European market but by 1998 it had lost the position and was heavily burdened by the debt (Weiss, 2010). From various sources the M&A team of the Renault came up to the fact that the interest of Nissan lies in: • Cutting excessive debt from its balance sheet • Brand identity • Regaining

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