In this installment of business case studies with solutions we will look at the amazing transformation of Nissan. Carlos Ghosn Nissan strategy was deeply examined by business professionals to understand how to bring in effective change in organizations.
The problem at Nissan
Nissan was a well known carmaker but in 1999 the company became heavily in debt and was on the verge of bankruptcy. Carlos Ghosn was brought in to save the company. This case covers key understandings on strategy, leadership and organizational transformation.
Watch the video about the events that followed and and answer the following:
What was wrong at Nissan?
What steps did Carlos Ghosn take to get Nissan back on its feet?
What was wrong at Nissan?
When Carlos Ghosn came to Nissan he noticed that there was no sense of urgency.The rigid structures and traditional ways of doing business were deeply entrenched.There was lack of communication among the various departments and performance was not recognised. The organizational strategy had also moved from the focus to produce unique designs and superior performance that customers enjoyed to bland designs and doing what every other automotive company was doing i.e.and focus on mass production and servicing.
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What steps did Carlos Ghosn take to get Nissan back on its feet?
He used his foreigner status to change the existing way of doing business and implemented a new strategy.He got the focus back on innovative designs and performance which differentiated the Nissan cars. He closed down 5 factories and laid off more than 20,000 people.This was the wake up call for everyone in the company as they realized the gravity of the issues and were forced to take action to revive the company. He visited every factory and spoke to the people about the problems they faced. The people were put together in cross functional and diverse teams to solve problems.This also enhanced the communication between departments and there was increased unity and teamwork. He also changed the system of promotions based on seniority and made it based on performance. Regardless of how old you are you could not grow in the company fast based on your performance.
The steps changed the organizational results and within a year Nissan became profitable.
Watch the video below for learning how he brought about the change.
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