Renault & Nissan Joint Venture

4 Pages 1119 Words

Since the 1980's, and even more now in the late nineties, it has become a growing trend for companies, both large and small, domestic and foreign, to form strategic alliances within their particular industries. There are many specific goals that companies may be looking to achieve by dong this, but the main underlying reason is to guarantee the long-term sustained achievement of "fast profitable growth" for their business. They have to keep up with a rapidly increasing diversified global market and increased competition.

Renault and Nissan join forces to achieve profitable growth for both companies… On Saturday, March 27th, it was announced that Renault, a French car manufacturer, would be teaming up with Nissan Motor Corporation in a $5.4 billion deal that created the world's fourth largest automaker. This deal gives Renault a 36.8% stake in Nissan, a company that has been struggling financially for the past few years. "The $5.4 billion deal between Renault and Nissan hands over effective control to the French automaker in exchange for badly needed cash" (Wwodruf). There are other agreements within the contract, but they will not be discussed in much detail at this time. Both of these corporations plan on benefiting from the merger. This alliance will resolve Nissans very substantial financial problems. Renault will be given the opportunity to join the automotive big leagues at a time of global expansion in the auto industry (Marks). Market expansion will be possible because Nissan is strong in Japan, Taiwan, Thailand and North America- markets where Renault has no presence. On the other hand, Renault is one of the top marketers in Europe, while Nissan is just a small player. Nissan is strong in trucks and luxury cars, and Renault is strong in small, mass-market cars. Even though the deal sounds great, it does not come risk-free. Many skeptics believe that the teaming up of two struggling automakers will not result in profitabilit...