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Nissan United Kingdom, Ltd.: Case Study
This particular case study looks at Nissan Motor Manufacturing (UK) Ltd., created in 1984 as a manifestation of Nissan Japan's global investment arenas, with production beginning in 1986. Nissan Motor Manufacturing UK Limited (NMUK) is at the present day, the most massive manufacturing plant for cars in the United Kingdom, and is found near Sunderland. In terms of productivity, cars produced, and people hired, it is the most productive car manufacturing plant in Europe.
Nissan headquarters eventually decided that they would bolster their UK manufacturing program by increasing the production to 60% in the next two years and then by 80% in the fourth year, with a plan to create 100,000 cars. However, before all this productivity occurred, the case examines the working relationship and related complications between the U.K. And Nissan. Prior to this working relationship in 1974, "Datsun U.K. was outselling Toyota, its nearest Japanese rival by more than three to one. The U.K. was the only market in the world where Nissan outsold Toyota" (Walsh, 2007). Thus, it was really no surprise that these two nations joined together in a working relationship. Once the working relationship began it was extremely productive.
However, this case examines the termination of this once productive working relationship. Botnar had been the individual who had been leading and implementing the production of Nissans in the UK to begin with. "In 1988, the merchant bankers retained by Botnar valued total Nissan U.K. holding at 750 million pounds. Nissan Motor Company's merchant bankers, after speci-cally noting that the estimate was not to be taken as a definite offer, stated that their method of valuation had produced the ?gure of 330 million pounds. This ?gure in Botnar's eyes treated Nissan U.K.'s book value as if it were bankrupt, not a highly pro-table business" (Walsh, 2007). Thus, this caused Botnar to counter with a memo to Nissan, a memo which asserted that the sale of the core business for 390 million pounds, and which maintained that Botnar would remain in control of the automotive financial group, the financial services and the car removal unit; instead Kawana offered up the idea of putting off any negotiation about the subsidiaries until Nissan UK had been sold officially, and also suggested that an outside audit be used to assess the overall profits and value (Walsh, 2007). Thus one of the key elements of this case was that this kind of friction, along with heated negotiations for a sale price caused Botnar to pen a memo to Kume, where more issues of the overall situation were brought to light.
One of the issues that chipped away at this working relationship was the fact that Botnar felt that every time he tried to communicate with Kume about issues which were affronting the company; Kume would pass these concerns along to a subordinate, something which was counter-productive for the company at large. Another issue was that Botnar thought it made sense for Nissan to attempt to control the sales in the business in the UK because of the production volume that was at stake, and because of the necessity of having a UK production plant to win over the UK market. Yet another key factor in this case was that Botnar felt that Nissan never provided them with a staff that was experienced enough nor which had enough expertise to bring the company into the highest amount of productivity.
Ultimately, one of the key factors in this case was that Botnar felt there was not only a sheer lack of communication between the parties, but that there were wildly different expectations and perspectives on the U.K. endeavor. "In 1985, Nissan had decided to reduce its investment and to make in phase one a small plant, producing 25,000 cars per year initially from assembly kits, rising in phase two to 100,000 per year in 1992. This made the task of managing Nissan U.K. even more complicated" (Walsh, 2007). Essentially this excerpt highlights the host of problems that were riddled throughout this venture: the two parties were nowhere near on the same page of how to make this enterprise successful.
Nissan Japan had made themselves appear as though they were ready and able to take over Nissan U.K. within a few months, without preparing the staff and with absolutely no understanding of the company market within the nation. Nissan Japan also presented themselves has having no interest in what this type of takeover would have on the management and staff of Nissan in the U.K (Walsh, 2007). Botnar and his colleagues felt that it would essentially be catastrophic if Nissan took over the UK factory, as they were so largely out of touch with the needs and workings of this particular location and market.
An additional key issue was that of excess car production in the early 1980s in Europe in general: this was something that really put the stability of the company in a heightened sense of limbo. This is conjunction with a marketing policy that was in place that focused on discounting, created a wealth of increase in the size of the used car market in the U.K. And the sale of used cars in general, as the used car market became three times the size of the new car market. Thus, most dealers just didn't have the space to cope with the volume of used car sales. This development couldn't help but threaten the further stability of the brand in general. "The majority of Nissan dealers had insufficient space to cope with volume used car sales and the concomitant workshop activity, so the Nissan franchise ceased to be pro-table for them and they turned to low volume/high pro-t margins such as Toyota, Honda, Mazda, Saab, Volvo, etc. This, coupled with the appreciation of the yen from 1983 to 1986 of 50%, has made the whole new Nissan car sales business unpro-table, for the dealers as well as for Nissan U.K" (Walsh, 2007). This was a key factor which demonstrated the sheer inefficiency of the management system as a whole. Basically the decisions of the mother company in Japan were created a situation of unprofitability for the Nissan UK branch, based on a skewed perspective and a poor understanding of the European market, along with an unclear understanding of the unique needs of the Nissan UK Company.
Comparative Management Systems
Fundamentally, this breakdown demonstrates the sheer differences in comparative management systems. Comparative management assesses the extent to which the pillars of management are applicable from one nation to another. There continues to be a certain amount of debate surrounding the comprehension and approach to comparative management, with many saying that it is a hybrid between an art and a science. Furthermore, there's a certain universality which is applicable for practitioners under a variety of circumstances. This means that the universality of management science means that it can be moved from one locale to another: management thus becomes universal because it is so pivotal to the smooth functioning of a single organization. For instance, when it comes to management theory, the "universalist" school of thought asserts that certain management principles can be applicable to any nation or situations and can be transferred smoothly. There were elements of this mindset present in this case. For example, there was the notion that both sides believed in the importance of having smooth working relationships based on respect and which would be able to subsist for the long-term.
However, this was not something which was able to be readily manifested, largely as a result of the fact that management systems are largely culture bound. Cultural differences can't help but subsist in various nations and this case demonstrated how these extreme cultural differences can sometimes undermine the success of the entire venture if they're not appropriately explored or otherwise dealt with.
Thus, the alternative course of action would have been to have listed and confronted all cultural differences and issues of management before the enterprise had ever occurred. For instance, there was a clear difference between centralized and decentralized decision-making in the UK vs. In Japan. There was no clear manifestation of individual vs. group rewards: workers for Nissan UK didn't appear to have a strong reward system in place which valued and rewarded individual productivity; instead there was a very eastern mindset that the good of the company was its own reward. With Nissan UK, there was a greater tendency of informal procedures which intermingled with formal ones: Nissan Japan had strictly formal procedures and modes of communication. Nissan Japan also had a more aggravated sense of organizational loyalty, with workers more identifying with the brand that they worked for: this wasn't something that generally existed in the UK division as much, or at all. Thus, the two branches really should have acknowledged the differences that were thriving between them, and found proactive methods of dealing with them so that all parties could feel as though they were part of productive,…[continue]
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