NISSAN in France

1. NISSAN in France Best in France Case Study December 2004 Toshiaki Endo Kamen Palatov Sandeep Raghuwanshi Shelagh West

2. About NISSAN NISSAN and France Organisational structure NISSAN Europe Background data Impressions of France Constraints Advantages Adapting to France Essential Advice Executive Overview

3. About NISSAN • The world’s seventh largest Japanese automotive manufacturer • Sold over five-hundred-thousand vehicles in Europe in 2003, out of a worldwide total of more than three million

4. NISSAN and France • Nissan signed a strategic alliance with Renault in 1999 • First alliance between a Japanese and a French company • Primary purpose of the alliance was survival in the competitive automobile industry

5. Organisational structure NISSAN Europe S.A.S NISSAN France NISSAN HQ Japan NISSAN Technical Center Europe, Ltd. NISSAN U.K. North America NISSAN Design Europe, Ltd. NISSAN Germany Europe Asia NISSAN Motor Manufacturing Ltd. Other area NISSAN Motor Iberica, S.A.

6. NISSAN Europe • Regional headquarters of NISSAN located in France • Manages its European operations and products • Established in 1989 in Netherlands and moved to France in 2002 following its alliance with Renault • Employs 350 people at the headquarters, including 40 Japanese representatives

7. Background data • Nissan moved to France in order to improve cooperation with its partner Renault • The company sold 47,000 vehicles in France in 2003 • Cars are mainly manufactured in the U.K. and Spain • Nissan is trying to increase sales not only in France but also across Europe, utilising its alliance with Renault • However, the company is cautious about expanding the number of employees in France because of uncertain business circumstances

8. Impressions of France • Although the French automobile market is large, domestic companies are strong in France • Generally speaking, there are few reasons for foreign manufacturers to locate their regional headquarters in France • Nissan executives think that they still have room to improve the company’s relationship with Renault, especially to reduce back office costs

9. Constraints - 1 • Arrogant administration • It always takes lots of time for each procedure, compared to the time required in other western countries. • Moreover the procedures differ depending on who is in charge. • Sometimes the results and duration differ depending on whether executives have certain connections or not. • Operations often slow down or even stop during vacation seasons. • Strong labor unions • The rights of workers are strongly protected. For instance, the maximum number of working hours is limited to 35 by law for non-professional employees. These constraints cause high labor costs.

10. Constraints - 2 • Expensive hiring costs • Tax and social security are expensive in France. • Especially, the double-layer social security for Japanese representatives is a serious constraint on expert exchange. • (The French and Japanese governments agreed to solve this problem last October) • Vertically divided job system • Each employee has his/her own specialty but does not tend to share information and expertise. • Thus people sometimes have to repeat procedures, which may prevent jobs from running smoothly.

11. Constraints - 3 • Sense of time and services • Generally speaking, people are less punctual than the Japanese and Anglo-Saxons. • Awareness of the importance of quality service is low. The company has to train local employees or distributors about its required standards. • Language • Compared to Benelux countries, fewer people can speak English.

12. Advantages • Easy to recruit candidates • In addition to high educational standards, Nissan’s recognition and brand image have improved recently in France, which allows the company to hire talent easily. • Employees work at their best • Interviewees said they felt that even temporary employees worked as hard as they could. • High living standards • There are many places for expatriate employees to visit in France, especially in and around Paris. Employees can enjoy high quality of life, as long as they do not feel burdened by language constraints.

13. Adapting to France • The company has tried to introduce a common appraisal system worldwide • Regarding the constraints mentioned before, it has accepted the French way due to a lack of alternatives • Since being affiliated with Renault, Nissan has launched many measures to adapt to the French way of business • THE ALLIANCE CHARTER • HUMAN RESOURCES • Personnel exchanges and the Alliance Business Way Program

14. Adaptation – example 1 THE ALLIANCE CHARTER: • PRINCIPLES AND VALUES • A Charter, signed in July 1999, sets out the principles of a shared ambition, mutual trust, respect of each partner’s identity, and balance between the two partners of the Renault-Nissan Alliance, completed by operating and confidentiality rules. • EXTRACTS FROM THE ALLIANCE CHARTER • “A spirit of cooperation, of understanding and of mutual respect is the basis of this Alliance which induces a set of rules.” • “While preserving respective brands and identities and ensuring profitable growth for each partner, Renault and Nissan seek to build a new culture founded on trust, aiming at building a bi-national group.” • “Thanks to complimentarily and synergy opportunities, and despite distance and differences between the 2 companies, Renault and Nissan intend to develop a continuous cross learning process in order to build together value for both companies and their employees, shareholders and customers.”

15. Adaptation – example 2 • The Alliance Charter also formalises a guide to the “Spirit, Principles and General Rules of Business Ethics”, agreed to by both partners. It includes the following : • 1.Ambition and will to success must guide both partners to build together value for both companies and their stakeholders. • 2.Promote and maintain at all times mutual trust. • 3.We should develop a common vision based on truth and human respect. • 4.Ensure balance between the 2 partners. 5.Keep confidential within the Alliance any information or document relating more particularly to studies, products, industrial, financial, commercial data and any industrial property rights or know-how, exchanged or developed as a result of the Alliance. 6.Be fair with third parties. The Charter also sets out key conditions of success that were widely communicated to all contributors of the Alliance.

16. PERSONNEL EXCHANGES Since the beginning of the Alliance, Renault and Nissan have been committed to developing personnel exchanges in order to increase Alliance performance. These exchanges concern approximately 350 employees (including common organisations and can be grouped into four categories: The first category includes Renault and Nissan expatriates who are employed by the partner company during their expatriation. Such exchanges help reinforce the various functions through the sharing of best practices as well as encouraging mutual understanding. As of November 1, 2003, 75 expatriates fall into this category: Adaptation – example 3 • - 40 Renault employees are integrated into Nissan in Japan and work mainly in Ginza (Headquarters) and Atsugi (Technical Center). • - 35 Nissan employees work at Renault, either at the headquarters or at the R &D facilities in Rueil and Guyancourt. • Fourteen other expatriates work in Alliance projects such as development of platforms, engines and transmissions, etc. • A third category is made up of people working in common companies (RNPO and RNIS). Approximately 200 people fall into this group.

17. Lastly, personnel exchanges within a regional framework also exist. Thus, 25 Renault employees have been assigned to European Nissan affiliates. Nissan has also posted 30 employees either to Renault Samsung Motors or Renault Japan and the Asia-Pacific region. These 350 people are not the only ones directly making the Alliance work. Several hundred people are involved in Alliance bodies, particularly Cross-Company Teams (CCTs) and Functional Task Teams (FTTs). These people remain employed by their home company. Adaptation – example 4 • ALLIANCE BUSINESS WAY PROGRAM • The Alliance Business Way Program is a performance-oriented program in three phases for Renault and Nissan individuals and Renault-Nissan Teams: • Cross-cultural training consists of attending a conference on Japanese or French culture and a “Working with Japanese/French Partners”session. Over 1,400 people have been trained in both companies. • Team-Working Seminars (TWS) for a Renault-Nissan team focus on individual and team efficiencies by developing teams’ processes and enhancing team communication.

18. Essential Advice • First of all, though it has large market, France is not necessarily a good place for the European headquarters of an automobile manufacturer. • The company should be prepared for inefficient and non-cooperative administrative bodies and expensive tax and social security. • Strongly protected labor rights may also be a serious issue. • Regarding production, most automobile companies consider locating in low cost countries in eastern Europe instead of France.

19. We Thank • Mr. Toshiya Yamaguchi General Manager, Business Planning Parc de Pissaloup, 13 avenue Jean d’Alembert B.P. 123, 78194 Trappes Cedex France • Mr. Tetsuya Tajima Section Manager, Human Resources Parc de Pissaloup, 13 avenue Jean d’Alembert B.P. 123, 78194 Trappes Cedex France

20. References • http://www.nissan-global.com/EN/index.html

21. Our Team • Kamen Palatov • Sandeep Raghuwanshi • Shelagh West • Toshiaki Endo HEC MBA ProgramHEC School of Management1, rue de la Libération78351 Jouy-en-Josas CedexFrance