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In Carlos Ghosn We
Trust?!
French businessman of Lebanese origin. He is the current CEO and President of Renault of
France and Nissan of Japan. He is largely credited with turning around Nissan. As an outsider in
charge of one of Japan's largest companies, Ghosn has been extremely successful. He was voted
Man of the Year 2003 by Fortune magazine's Asian edition and is also on the board of Alcoa,
Sony, and IBM. Ghosn became CEO of Renault, in 2005, succeeding Louis Schweitzer, while
Ghosn (pronounced Gonne in French, Ghosen in Lebanese Arabic) was born in Porto Velho,
Brazil on 9 March 1954 to a French mother and Lebanese father. At age 6, he moved to Beirut,
Lebanon, with his mother. He completed his secondary school studies there, in a Jesuit school
Stanislas in Paris. He graduated with engineering degrees from the École Polytechnique in 1978
with last year's specialization at the École des Mines de Paris. He is a French citizen.
He is married to Rita Ghosn and has four children. Ghosn is multilingual, speaking four
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Career: Michelin Corporation: 1978–1981, employee; 1981–1984, plant manager; 1984–1985,
head of research and development of construction and agricultural tires; 1985–1989, of South
American markets; 1989–1990, President and COO of North American companies; 1990–1996,
Nissan Motor Company: 1999–2000, COO; 2000–2001, President; 2001– now, President and
CEO;
Introduction
This paper focuses on the managerial and leadership skills of Mr. Ghosn, CEO of Nissan Motor
Co. Ghosn, who was appointed as COO of Nissan after Renault-Nissan alliance, won praises
from auto industry and economical analysts for the amazing turnaround of the failing major
As Nissan COO, Ghosn made a revival plan, which included massive layoffs, shutting down
factories and breaking the traditional Japanese business supplier network and focused on
changing the organizational behavior from within. This paper also sheds the light on other
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Gain an insight into the entrepreneurial and leadership qualities of Carlos Ghosn after a review
Nissan Decline:
Nissan started showing signs of decline from the early 1990s. Its market share in the US
automobile market declined to 4.7% in 1991 from 5.5% in 1980, while during the same period
other Japanese automakers increased their share in the US market from 17.7% to 28.5%.
In Japan also, Nissan's market share declined from 34% in 1974 to below 19% in the late 1990s.
In 1992 fiscal its pretax profits were $615 million - a 50% decline when compared to its 1991
pretax profits. Many analysts were of the opinion that in the early 1990s, the top management at
Nissan failed to take notice of changing trends in the customer tastes especially in the US, its
biggest export market. Commented David Magee, "Management once hailed as progressive and
trend-setting was now a part of Japan's old boy network, arrogant and oblivious to market
changes and customer needs." According to analysts, over capacity, high production costs, and
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Nissan took various steps during 1992 - 1998 to turn the company around. However none of
these efforts were successful. The first restructuring plan announced in 1993 aimed at reducing
over capacity but failed to achieve its objectives due to strong opposition from the labor unions
to shutdown plants. Nissan launched another restructuring plan in 1995, when the manufacturing
plant at Zama Island was shut down, but the workers had to be transferred to other
manufacturing plants due to strong resistance from the labor unions. The 1995 restructuring plan
also failed to turn Nissan around. In FY 1998, another restructuring plan - Global Business
Reform Plan - was announced. It aimed at consolidating operating profits of the company,
concentrating on increasing profitability rather than sales. It planned to introduce high profit
margin models, focusing on global markets especially the US market. But even before this plan
could be implemented, Nissan had to borrow $708 million from state-owned Japan Development
Initially, Nissan had talks with three players - Daimler (Germany), Ford (US) and Renault
(France). Nissan was more interested in either Daimler or Ford picking up a stake in the
company as both these companies was bigger and had more financial muscle than Renault
(which had just re-established itself in 1997). But both Daimler and Ford backed out and Nissan
Mr. Fix it
Since May 28, 1999, date of the closing of their agreement, Renault and Nissan have rapidly
completed a number of vital stages. These relate both to the basis of the Alliance and to the
implementation of synergies between the two groups. Work already done by the Cross Company
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Teams confirms the transaction rationale and feasibility of the objective of overall savings of $
3.3 billion (FRF 20 billion / 390 billion yen / 3 billion euros) for the 2000-2002 periods alone. In
the longer term, these synergies would reach $ 3 billion each year from 2005 onwards.
Nissan and Renault managers and engineers have rapidly established a close working
relationship marked by their joint determination to succeed, an open-minded attitude and mutual
respect and trust. The quality of this relationship is a key asset in making a success of the
Alliance. A true complementarity of business experience and technical skills appears as a solid
foundation. Balanced relations between the two companies and the development of strong
identities for each of the brands are the core values on which the cooperation between Renault
The Annual General Meeting of Nissan shareholders approved Carlos Ghosn's appointment to
the Nissan Board of Directors on June 25, 1999. He immediately assumed his duties as Chief
Operating Officer of Nissan. Patrick Pélata, appointed Executive Vice President in charge of
Product Planning, Design and Strategy, and Thierry Moulonguet, named Deputy Chief Financial
The Annual General Meeting of Renault shareholders appointed Yoshikazu Hanawa, Chairman,
President and Chief Executive Officer of Nissan Motor, to the Renault Board of Directors on
June 10, 1999. Mr. Hanawa has served on the Renault Board since that date. Further, Tsutomu
Sawada, appointed Senior Vice President, Adviser to the Chairman, joined the Renault
Management Committee (CDR) on September 1, 1999, and Mr Yutaka Suzuki was appointed
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17 Renault people have joined Nissan at management level and one more is expected in the
course of 1999. They have been appointed in the following sectors: office of the COO.,
international human resources, finance and treasury, corporate planning, product planning,
purchasing, manufacturing and engineering, marketing and South American operations. Seven
Nissan people have joined the ranks of Renault's management and 14 others are expected to
follow before the end 1999. They have been appointed in the following sectors: Alliance
• CEO Yoshikazu Hanawa gained an alliance with Renault who took a 36.8% equity stake in
Nissan
Board of Directors
• While CEO of Michelin North America, he led the merger with Uniroyal Goodrich.
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Ghosn’s Challenges…
• Speaks no Japanese
• Taking over in Tokyo with the mission to save a losing operation based on a reputation for
cutting costs.
When Carlos Ghosn took over as CEO of Nissan Motor Co. three years ago, he had to do some
very un-Japanese things—cut staff, cut suppliers, and introduce accountability into the ranks of
the automaker. You’d think those actions, compounded by his inability to speak Japanese, would
make him unpopular. But instead Ghosn has become somewhat of a hero in Japan for his
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It might have been his promise to quit if he didn’t accomplish the task, or his penchant for long
hours, or his commonsense approach to leadership that made him the subject of Japanese
business books and the recipient of many awards. But Ghosn told a Stanford Business School
“If you want to be a leader, make sure you get results, especially in a situation where it may be
Nissan’s numbers bear out the fact that Ghosn has performed. He transformed a $5.5 billion loss
in fiscal 2000 to a $2.7 billion profit the next year—above analysts’ expectations. He trimmed
billions from Nissan’s $20 billion debt and boosted the stock price 30 percent. “We did in two
The accomplishments were not without pain, but the carmaker was headed for the junkyard if it
didn’t improve its record of seven years of unprofitability and declining market share. “Nissan
was in a difficult situation not only for the short term but for the future,” Ghosn said.
Just three months after arriving from Renault, where he was executive vice president, he laid out
his revival plan in October 1999. Two years later, he had closed plants in Japan; reduced
headcount by 21,000 employees globally, halved the number of suppliers to around 600, and cut
parts purchasing costs by 20 percent. “We had to speedily and significantly reallocate our
Did It Work?
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The growth continues under what Ghosn calls his “180 degrees plan”—1 million units sold in
three years, an 8 percent operating margin, and zero debt by 2003. Far from jeopardizing
Nissan’s future, he has invested in a new plant in Canton, Miss. and is expanding the model line,
But that’s “far from the potential—there’s more to come” he told the packed Bishop Auditorium
audience during a student-sponsored View from the Top speech. He sees “at least” cost cuts of 10
Results…
Analysis
3 Success Factors
• Strategy
• Leadership
• Change management
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– Design goals with new incentives (pay per performance)
• Cost Reduction
– Close plants
– Reduce debt
• Performance Management
• Leadership Development
– Succession Planning (Criteria for leading a global firm). Must she/he be Japanese?
Ghosn’s Leadership
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• Not Japanese, but multicultural experience enabling him to embrace cultural differences and
building on them
• Power distance
• Communication Style
• Individualistic or collective
• Quality of life
• Employment Security
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• Position Power
• Focus on key basic metrics of quality, cost and customer satisfaction. “Execution is 90% of the
job”
• Communications: Connect to all levels of employees all across the company and get everyone
• Transparency: Consistency between what leaders think, say and do. “Walk the Talk”
2. Identify and involve power centers and change agents (top, middle, line management)
– Communicate/promote objectives
6. Reinforce learning
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Getting large numbers of employees to follow the same vision can be a challenge—a challenge
that is magnified when two companies from cultures as different as Japan and France are
partners.
“You can make companies work together even if they are on different continents,”
Ghosn said.
One company does not need to take over the other, nor is it crucial for both companies’ cultures
to meld into one. Preserving distinct styles helps each company’s employees identify with their
The first is respect for identity: “Renault is Renault. Nissan is Nissan. Japan is different
The second is respect for autonomy: Decisions about Nissan shouldn’t be made in Paris,
Finally, Ghosn said, “We don’t work together for the sake of working together.” Every
Ghosn also believed in transparency. When he joined Nissan, he publicly announced the
problems that the company faced and the drastic steps required to revive it. He was also open
Ghosn believed that by giving employees and media the true picture of the company, it would
be easier for him to convince them about the drastic steps that would follow. Another step
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that Ghosn took after empowering employees was to improve communication in the
company.
On Global Leadership
“It sometimes seems to me that as Nissan’s identity strengthens, the North Americans, Europeans
and Japanese working here are becoming more alike than they are different”
Carlos Ghosn
In April 2005, Carlos Ghosn, the ‘turnaround artist’ behind the much acclaimed restructuring at
Nissan, would lead two companies. Louis Schweitzer, CEO of Renault, announced in 2002 that
Carlos Ghosn would succeed him as CEO of Renault, while continuing as CEO of Nissan. While
at Nissan, with his cost-cutting ventures and old ‘non-Japanese’ ways of management, he was
regarded as the most charismatic leader in the company as well as among the Japanese business
community. With his unconventional ideas and attention for urgency, he managed to ring radical
changes in the company’s operations. As the industry observers eagerly awaited the management
change, the pressure was perceived to be high on Carlos Ghosn. Brazilian by birth, Ghosn has to
deal with Japanese culture at Nissan as well as French etiquettes at Renault, while achieving
synergies with their partnerships. At the same time, the challenges for the two automakers were
equally high with the global automobile industry in a downturn and product and market
expansions underway at both the companies. In the age of globalization and increasing corporate
scandals, Carlos Ghosn epitomizes the qualities required to be a successful leader with cultural
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Exhibit 1
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Exhibit 3
References
Ghosn, C. 2001, “Mr. Ghosn said: ‘thus, I have changed Nissan’ ” Economist September 4 page 86-89
Ghosn, C. 2002, “Saving the business without losing the company” Harvard business review Jan. pp
37-44
Nikkei Business, 2000, “The seven diseases Carlos Ghosn defies: Nissan reform” Nikkei BP, Tokyo
Gold, A., Hirano, M. & Yokoyama, Y. 2001”An outsider take over Japan: An interview
Magee, David, 2003, “Turnaround: How Carlos Ghosn Rescued Nissan” Harper Business; 1 edition
January 7,
Ghosn, C.,2006, “Shift: Inside Nissan's Historic Revival” Broadway Business, March 21
MANAGEMENT TEAM
GROUP EXECUTIVE COMMITTEE
March 1, 2010
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