Monday, October 23, 2006

Alliance week, day 4--inside the Renault-Nissan alliance

Given all the hype surrounding the now-defunct talks between GM and Renault over creating a global alliance, I decided to look into the model for that alliance--the seven-year-old alliance between Renault and Nissan.

The Renault website contains a large volume of information on the alliance, including the alliance principles. They describe the alliance as follows:

Linked by cross-shareholdings, Renault and Nissan are united for performance through a coherent strategy, common goals and principles, results-driven synergies and shared best practices. They respect and reinforce their respective identities and brands.

Here's a summary of the alliance's key aspects (if you want more, click here for a 26-page booklet(!) describing the alliance):

Cross-shareholdership - Renault owns just under 45% of Nissan; the Japanese company owns 15% of Nissan.

Platform sharing - all new platforms are developed to be allow sharing between Renault and Nissan, with a goal of ten shared platforms by 2010. In addition, they share major components such as powertrains and engines, increasing scale economies.

Joint purchasing - 70% of purchasing dollars are spent through the alliance, yielding savings compared to purchasing separately.

Joint research and development - the two companies coordinate their advanced R&D.

Alliance governance - an Alliance Board, part of a company owned 50/50 by Nissan and Renault, governs the alliance. The board sets goals, assigns teams to individual projects, assess results, etc. Carlos Ghosn, CEO of Renault, heads the board. The individual companies are responsible for managing their brands and their day-to-day business.

In short, an ambitious alliance, notable for its financial results and its openness and transparency. It's hard to imagine GM management signing onto such an assertive partnership. Now we'll get to see how they fare without it.