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Nowadays, the performance of the research concerning the work of a particular company enables to determine its strong and weak sides, opportunities and threats, and the overall effectiveness of its organizational performance. This capstone project will describe Nissan Motors Company – one of the leading vehicle manufacturers in the world. The additional emphasis will be placed on a discussion of the company’s strategies and mechanisms of governance. This essay will show how the current strategies form the future directions of the company.
General Information about the Company and Its Success
The current work will provide information concerning such a publicly-traded company as Nissan Motor Co. This company was founded in 1933. Nowadays, Nissan Motor is headquartered in Yokohama, Japan (Yahoo. Finance, 2015). It performs manufacturing and selling automobiles under the following brands: Nissan, Infinity, and Datsun. Also, it proposes parts of vehicles, manual transmissions, engines for automobiles, motorsports, and industrial equipment, axles, specially equipped vehicles, etc (Yahoo. Finance, 2015). Nissan Motor is engaged in various business activities like manufacturing and selling of boats, financial services (credit, leasing, and insurance), consulting concerning raw materials, logistics business, ground and vehicle management, experimenting with automobiles, etc. The products of this company are distributed all over the world (Yahoo. Finance, 2015).
The overall success of Nissan Motors is greatly influenced by the company’s vision, mission, and stakeholders. The company has the following vision: “enriching people’s lives” (Nissan Motor Corporation, n.d). The mission of the company is represented by the following statement: “Nissan provides unique and innovative automotive products and services that deliver superior measurable values to all stakeholders in alliance with Renault” (Nissan Motor Corporation, n.d). The mission and the vision of the company form the understanding that providing innovative solutions for the improvement of the quality of life is one of its top priorities. The stress is put on such words as “enriching”, “unique”, “innovative”, and “superior” for making the emphasis that the company is successful and deliver products to prosperous people. As it is noted on the official site of the company, its stakeholders are represented by communities in which the company operates and works: employees, shareholders, customers, suppliers, and dealers (Nissan Motor Corporation, 2011). That means that all the parties which are involved in the development, manufacturing, and selling of vehicles cooperate and play relevant roles in the company. All of them have a considerable impact on the performance and success of Nissan Motors as they are the integral and essential parts of the working process. The absence of any of these parts will make the existence and operation of the company impossible.
Analysis of Five Forces of Competition and Their Impact on the Company
The analysis of the five forces of competition is necessary for the understanding of the industry structure, their methods, and the extent of their influence on the industry and companies in it. These forces are the following: the threat of entry, bargaining power of suppliers, bargaining power of buyers, threats of substitutes, and industry rivals (Ghos, 2003).
In the automobile industry, the threat of entering is rather weak because different companies require considerable funds and knowledge for the development, manufacturing, and selling of new products. The situation is sharpened by the fact that at the current moment, there exists a great variety of innovations and solutions. Additionally, nowadays, there exist numerous automobiles with various characteristics which are oriented to different customer segments. Hence, creating and proposition something new will be rather a difficult task. That means that Nissan Motors will be obliged to spend a considerable sum of money and time for the creation of some innovative solutions. Also, the possibility of retaliation for the innovative ideas from the side of the existing companies is rather high. Moreover, in the automobile industry, new companies will be obliged to correspond to local and global requirements (for example, requirements towards emission control). Because Nissan Motors is already presented in numerous countries all over the world, it is understood that its products meet the stated requirements. The creation of a well-recognized image and reputation which will be competitive in the market is a considerable issue. The additional attention should be paid to the fact that a new company will be obliged to withstand the economies of scale of the existing companies. These factors create the understanding that Nissan Company (as the corporation that existed in the market for more than 80 years) should not fear competition from the newcomers (Evanow, 2005).
At the same time, it would have no problems with the suppliers. There is a considerable amount of small suppliers whose power in the market is relatively low. These companies propose widely accessible materials. That means that Nissan Motors can choose from the great variety of suppliers and materials the most attractive (concerning the quality and price) ones.
The buyer power in the automotive market is rather strong. The existence of a great variety of brands (BMW, Ford, etc) makes shifting from one vehicle manufacturer to another (due to the price increase) easy. Even though the majority of buyers are represented by separate individuals, the big orders are made by corporations and governments, which may bargain for some sales. The production of this company can be hardly replaced by other means of transportation like motorcycles, bicycles, buses, and planes because they are less convenient. Hence, there is a low threat of substitution of Nissan Motors’ vehicles by any other type of transport.
The above-mentioned analysis shows that the competitive rivalry of the company is rather strong because there is a considerable number of competitors. The majority of these companies are big. Hence, the threat of being acquired by one of the competitors is rather high. At the same time, the threat of new competitors is low. Consequently, managers of Nissan Motors cannot fear the competition from some newly established companies. Simultaneously, they should pay attention to the price policy and appearance of the vehicle to hold the existing customers and to attract new ones.
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SWOT Analysis of Nissan Motors
SWOT analysis of the company will help to determine its strong and weak sides, threats, and opportunities.
The strong sides of the company are represented by the strategic partnership, development of innovative solutions, strong financial performance, and growing reputation of the brand. The strategic partnership is reflected in the close cooperation with Renault (car manufacturer from France) through the cross-sharing agreement (Loska, 2010). Such a cross-cultural combination enables the satisfaction of the great variety of needs from different customers located all over the world. The partnership of employees of both companies leads to the development of innovative solutions and selling electric cars.
The strong financial performance is reflected in the availability of considerable income, gross profit, and the trend to the increase of the amount of sold production. In 2013, the company sold about 20 % more production than in 2012 (10,482,520 vehicles compared to 8,737,320 vehicles) (Nissan Motor Corporation, 2014). In the current year, the gross profit of the company raised by 5 % (from 18.46 B to 19.42 B) (AmigoBulls, 2015). The net income of the company increased by about 7 % (from 3.89 B to 4.16 B) (AmigoBulls, 2015). Also, Nissan Motors is widely recognized as the reliable brand that offers sporty and economic vehicles (Becker, 2014).
The major weak side of the company is represented by the numerous recalls of its products because of identified deficiencies. For example, Nissan Motors recalled almost 1 million cars from different parts all over the world (mostly from Japan) because of “defective accelerator sensors that could cause the engine stalling” (Auto Blog, 2013). This malfunction of sensors can cause a slowdown of the engine and stop. Also, it should be noted that the company already had several recalls this year (about 13,000 cars due to the problems in the hardware and 800,000 vehicles because of steering issues) (Auto Blog, 2013).
The major opportunity of the company is reflected in making more efforts on the development of environmentally friendly solutions, which become more popular at the current moment due to global trends of saving nature, reduction of harmful emissions, and the intents to save money on expensive petroleum.
The main threat of the company is the lowering of the reliability and trustful attitude from the customers towards the brand because of the considerable amount of recalls due to various reasons. These recalls show that there are some problems in the development, manufacturing, testing, and checking of automobiles inside the company. This fact can lead to the lowering of the popularity and decreasing of the number of sales. One more weakness of the company is the growing competition from other automobile manufacturers.
The proposition of the Strategy for Improvement of Strengths and Opportunities and Lowering of Threats and Weak Sides
Nissan Motors can improve its strong sides and opportunities by closer cooperation with companies that propose environmentally friendly solutions to the automobile industry. These can be small and unpopular companies offering unique and uncommon approaches. The weak sides and threats of the company may be minimized by the increasing thoroughness of the development, manufacturing, and checking of the final production for the elimination or minimization of callbacks. This can be performed by the creation of a special independent unit inside the company that will provide an impartial assessment of the quality of vehicles and spare parts.
Strategies Directed on the Maximization of Company’s Competitiveness and Profitability
Various levels and types of strategies will be proposed in the current work: differentiation of the product, improvement of the employees’ awareness concerning the quality of production, and cooperation with other companies which develop environmentally-friendly solutions. The first type of strategy will concern the upper level of managers and developers who will create new production directed on the expanding of the market segment of the company by proposing, for example, manufacturing of motorcycles. This will lower the dependence of the company on the fluctuation of the automobile market. The next strategy is reflected in the improvement of awareness of workers at all levels concerning the necessity of the developing and manufacturing of high-quality products and checking of these products. The last strategy relates to the development department and the department of the establishment of relationships with other companies which propose environmentally friendly solutions.
The above-stated strategies can be introduced to all stakeholders through various means of communication. First of all, these strategies should be officially presented to stakeholders by one of the well-recognized managers of the company. Simultaneously, they should be presented on the official website of Nissan Motors for enabling each person to get acquainted with them. The next step is represented by the introduction of these strategies with more concrete actions in various units of the company and by the discussion of the ways of their implementation with stakeholders.
Evaluation of Corporate Governance Mechanisms
The current work will provide an evaluation of the effectiveness of corporate governance mechanisms. The first mechanism is reflected in compliance with all the workers through the creation of “a fully functioning framework for the prevention of conduct violations” (Nissan Motor Corporation, 2015, Corporate governance & internal control). Special meetings are held for the control of the development and realization of various policies in each region and sphere in form of guidelines, updates, and training. This strategy is rather beneficial because it enables the improvement of awareness of each employee. Also, it provides the assessment of current rules and the necessity of the implementation of any amendments to them. This is based on the background of the information concerning the performance of the company. Consequently, this mechanism provides the ability of timely rectification of any issues.
The second mechanism is the assurance of the proper functioning of the risk management system of Nissan Motors by annual reassessment of corporate risks and reports analysis. This mechanism is rather beneficial because it enables the company to determine new risks and to eliminate or minimize their possibility by avoiding threats and improving strengths and opportunities.
Responsibility of the Company
As it was stated above, the core vision of the company is reflected in the enriching of human life. It also concerns the sustainable social development of the company reflected in the establishment of the strategy “Blue Citizenship” for the efforts to reduce the number of emissions of carbon dioxide at about 90 % till 2050 (Nissan Motor Corporation, 2015. International NPO names Nissan a world leader in corporate action on climate change). An example of the successful implementation of this strategy is developing, manufacturing, and successful selling “the world's top-selling zero-emission vehicle, the Nissan Leaf” that can be powered from the homes of its owners (Nissan Motor Corporation, 2015. International NPO names Nissan a world leader in corporate action on climate change). This initiative has a considerable effect on the company’s bottom line because it reflects its intents of developing environmentally friendly technologies and lowering the negative impact of harmful emissions on its stakeholders and the whole society.
It should be noted that the current work provides the description and the assessment of the work, strategies, and mechanisms of Nissan Motors Company. Additional attention should be paid to the fact that the success of the company is influenced by its vision and mission because they place stress on the innovation and improvement of the quality of life. The analysis of the five forces of the competition shows that the company should not frighten the rivalry from the side of newcomers or the influence of suppliers. However, the management should pay much attention to the price policy, development of the innovative solutions, and the appearance of the vehicles, because customers have considerable strength as they may choose from a great variety of similar products. Also, Nissan Motors should develop its strong sides and eliminate weak ones. However, the company has a weak side of several recalls of its production due to identified deficiencies. The main opportunity is reflected in the development of environmentally-friendly electric cars when the major threats are growing competition and loss of reliability. The improvement of the company’s strength can be reached through diversification of production, an increase of employees’ awareness, and the establishment of relationships with other companies offering environmentally friendly solutions. The existing corporate governance mechanisms are considered to be advantageous as they improve the awareness of workers and better assessment of the existing and possible risks. The responsibility of the company is reflected in the development and manufacturing of electric cars which do not emit harmful substances into the atmosphere and do not harm the health of the people.