The Strategic Alliance Between Renault and Nissan Renault and Nissan are two major automobile brands working independently as well as are in a 19-year-old alliance where Renault holds 43.4 percent stake in Nissan and Nissan owns 15 per cent in Renault. The Renault-Nissan Alliance is the first of its kind involving Japanese and a French company. Renault was identified for modern design and Nissan for the excellence of its engineering. The two companies had just decided to a most important strategic alliance in which Renault would take for granted $5.4 billion of Nissan's Debt in return for a 36.6% equity share in the Japanese company. Before the alliance it was concluded that the combined company would be the world's largest carmaker. Supply chain management is one of the areas of key concern for global car manufacturers. Major players in Car Industry are looking for revolutionary methods of management of their suppliers. In Renault-Nissan case, RNPO or Renault Nissan Purchasing Organization is a unique joint organization responsible for integrating purchasing Strategy. As a result of mutual engineering efforts, Renault and Nissan cars can share components. This fact allows the alliance to combine their purchasing orders. Therefore, not only the cost of order has reduced but RNPO "defines worldwide purchasing strategy" and now it is accountable for full purchase of Nissan and Renault. Another area for cooperation between two companies is engineering which could be a lesson for other car manufacturers to reach economic of scale and scope. The key difference in Renault-Nissan case is concentrating on designing and producing components of car jointly instead of developing whole car from scratch. The alliance achieves economies of scale by producing in larger scales and economies of scope by manufacturing components which are compatible for different models of both brands. Moreover, one of the top priorities of Nissan is to find a way to reduce R&D cost as well invest in new technologies with lower cost. For instance, according to Renault website, the alliance helps two companies to invest in advance technology like hybrid vehicles. Through the alliance of Nissan and Renault, the benefits that arose were obvious and determinant. Transparent benchmarking allows two culturally diverse companies to share best practices and also the common platform and shared purchasing strategy had delivered huge cost of savings. Noticeable is the fact that to preserve corporate identities they decide to remain as separate managements, separate brands, and separate companies while every decision was affecting both brands. Renault and Nissan successfully integrated their complimentary competencies to standardize their purchase orders and components manufacturing. Therefore, they can reduce their cost and achieve greater outcomes. Therefore, the success of this alliance is also interrelated with the synergy among the two companies and the framework of equality help the transfer of knowledge between foreign engineering teams. As a result, the Renault-Nissan alliance has been hugely successful. There is broad acknowledgement by many at senior levels inside both companies that much credit for this must be given to their conscious effort to build cross-cultural understanding from the start.

Case Questions: 1. Define strategic alliance and state the type of alliance that Renault and Nissan are engaged in. Justify your answer. Answer: 2. Discuss the type of business-level cooperative strategy that was entered into by Renault and Nissan. Justify your answer. Justify your answer. Answer: 3. Discuss the type of corporate-level cooperative strategy that was entered into by Renault and Nissan. Justify your answer. Justify your answer. Answer: 4. Explain three (3) risks of strategic alliances and how they could have negatively affected the strategic alliance between Renault and Nissan.