Nissan Company Strategies
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The company maintained a flexible working environment and encouraged cultural diversity, which has been a more extended strategy to support customers in the international market. This is beneficial to the company as sales to these customers generate profits for the company. The corporate company officers have far-reaching exposure in global operations, which helps the company maintain and attract new customers.
The company maintains simple products for the usage, which is an advantage to them as competitors companies do not produce these products for their customers. Nissan Company Company has implemented the strategy of build to stock, which ensures the company has enough products to supply to the global regions, consequently increasing sales for the company.
Risk management strategy: Nissan Company has developed responsive risk management, which has proved to be beneficial in overcoming severe financial challenges; this worked out well when the alliance with Renault was formed. Nissan risk management concentrated on identifying and critically analyzing risks early enough before they occur. This is beneficial as it minimizes risks.
The executive-level committee formed laid out decisions to ensure sufficient corporate risks, and it handled specific risks by frequently informing the Board of Directors on risk measures and control measures employed.
Nissan’s recovery committee focused on meaningful action to organize a company’s reaction to emergent hazards by critical distribution information, distributing enough supplies of products, supervision products at functional management levels of the supply chain, sales, and productions. Nissan Company was tasked with empowering action where management was given authority to make decisions in technical operations and delegating operational authority without many restrictions from the central authority.
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Many organizations have limited knowledge about the occurrence of a disaster. The organization needs to increase and improve training facilities and equipment to enable them to have enough experience to overcome the disaster effects. The training programs should be divided into several groups that are volunteers, medical specialists, emergency responders, and also those for construction.
Specialization in one field of a disaster response encourages the specialist and gain a good understanding in that field as they undertake different training modules. The organization needs to partners with the professional association, which will help in training curriculums for the response, recovery, and reconstruction due to an occurrence of a disaster.
The cost of implementing these training programs in the organization is expensive because it has to employ specialists to train the employees. It is time-consuming to train the employees, but hiring the specialist is more costly. The tools of the response and reconstruction are expensive to acquire to be used by the specialist.
The company will have a lot of benefits after having its own specialist. After the disaster, the organization will be able to reconstruct and recover quickly. The company will not have to depend on other multinational organizations to help wish usually take time to respond. The owners of the organization will be guaranteed that the organization will not collapse soon as measures have been made to control to ensure continuity of the company operations.
The qualitative risk assessment procedure is one way in which Nissan Company could have assessed the supply chain risks. These procedures include brainstorming, conducting interviews, use of historical data and strengths, weaknesses, opportunities, and threats (SWOT) analysis. Carrying out interviews with risk assessment experts could have helped Nissan Company management to identify the most likely causes of risks in their business, which is earthquakes. Historical data on the effect of this catastrophe could enable the management to estimate the likelihood of occurrence of earthquakes in their area of operation.
Analyzing strengths, weaknesses, opportunities, and threats of the industry in which Nissan company operates could also have helped the business in identifying the possible risks that the market is likely to face in its supply chain. Management of this business after conducting interviews analyzed historical data and carried out the SWOT analysis could have brainstormed the data obtained from these procedures and estimated the likelihood of the business’s supply chain be disrupted by the earthquakes.
Application of quantitative risk assessment procedures could also have helped the business access the risk of disruption of their supply chain. The qualitative methods include determination of the probabilities of interruption of the supply chain by earthquakes, and quantifying the cost the business could incur if the risk occurs. These procedures could have provided a strong basis for the management of the company to realize that earthquakes are the critical risk that requires the most attention. Quantitative methods allow the integration of information from other sources as well as providing a structure for sensitivity analysis.
A semi-quantitative approach, on the other hand, uses partially quantitative measures discussed above, to characterize the likelihood of an event to occur. This process does not require accurate mathematical data for risk assessment in analyzing probabilities and consequences of the occurrence of a game. If Nissan Company could have decided to use this approach, the risk could have been classified as either low, medium, or high. Probabilities in the quantitative approach are calculated and brainstorming, which applies qualitative procedures done to classify the risk in the above-mentioned categories.
According to Marcus et al. (2012), mixed methods are more effective in risk assessment. Structure process failure mode effect analysis (PTMEA), which he developed, the semi-quantitative approach can be used to estimate risks in sourcing, design, and component manufacturing while simulation model, which is quantitative in nature, can be used to measure the risk and provide fact to support decision making. Nissan Company could have used the mixed method, which comprises all the purposes mentioned above to regulate access to the risk of disruption of its supply chain by earthquakes.
Companies adopt various product line strategies, depending on market needs. Consumers have varying preferences, and companies should seek to honor those preferences in order to increase sales. Nissan is one such company that believed in honoring customer preferences. The company did not focus on producing mass quantities of cars that have standard features. Instead, Nissan focused on maintaining a simplified product line compared to its competitors prior to the disaster. This means that the company’s product line was made flexible enough to accommodate the varying preferences of its global customers. For instance, the company adopted a build-to-stock strategy for just a few strategic keeping units in each model while taking a build-to-order approach for the rest. This means that the company did not produce cars in mass but instead acted on orders. Although the product line strategy improved the company’s product offering and increased sales, it significantly hurt its ability to respond to and recover from the disaster.
The simplified product line meant that Nissan’s production was mostly dependent on orders placed by the customers. The type of car manufactured has to capture the inputs of its customers, as the company endeavored to meet the unique wants and needs of every customer. However, the product line strategy could not allow the company to produce cars in mass quantities in anticipation of demand. The simplified product line strategy adversely affected the company’s operations following the Great Japan Earthquake and the subsequent Thai Floods of 2011.
Since the company did not stock enough cars to meet the demand after the disaster, the disaster led to a stop in its manufacturing activities. As such, the company could not work on the orders placed, leading to a significant reduction in sales. Had the company adopted a rigid product line, it would have produced more cars that could be sold during and after the crisis. Thus, the simplified product line accounted for much of Nissan’s woes following the disaster.
5.
Effects of operations changes to exposure of Nissan Company to future disruptions, steady-state operations, and the trade-off that the management is making
One of the changes that Nissan Company in 2012 announced to put in place is the increase in the local production of cars in America and the reduction in reliance on components made in Japan to its foreign factories. This would reduce the disruptions caused by the exposure of the company to earthquakes in Japan. Delocalization of production of cars outside Japan meant that the shocks that face Japan would not affect production in other factories situated outside Japan. Opening up other factories also necessitated the need of the company to access the risks that the new locations are exposed to. The management of the company may have reduced the exposure of the business to earthquakes but opened up new threats in the new areas of operation.
The steady-state of operation of the Nissan Company will be affected as the organization factors in the new changes in the business. The Chief Operations Officer in 2012 stated that some part suppliers were yet to restore their operations, need for rehabilitation of the supply chain, development of a robust supply chain, and comprehensive risk management in order to make the business more sustainable. This meant that there was a need to alter the chain of supply in the industry by developing a new chain that is less exposed to disruption by earthquake risks. There was a need for the management to create a risk assessment department that will help in data collection and presentation for decision making. The operations of the business have to be changed to factor in these new changes.
The trade-off that Nissan management is making is giving up production of parts in Japan and shifting it to other factories in other areas. The main of this trade-off is to reduce the risks exposed to the business by depending highly on production in Japan, where the risk of earthquakes is high. The trade-off is done mainly to enable the business to obtain its objectives irrespective of the occurrence of the earthquake in Japan.
References
Chau, V. S., & Witcher, B. J. (2008). Dynamic capabilities for strategic team performance management: the case of Nissan. Team Performance Management: An International Journal.
Jindal, D., Jee, C., & Thakur, R. R. (2011). Nissan: go‐global strategy. Business Strategy Series.
Toma, S. G., & Grădinaru, C. Strategic Alliances: The Case Of Renault-Nissan.
Marcus, W., Wieland, A., Carl (2012). Dealing with supply chain risks. International Journal of Physical Distribution & Logistics Management. 42(10): 887-905