The making of a Global Alliance: Nissan and Renault

Essay by Liliana86University, Bachelor'sA+, May 2008

download word file, 13 pages 3.0

The term strategic alliance has become widely used to describe an agreement between two or more businesses joining together to cooperate in a specific business activity, so that each benefits from the strengths of the other and gains competitive advantage. The businesses are usually not in direct competition, but have similar products or services that are directed towards the same target audience.1 The formation of strategic alliances is widely seen asa response to globalization and increasing uncertainty and complexity in the business environment.

In the recent years companies worldwide, including many industry leaders, are becoming increasingly involved in strategic alliances. Furthermore, several surveys have disclosed that such partnerships are distinguishable from traditional foreign investment joint ventures in several important ways.

Strategic alliances involve sharing of knowledge and expertise between partners as well as the reduction of risk and costs in areas such as relationships with suppliers and the development of new products and technologies.

A strategic alliance is sometimes equated with a joint venture, but an alliance may involve competitors and generally has a shorter life span. Strategic partnering is a closely related concept.

Taking into consideration the automotive industry itself in the near past there have been observed many consolidation and inter corporate linkages as alliances or joint ventures in this sector. All with the aim to become more cost-efficient and to stay competitive. In 1998 took place the merger of Daimler-Benz and Chrysler and in 1999 the alliance between Renault and Nissan.

"The majority of the auto industry views this as a time of consolidation, not expansion, as many expect global overcapacity to exceed ten percent," said Daron Gifford, National Automotive Industry leader, KPMG LLP. "The reasons for this consolidation are clearly structural and material-cost reduction, as well as revenue growth through new business opportunities." For the fourth...