Nissan Motor Company's SWOT, Market Analysis, and Strategic Choices - Example

Abstract Market analysis in any organization is very essential in measuring up the company performance and sustainability. With today globalization crisis such as economic recession and subprime crisis, it is important that a company defines its market analysis, conduct both SWOT and PESTLE analysis of its company as a way of measuring its future sustainability and growth as well as ensuring that a well established competitive advantage is obtained ahead of its competitors. For this reason, this paper aims at analyzing the automobile industry using Nissan Motor Company as the case study. The paper will first introduce the company through analyzing its background. A market analysis of Nissan Company will be produced where a competitive analysis will be undertaken followed by the company market segmentation. It is important that this paper analysis various strategic choices that are need to be met. Finally, the paper will be summarized thorough the issue of a conclusion. Recommendation will be issued on how Nissan Motor Company can sustain itself from today’s ever rising global issues as well as proper adaptation of modern technology so as to stay ahead of its competitors. Contents 1.0 Company Background 3 1.1 SWOT Analysis 4 2.0 Market Analysis 4 2.1 Nissan Motor competitor analysis 5 2.2 Branding and positioning 6 2.3 Market Segmentation 6 3.0 Strategic Choices 7 3.1 Ansoff Matrix 7 3.2 PESTLE Analysis 9 4.0 Conclusion and recommendations 10 4.0 References 11 1.0 Company Background Nissan Motor Company Ltd is a multinational motor maker whose headquarter is situated in Japan. The company along with its various subsidiaries, largely designs, produces and sells automobile products and services. The company also engages in offering financial services to its customers. The company operates in Canada, South Africa, Spain, United Kingdom, Japan and France. About 80% of the sales within the company come from outside Japan. Nissan Motor Company has a well defined global partnership with Renault for automobile production as well as distribution and automotive financing. Renault holds 44% stake within Nissan Motor which constitute the Renault Nissan Alliance which is mainly focused in manufacturing all designed electrical vehicles. The company conducts its operations in the main segments namely; sales finance and automobile. Nissan Motor uses the strategy of getting big through going small. Through its designed small car initiative, the company manufactures low cost and fuel efficient small car with safety, standard comfort, performance and style (Yoshiro and Fagan 2003). The various renowned Nissan models include Sentra and Maxima cars; infiniti upscale sedans and altima, pickups, sports cars as well as SUVs. The company is considered to be the biggest manufacturer of forklifts. The company well established strategy of working to ensure that safe cars are manufactured. 1.1 SWOT Analysis Strengths Possession of a global brand Global financial position Well established alliances Weakness High dependency in overseas markets Lack of a proper diesel technology Time lag in product innovation Opportunity Great Asian market Relocating its manufacturing plant so as to reduce cost Threats Rising of prices in commodity Motor market saturation Great cross cultural disharmony 2.0 Market Analysis According to Yoshiro and Fagan (2003), the manufacture of automobile in large volume began in the early 1890s in Western Europe with the USA commencing the production of both gas and electric automobile. Initially due the low fuel prices, US were producing big cars but after the fuel prices increased drastically, US had to compete with Japan Nissan Motor Company who succeeded in manufacturing cars that were fuel efficient. It is from this time that marketing, prices, customer satisfaction and design become important aspect within the automobile market. The manufacturing of fuel efficient cars made Nissan Motor Company is the world leader within the US market (Yoshiro and Fagan 2003). This potential growth in opportunities led to global overcapacity in the automobile which in turn led to acquisition and merges such like Nissan Motor and Renault Company. It is quite evident that increased in global trade has facilitated in high competition especially within the automobile industry. With current global recession, the automobile sector is largely suffering from bad economic spending. As the financial crisis gradually increases consumer weakened confidence and credit availability have lead to drastic decline of the sales of vehicles. Consumer spending especially within automobile has fallen to an annual rate of 4%. The current credit environment has widely limited automobile finance companies such as Nissan to access securitization markets and public debt thus impairing the ability of the company to support both dealers and consumer financing needs (Morck and Nakamura 2004). 2.1 Nissan Motor competitor analysis There is great competition which lies in the automobile industry. Nissan Motor Company operates within fuel efficient motor vehicles. This analysis compares the Nissan Motor Company with two other automobile in Asia which is Suzuki Motor Corporation (whose sales in the year 2010 was an approximate value of 2.47 trillion Japanese yen which calculate to *^% of four wheeled cars) and Honda motors Company Limited (whose sale was 8.58 trillion Japanese yen translating to 76% automobile business). In order for the company to ensure that it remains the leader within the automotive industry, it greatly invests and maximizes on its competitive advantage. The company offers competitive prices that are attractable to its potential customer (Morck and Nakamura 2004). The company has established well trained staffs who guide customers during car purchases. The compare boost of a competitive advantage over its competitors in that it has a well established inventory for both new and used cars as well as a well complete service and parts department to effectively serve its customers. 2.2 Branding and positioning Nissan Motor company have a well developed approach to both brand and positioning engagement which largely focus on long term change turning the company image to a brand and position driven organization. The company is largely focused on culture thus aligning their business commercial objectives. This is widely defied in their goals and objectives which are related to the brand and the organization positioning (Ghosn 2002,). The company’s works towards building a brand that is well positioned so as to achieve high level of success. Its brand in Datsun has continued with technological breakthrough such as Sedan that is accompanied with Italian styling ensuring that the brand has a loyal following in the United States. Morck and Nakamura (2004) asserts that, the company has established their brands and positions them within sporting activities such as the Datsun Fairlady roadster, Datsun 510, the sporty and race winning 411 series. With a well established brand image and a loyal following Datsun was the ideal marketing position. The brand in the Nissan leaf is a new model which gives both Honda and Toyota a wakeup call. The new leaf is all electrical which is all electric and have interesting innovations (Ghosn 2002). 2.3 Market Segmentation Nissan have realised the importance of market segmentation so as to allow marketing or sales program to focus on a particular subset that is likely to purchase their products and services. Based on geographical segmentation, the company is involved in selling some of its brands in some countries. For instance, the company have been involved in selling the Sedan in Italy ensuring the brand has a loyal following in Italy making sure that a small number of individuals within America posses the car. On the price segmentation, Nissan Motor Company has different price offers for its cars so as to create a larger opportunity for ensuring that it segments some market along a given price dimension (Industry Snapshot 2007.). For instance the new Nissan Leaf model varies in price as well as status along a clear defined spectrum as a way of appealing higher income groups. It is observable that the company has defined is market segmentation through lifestyles. In that it has well established cars for both sporting and home automobile activities (Vlasic 2008). 3.0 Strategic Choices Nissan Car Company has applied strategic choices in order to meet the challenges facing the rapidly changing business world. Excellent-justified decisions and defined strategies are important tin the company so as to achieve its objectives as it is optimizing its resources. Strategic choice entails the understanding of the underlying basis that are guiding the future strategy and creating strategic options for selecting and evaluating from among them. 3.1 Ansoff Matrix Ansoff Matrix is a very useful framework in guiding the managers in making strategic choices. Nissan Company has used these strategies to meet its objectives. The company has applied the four options in relation to market strategy. In the market penetration, the company has laid specific strategies to sell more in the existing markets. The European market has been one of biggest market for the company. The company has therefore, strategized to create local production in different models to meet the demand. However, in order for the Nissan to effectively penetrate the European market, it has to be organic and flexible organization in Europe (Thompson & Thompson 2010). In case of market development strategy, Nissan has established goals to gain more markets outside Japan. These include European countries such as France where its impact has not be felt completely. Early trials of selling the automobiles had proved futile due to the poor marketing and management. For instance, in France, marketing organization was wanting. The distributor, Richard-Nissan S.A was both limited in both marketing capability. Therefore, in order to full excel in marketing developing strategy, re-engineer is necessary. This means that Nissan should allow the Europeans countries to control their marketing strategies and their decision making. In the product development strategy and diversification strategies which are related to the products, Nissan has strategized on ways to add innovate ideas in the production of the automobiles. Investment has been done which aims at increasing sales 1.3 millions automobiles to 2.3 millions by the end of 2015 (Smith 2010). The company is underway in launching about 30 products including a zero-emission car under the new brand, Venucia. However, this is a venture between the Nissan and Dongfeng Motor Company. Therefore, diversification strategy is underway. This new plan is said to ensure the China production of automobile will be on the increase. The partnership has led to growth and expansion of their influence. This is well illustrated by the establishment of any manufacturing facility that will manufacture light commercial vehicles (LCV), while other plants will be established in other regions in China that will manufacture Middle and Heavy Commercial Vehicle (Rieple & Habersberg 2008). In case of New Products Development (NDP) strategy, the Nissan Company has collaborated with Dongfeng Motor Company (DFL), which was created in 2003 as strategic partnership between the Nissan Co. and DFL Group. As a result of the China government giving direction in promoting energy-efficient vehicles, the company is underway in manufacturing electric passenger vehicle (EV) which bears the brand name of VENUCIA. The new product in the market allows the company to be more competitive in the industry. It will therefore, be able to compete effectively with automobiles manufacture in Europe and America (Smith 2010). 3.2 PESTLE Analysis In application of political, economic, social and technology (PEST) strategy, Nissan has laid goals which are necessary in the present business world. A PEST analysis commonly measures the market. The tool is effective as it will allow the company to access the market growth. The company had issues in penetrating the European market due to quotas restriction and valuation of the Yen. In order to counter these economic issues, Nissan has come up with strategies that will lead to decentralized structures and flexible management policy. States, federal and local bodies have restrictions that regulate business. Nissan Company has set up strategies that ensure the political patterns will not heavily affect its business. These factors include international legislation, conflicts and wars, trading policies and government change and term. Technologically, factors such as automation, rate of technology change, technology incentives, R&D activity, are considered in setting of strategy. This is because any shift in technology will definitely influence the quality, costs and may lead to innovation. Nissan Company has set up strategies that will ensure that the technology will turn out to benefit the company (Rieple & Habersberg 2008). It is evident that Nissan Company has principles those strategies in the production of car. The strategies will ensure that the Nissan Company has a great future in the manufacture of cars. Venturing with other companies has ensured that the company expands its horizon to other countries. This is a great advantage as it will help the company to compete effectively with its main rivals. In addition, its strong company culture, advanced management methods, low costs, financial strength, and quality products will ensure that the company is able to achieve the set strategies. 4.0 Conclusion and recommendations It is quite observable that Nissan motor Company have well established market segmentations and from its SWOT analysis the companies widely boost on its brand position within the automotive industry. Its both its PESTLE and SWOT analysis gives an indication that the company has a desirable growth both in term of brand and positioning as well as the company performance. However, there are several areas that Nissan Motor Company needs to re-establish so as to be able to tackle with today’s ever raising global challenges so as to continue to enjoy being the leader in the manufacture of automobile not only in Japan but across the globe. The following recommendation will ensure that Nissan Motor Company establishes it market position; With the raising cost of fuel across the globe, there is need for the company to manufacture cars that are fuel efficient. The company can decide on manufacturing automobile that uses solar energy so as to cut on cost especially on fuel prices It is important to enhance the use of modern technology in the manufacture of Nissan automobile so as to ensure that the company is able to stay ahead of its competitors as well as establishing a significant With its merge with Renault, Nissan need to ensure it works together with the company so as to improve on their performance ahead of their competitors 4.0 References Ghosn, C., 2002, “Saving Business Without Losing the Company”, Harvard: Harvard Business Review Industry Snapshot. 2007. Nissan SWOT Analysis. Retrieved on 1st December 2011 from http://industrysnapshot.blogspot.com/2007/01/nissan-swot-analysis.html Morck, R. and Nakamura, M., 2004, “Been There, Done That – The History of Corporate Ownership in Japan”, Center for Economic Research, Hitotsubashi University, Paper series No. 2004-4. Rieple, A, Habersberg, A, 2008, Strategic Management: Theory and Application, London: Oxford University Press. Smith, A. 2010. "Nissan recalling 747,000 vehicles in U.S". CNN. Thompson, F, Thompson J, 2010, Strategic management, London: Oxford University Press Vlasic, B. 2008. "Nissan Plans Electric Car in U.S. by '10". The New York Times. Retrieved May 20, 2010. Yoshiro, M and Fagan, L., 2003, “The Renault-Nissan Alliance”, Harvard Business Case No. 9-303-023 Read More