Case study report: Carlos Ghosn: Multicultural Leader as CEO of Nissan and Renault Written by Syeda (Alaina) Irfan- 15180 Introduction Think of a company with losses worth $5. 5 Billion, debts of $19 Billion, poor product portfolio, rapidly decreasing market share and diminishing brand value. Now ask yourself would you invest in such a company? The obvious answer is probably not but would you re consider had you known that in 3-5 years time the company would be the third largest automaker in the world and one of the most profitable? Renault, 2010) Such is the case of the phenomenal turnaround brought about by Carlos Ghosn when he took over the reins of the Japanese auto maker Nissan. Carlos Ghosn- The Turn Around Artist Carlos was born in Brazil in 1954. His parents were both of Lebanese origin. Since childhood he showed credible signs of strong leadership traits, analytical skills and managing capabilities. He was brought up amongst students from a variety of cultures which encouraged him to master 5 languages (Arabic, Portuguese, French, English and Japanese). Straight after graduation he was recruited by French tyre company Michelin where he served for 18 years.He joined Renault (French auto maker) in 1996 where he earned the nick name, ‘Le Cost-killer’. After Renault’s publicly criticized alliance with Nissan, Yoshikazu Hanawa (CEO Nissan) requested that Carlos join Nissan as COO in 1999. The “Nissan Magic”- Case Summary Carlos arrived in Japan with no knowledge of the culture there. He once said, “I did not try to learn too much about Japan before coming, because I didn’t want to have too many preconceived ideas. I wanted to discover Japan by being in Japan with Japanese people”. Known for his strict regimes and cost cutting strategies his arrival in Nissan was not a welcoming one.He was faced with the challenge of making Japanese employees understand the concept of accountability and ownership without the use of dictator ship that would quickly lead to de-motivation. So he created a sense of urgency amongst the workforce by mobilizing the managers. He realized that Nissan was driven to achieve short term goals only, their profits were spent on equity purchases not needed, their designs were outdated and spending costs were very high. In a culture that strongly opposed cross-functional teams he managed to convince the Japanese to form them by explaining its importance and the overall benefits.This led to the execution of the Nissan Revival Plan (NRP). Phase 1 of the plan included closure of 5 plants, 12 platforms, 10% of retail outlets and cutting of 21000 jobs. The results were 1. 5 Billion profits. Phase 2 involved dropping non performing products and introducing new innovative trendy designs. The result was 1 Million in Profit and all debt was cleared. Later platforms, workers and technology were integrated with Renault to create a culturally diverse workforce. Theoretical Motivation Analysis: Japan Hofstede’s Cultural DimensionsIn the case of the Nissan, Carlos was faced with a workforce that rated extremely high on uncertainty avoidance which meant job security was vital for them and his leadership was tested when he had to let go employees, however his way of executing it by means of golden handshakes etc is commendable. Power Distance ranks fairly high thus explain why Carlos felt that the employee’s reluctance to speak out to contribute in the decision making process was the ‘greatest hurdle’. The Japanese rank lowest on Individualism, confirming that it is a Collectivist Society, however they like to be in groups that they are familiar with e. . engineers with engineers, when thrown into groups with different people e. g. engineer with sales person, their biggest strength becomes their biggest failure. However Carlos overcame the problem by explaining the purpose and giving them a common goal to work towards. Japan ranks highest in the world in Masculinity, employees need traditional formal structures to feel motivated. This is why Carlos defined high yet attainable goals, responsibilities were clearly indicated and there were consistent checks on progress. Work Centrality – Meaning of Work (MOW)Japan ranks highest in MOW research with a score of 7. 78, whereas Britain ranks the lowest with 6. 36. This means that the Japanese people give a higher degree of importance to work. The research indicates that such countries have a more motivated and committed workforce. Because the importance of work is so high firing of workers causes morale of the entire workforce to drop dramatically. Carlos used a variety of methods (Golden handshakes, retirement plans and pre retirements) to let go of people as he knew that work centrality was high in the culture. Global mindset The greatest competitive advantage companies in the twenty-first century can have is effective global leaders”(Deresky,2010) Critical factors have been identified that seem to exist in such leaders. These include High Cultural quotient (CQ), open minded and flexible, effective cross culture communicator and collaborator etc. Carlos Ghosn has been internationally acclaimed to have a global mindset. Globe Project Global Leadership and Organization Behavior Effectiveness (GLOBE) has conducted a research of 62 countries to understand the effects of cultural variables on leadership and the organization.The globe project reading indicates that the most effective style of leadership should consist of Not be very charismatic, not a highly team oriented nor self protective, moderately participative and humane and lastly not Autonomous. It seems that Carlos adaptation to the culture more or less suits the above description. However due to his unique way of doing things, sometimes that were ‘un Japanese’ he may have molded the above attributes to suit his agenda. Conclusion Carlos Ghosn is a true Trans-cultural leader He based the revival of Nissan on rebuilding the motivation of its employees.He adapted his leadership style to blend into the Japanese culture and though unpopular in the beginning, gained celebrity status in Japan soon after. He is solely accredited for Nissan’s revival. All the theories and research used above without a doubt indicate his ability to successfully use ‘cultural diversity as a catalyst rather than a crutch for the company’
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