14 October 2004

Nissan vs. Mitsubishi Management Style

The BBC reports on Remodelling Japan Inc.
Nissan and Mitsubishi, two of the world's most famous car companies, have both stared into the economic abyss in the last five years.

But while one has recovered to become Japan's most profitable automaker, the other remains in deep trouble.

Their crises expose weaknesses in Japan's traditional corporate model - weaknesses that were hidden until the economic downturn exposed them....

Just five years ago, Nissan had debts of $22bn and was close to bankruptcy.

The company had been complacent about its place in the market and its designs were felt to lack imagination, analysts say.

Toshiyuki Shiga, head of Nissan's General Overseas Markets, explained that although Nissan's problems were widely reported by the media at the time, the company's own employees would not believe there was a crisis. They were tunnel-visioned and ostrich-necked, he said....

This was one of the first issues tackled by maverick French national Carlos Ghosn. He took over as Nissan's CEO when French car-maker Renault announced it was taking a 37% share in Nissan in 1999. That stake has since been increased to 44%.

Mr Ghosn introduced something called "cross-functional team working". This encourages dialogue across departments and divisions, engendering what Nissan's Toshiyuki Shiga terms "healthy conflict". It also enables the ideas of younger employees to get heard.

Mr Ghosn also tackled bloated management - cutting 22,900 jobs, some 15% of the total workforce, and halved the company's suppliers.

As a result, it is now Japan's most profitable car company, posting a $7.29bn profit in year end of March 2004.

Like Nissan, Mitsubishi Motors forged an alliance with a foreign car maker, in 2000. Daimler-Chrysler initially took a 37% stake, although that has since been reduced to 20%.

But unlike Nissan, its foreign marriage has not ended happily. When Mitsubishi asked Daimler to bail it out financially, Daimler refused.

Mitsubishi has responded with an aggressive restructuring plan. It has declared it will cut 11,000 jobs in the next three years, and has reduced its departments from 230 to 157.
via Tanuki Ramble

No comments: