RNBV was a 50/50 joint venture company established in March of that year to oversee the strategy of the alliance and all activities undertaken jointly by Renault and Nissan. The new company would "steer alliance strategy and supervise common activities on a global level, while respecting the identity and culture of each company and not interfering in operations." Executives at both companies believed much had been accomplished in the first three years of the alliance. Nissan, under Carlos Ghosn's leadership, had improved its finances dramatically and was rapidly reemerging as a major player in the global auto industry. Moreover, the alliance partners were in line with their initial forecast of $3.3 billion in cost savings and synergies promised by 2002, according to their internal reporting. As the board prepared to meet, Louis Schweitzer and Ghosn believed the alliance faced difficult challenges ahead. (Yoshino, Michael Y., and Perry Fagan. "Renault-Nissan Alliance, The." Harvard Business School Case 303-023, May …show more content…
It had been suffering to gain profit for eight whole years. Its margins were extremely low and expert figured that Nissan gave away $1000 for every car sold in the US due to the need of brand power. Purchasing cost was 15% - 25% higher in Nissan than Renault. Adding the cost burden was far in excess for the company’s needs. The Japanese factories alone could produce almost one million cars a year than the company sold. The company’s debts even after Renault’s investment, amounted to more than $11 billion. This was quite a do-or-die situation. Its either the company gain profit of Nissan would not exist