19-04-2014, 10:42 AM
Renault-Nissan: Nurturing a Successful Alliance Across Boundaries
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Introduction
It was late March 1999. As a seasoned executive of a global corporation, General Motors vice-chairman Bob Lutz
knew that well over 50 percent of alliances were destined for failure. Especially those taking place across such
distant – and distinctive – national cultures as the French and the Japanese cultures. These thoughts were
undoubtedly in his mind as he learned that the French company Renault had just bought a 36.6 percent stake in
Japanese Nissan for USD 5.4 billion to form an alliance between the two companies. His remark to a journalist
became instant news:
“Renault would be better off buying USD 5 billion of gold bars, putting them on a ship and dumping them in the
middle of the Pacific.”1
Bob Lutz was not alone in his opinion. The international media, company executives, management academics and
consultants all over the world were nearly unanimous in their disapproval of the Renault-Nissan alliance. A sample
of their comments gives a sense of their main concerns:
“Much has been made of the culture clash between [the May 1998 merging partners] Daimler and Chrysler but it will
be nothing compared to Nissan and Renault. At their core, they are both nationalistic and patriotic, and each
believes its way is the right way to do things. We will have quite a teething period for the first year or two as they feel
each other out.”
The Social Initiation Stages of the Alliance
In early 2004, an observer wrote:
“The Renault-Nissan alliance was called ‘a marriage of desperation for both parties’ when it was announced in
March 1999.” A more precise description, however, should have heralded a successful corporate [tinkunacuy]
period turning into a long-term marriage.” 4
This observer was referring to tinkunacuy, a Kichua word denoting an ancient conjugal practice of social initiation in
Peru’s Andean civilizations of millennia in age. Within certain Andean communities, whenever a young couple
contemplates future marriage, they move in together for a number of months. If the experience of living together is
satisfactory, they go on to marry. In any other case, the couple gives up their marriage hopes to once more become
single individuals ready for tinkunacuy with another partner in the community.5
There is more than what meets the eye in tinkunacuy. The partners expect – and are expected by the community -
to marry, and so they prepare mentally and emotionally as individuals beforehand. Then both partners give the best
of each other openly, truthfully and respectfully, to experience life together and share their dreams as a married
couple. Tinkunacuy thus resolves for the Andean people the timeless paradox of building solid conjugal
relationships. On the one hand, a couple does get the chance of building its shared dreams together. On the other,
they get to know, take risks and experience first-hand the practicalities and uncertainties of cooperating with each
other as a couple before entering a life-long commitment.
Two approaches to Alliance Negotiation
March 1999 saw two archetypal approaches to alliance negotiation and closure at play in the automotive industry.
On the one hand, DaimlerChrysler CEO Juergen Schrempp had a two-month due diligence carried out to assess the
prospect of an alliance with Nissan. Then on March 9, he met at length with his management board in a hotel in the
shores of Lake Geneva. A “green team” of company managers focused on the likely benefits of an alliance with
Nissan. A “red team” focused on the drawbacks. After listening to both sides, Schrempp and his management team
made a decision. The next day, Schrempp flew to Tokyo and met for three hours with Nissan’s Hanawa.
DaimlerChrysler broke off alliance talks with Nissan after that meeting. Soon after, following a similar process,
DaimlerChrysler entered into an equity alliance with Mitsubishi Motor Corporation (MMC). When signing that deal,
Schrempp remarked: “They [MMC] are the ideal partner for us.”
Renault’s approach to negotiating an alliance with Nissan was different. In their case, both the substance and the
style of their alliance negotiations were an organic result of what the two companies achieved during their social
initiation stages. The level of confidence in their ability to work cooperatively, the mutual trust that had been created
and the informal pledges that had been jointly formulated played a critical role in the final outcome of the
negotiations. In other words, these negotiations were not just about signing an alliance deal following a sound due-
diligence assessment. Rather, the prospective allies enacted a process of social commitment that codified the
mutual pledges stemming from their earlier experiment of working together. This is made evident by examining the
negotiations of the Renault-Nissan alliance in greater detail.