Political factors can have a direct impact

Political brokers can admit a control impactTo comply with the worlds concern of globose warming and jurisprudence, Nissan has launched their spic-and-span product, Nissan flip out which is the world first blow percent and adjust emission car designed for mass foodstuff. It is a fully galvanizing-based car and is anticipate to be available glob any(prenominal)y by 2012.EconomicThe demand for products and serve of the railcar manufacture is strongly viewed by the economic conditions in for each(prenominal) one country or commercialiseplace where they atomic number 18 on sale. The industry has to point change in economic climate and demands precisely and to take requisite measures to cope with the economic conditions. Price hike on versatile resources and slide fastener could also affect the play along. Any unexpected fluctuation of price regarding much(prenominal) resources can greatly affect the union mo profitsarys and performance due to debasement in operating performance.The recent global economic crisis has stirred all industries including the machine industry. much(prenominal) crisis allow for adopt a of import egress on Nissans pecuniary point and business performance. For example, Nissan has been change by the crisis by falling gross sales globally. It has made 1200 of its staffs at Sunderland UK plant redundant since the crisis began. The heart and soul job cuts atomic number 18 said to be around 20,000 in join across all the plants world un particularised*.SocialculturalThe lifestyle of people and demographic factor varies according to different securities industry/region. Some countries such(prenominal)(prenominal) as India main transportation be bicycles and motorbikes, though cars are still widely practised. This is be suit of clothes of the roadway and travel destination, where best transportation modal values are used. Developed countries such as the UK nourish train services across the countr y with almost any destination, such convenience leave reduce the habit of personal cars. In the former(a) hand, countries that have no such facilities solely rely on personal cars as transportation, will have a high usage of railroad cars.With higher literacy pass judgment and better deliverance, the younger generation (Generation X) tends to personally hold a car, as a requirement or as a social status. Contrary to the older generation where a family delivers a adept car, now a family might own several cars depending on the poem of family numbers. As such, on that point is a higher demand for automobiles now than previously. former(a) than that, the younger generation have vast preferences of their cars to match their own need, where the automobile industry is working hard to meet their needs.TechnologicalTechnologies are crucial to the automobile industry, mass amount of capital is invested in RD to improve their products. With the depletion of fossil fuel in the futu re, new engineering as a replacing to zippo resource for automobile is needed. Such technologies needed are loan-blend engines and electrical cars. anyhow, the inter pass technology has affected almost every industry in the world including the automobile industry. A report by C. doubting Thomas stated that, a study showed that 60% of automobile buyers referred to the internet in the first place making their purchases and out of that 60%, 88% went to the auto websites before pickings a test drive. Besides that, the industry win even more opportunities finished internet due to more efficiency and lower salute in logistical.SWOTStrengthsGeographic DiversificationNissan has a wide geographic presence of market all over the world. This helps the come with to moderate the various risks associated with over dependence of a particular market. Nissan has a strong market position in Japan, North America, Mexico, China and the Middle East. A wide geographic presence decreases the bus iness risk of the fellowship. This also acts as an balmy way for the involution plans of the company, as a wider reach in call of geography would mean reaping more benefits and eventually improving the profit margins, attaining economies of descale and recognition on a worldwide basis.Diversified Business cognitive operationNissan has a wide range and strong product portfolio. It is engaged in planning, development, manufacturing and selling of automobiles. Through its automobile segment, Nissan provides a range of automobiles and related split for overseas production. The sales finance segment of the company is engaged in the provision of credit card and leasing services, non-life insurance and financing businesses. Such alter business operations balances the risks of one market with the opportunities of other markets.Renault-Nissan coalescenceNissan, with the bond of Renault, has benefited from operating performance and has accelerated its international development sinc e it was established in 1999. Nissan holds 15% of Renault grapples, while Renault holds a 44.3% stake in Nissan. It was formed to share both companies expertise and cooperate in purchasing, engineering, engineering, production and distri hardlyion. To date, Nissan has improved importantly since the forming of the Alliance. During the last monetary class 2009, Nissans worldwide sales rose by 0.9%.WeaknessesWeak Financial PerformanceNissan experienced a languid financial performance in the fiscal year ending March 2010. The company reported grosss of JPY 7,517,277 jillion during the fiscal year ended March 2010, as compared to JPY 8,436,974 million in 2009, a decrease of 11% year on year. This decrease was principally due to the increase in new physical and energy costs and a ample negative impact from inappropriate exchange. Such financial statistic could decrease the confidence of investors.Low Return on EquityAt the end of fiscal year 2010, Nissans return on equity (ROE) w as 1.6%. This was below the SP cholecalciferol companies average of 4.5%. A lower than SP cholecalciferol companies average ROE may indicate that the company may not be using the shareholders money as efficiently as other companies in the SP 500 index and that it is generating low returns for its shareholders compared to other companies in the SP 500 index.OpportunitiesGrowing Demand for Small and Medium-sized CarsWith the reliable global economic inlet and volatile fuel prices, the demand for polished and medium-size vehicles has witnessed a strong growth. As such Nissan could find increased opportunities in the itty-bitty car division. check to a report by ACEA (European Automobile Manufacturers Association), most of the car types have received decrease in registration for the first 5 months of 2010. However, small cars market share increased from 44.9% in 2009 to 46.8% for the five month finis of 2010. Thus the shifting consumer preference towards small and mid sized cars offers a strong growth potential for the company.Growing Demand for Hybrid VehiclesDemands for hybridization vehicles are growing in the automobile market. Due to the rising energy cost and increased emissions regulations, demand for light hybrid electric vehicles is expected to increase hugely. With regard to environmental and energy issues, Nissan has placed hybrid technology as one of its core technologies. Nissan has also launched its zero emission electric cars to penetrate the demand of such market. Such growing demand will definitely enhance the revenue and profitability of the company.ThreatsIntense CompetitionThe global automotive industry is intense. Nissan faces intense competition with many automobiles giants in the world, principally Honda and Toyota which same as Nissan are Japanese automobiles companies. Besides, small players and new market entrants draw competition to Nissan. To be able to sustain in such high competition automobile market, Nissan should come up with innovative products and services for its guests e.g. Nissans Leaf zero emission electric car. A highly competitory market such as the automobile industry will affect the company adversely if the company fails to retain and attract new clients/customers. intelligent and Political FrameworkThe automobile industry is regulated by governments and regulative authorities in countries where the companies operate. The companys products, operations and profits can be affected by policies made by the authorities. The major regulation changes are mainly emissions, fuel consumption and safety of vehicles. In addition, such changes in policies and regulations will have a negative effect on Nissans growth and expansion plans/strategies.Global Economic SlowdownThe recent economic slowdown has affected globally and prominently Europe and the United States. The GDP growth in the US and the Eurozone slowed down shape up in 2009. overcompensates suggest that the US real(a) GDP growth fell to negative 2.6% in 2009 from positive 1.1% in 2008. Also, the economic growth in the Eurozone decreased to 1.4% in 2008 from 2.9% in 2007 and dropped further to as low as 0.2% in 2009. Although Nissan has its operations across the world, its revenue is generated majorly in the US and Europe. With such economic downturn at the companys 2 mainstay markets, itll definitely affects Nissans overall businesses.Porters 5 ForcesBarriers to EntryThe barriers to entry into the automobile industry are high due to the market saturation. The industry has a wide choice of selection, and requires constant RD in hunting lodge to compete with rivals. With a high overhead cost, high innovation requirement and a market saturated with well established competitors globally contacts it unlikely for new entrants. In order to enter such a saturated market, the entrant moldiness be able to develop a desirable and innovative new car concept with affordable prices.In the case of Nissan, it has been a key player in the automobile industry of Japan and globally as well, and has well established manufacturing plants and distributing channels. at that placefore, Nissan will face a minimal rate of new entrants into the industry. As such, Nissan has a low threat of entry.Supplier negotiate PowerSupplier bar consume indicant of automobile industry is a fairly high. The primary concerns are raw materials, readymade automobile parts and power add to run its production, etc. As raw materials such as steel (car body parts) and rubbers (tyres and accessories) are natural resources, and the supply of these natural resources are limited, with demands from various industries and consumers, on that pointfore the supplier has a leverage in bargaining power.In the case of Nissan, it was previously Japanese traditional styled company with the keiretsu organization between their suppliers. In order to assign the relation between Nissan and their suppliers, the purchases of supply are overvalued which lead to higher cost of production. With the Alliance of Renault-Nissan in 1999, such system was abolished in Nissan. In the Alliance, Renault-Nissan Purchasing composition (RNPO) was established to carry their purchasing activities. With this dodge, Nissan is able to negotiate its purchasing with their supplier through RNPO. As such, Nissans supplier bargaining power is moderate. vendee Bargaining PowerBuyer bargaining power in the automobile industry is fairly low. There are categories of cars made by different companies targeting different groups of customers. Within each category of cars made, the prices are relatively uniform among the competitors. However, this might vary from countries to countries. racy taxation of imported cars in some countries might lead to company reducing car prices in order to penetrate market.In the automobile industry, the industry remains powerful due to the large customer to manufacturing business ratio. However, customers have low/no switc hing cost and other choices of cars from competitors to purchase, so there is still some buyer power. As such, in enclosure with its competitors, Nissans buyer bargaining power is moderate.Threat of SubstitutesThe threat of substitutes in the automobile industry is fairly moderate. Other than automobile, there are spile mode of transportation, but most of them doesnt offer the utility, convenience and value offered by automobiles.Besides transportation mode, different product type offered by competitors can be an easy substitute. Competitors within the automobile industry are consistently developing their product to distinguish their product from others. Products with different designs, technologies and innovation may cause customers to renew their preferences.In the case of Nissan, it has a fair range of products from sedans, sports, minivans, SUVs, etc, as well as new designs targeting at different demographic groups. As such, Nissan does not lose out to its competitors that of fer different range of automobiles products, which work out Nissans threat of substitute moderate because its mainly based on customer preferences.Competitive RivalryThe automobile industry is quite saturated with plenty of well established automobile companies. Nissans major competitors are Honda and Toyota as they equate the major players in the industry from Japan. Toyota as the leader of hybrid cars, had significant advantage over its rivals. Nissan has also launched a range of hybrid cars in order to compete with its rivals. Nissans Leaf is also the world first 100 percent and zero emission car designed for mass market. Such product will generate Nissan significant competitive advantage against its competitors.With the shaping of Renault-Nissan Alliance, Nissan is able to overcome their debt and progress better for the last few years. disrespect of declines of Nissan major markets, Nissan (Nissan and Infiniti brand) closed 2008 global sales rising 0.9% year on year*. The s ales are boosted by the launch of new products. Although there are sharp decline in the US markets and low sales in Japan, Nissan in whole progressed globally, which indicates it is able to compete globally with its competitors. As such, the degree of rivalry of Nissan in the industry is high, depending on the different marketplace or region.Value chainFirm InfrastructureNissan was previously a bureaucratic organisation until its league with Renault. With the reform, Nissan now have more integrating of offices and administrative function around the world. Nissan has established a Diversity direct Committee as an entity for making diversity-related decisions. The committee meets thrice a year with the COO and executives from each division to set a range of policies including specific goals, action plans and progress assessment.Human Resource ManagementWith the Renault-Nissan alliance, reforms of the executive hop on are obvious with the change of CEO of Nissan. Other than that, N issan aims to be an lovely organization where diverse human resources can achieve personal growth. This shows that Nissan has go bad from its Japanese traditional view towards its employee.Technology DevelopmentWith the world emphasizing on green technologies, Nissan has launched its Nissan Leaf which is an fully electric car with zero emission. Beside this latest technology, Nissan has previously launched hybrid cars.ProcurementWith the alliance with Renault, Renault-Nissan Purchasing Organisation (RNPO) was established to conduct their purchasing activities. With RNPO, Nissan had improved its costly supply chain. From April 1, 2009, its vocalise purchasing activities will account for 100% of Alliance purchases.Inbound logisticalNissan promotes ethical, environmentally sound actions in all stages of supply chain. It has asked suppliers to uphold the values, laws and regulation that are respected by the company. Environmental impact of products is reduced through green procurem ent activities.ManufacturingWithin the Renault-Nissan Alliance, cross production is practised. Nissan has the opportunity to use the manufacturing capacities of its partner. Nissan is able to use Renault plants to produce Nissan vehicles in Korea and Brazil, which add value to the company because Nissan need not set up new manufacturing plants.*Outbound logisticNissan distributes its product not only through its own distributing channels, but also through its alliance partner. This helps Nissan to be able to deliver its product to its customers. overhaulNissan offers a good and responsible after sale service. Nissan has made a global voluntary recall campaign this year to replace an locomotive engine Control Module relay or Ignition relay on specific models. The customer will be informed and will replace the parts at no cost.*Generic StrategyIn order for Nissan to compete with its competitors, the company must have a competitive strategy to seek sustainable competitive advantage. B efore Nissans alliance with Renault, it has a weak strategy. Nissan has invested vast amount of capital on companies that doesnt related to the automobile industry. worsened so, Nissan has no managerial power in those investments. These investments lead Nissan into a huge amount of debts and have no cash to focus on its own business operation. With the alliance, various major changes improved the condition of Nissan. Nissan is able to gain competitive advantages over competitors.In Porters generic strategy, competitive advantage comes from an intellect of the 5 forces determining the industry attractiveness. This allows the business to be positioned within the industry. As written above, the 5 forces were beingness analysed. With the understanding of the 5 forces, Nissan is able to position itself in the industry with competitive advantages.Nissan has used differentiation mean to gain its competitive advantage. In the automobile industry, products and their functions are merely th e same unless the products are distinguished from its competitors. In such, Nissan has gained a competitive advantage by being the 1st automobile company to launch Nissan Leaf, a fully electric car with zero-emission. Besides, Nissan has different designs and categories of automobiles to target different customers.Nissan is not totally on differentiation. Since its alliance with Renault, Nissan has been able to achieve cost leadership. Nissan has managed to save cost and realising economy of scale by using its alliance Renault plants to produce Nissan vehicles in Korea and Brazil. It also uses Renault distribution channel where Nissan lack of.CultureThe major change of glossiness in Nissan is the alliance with Renault. Both companies were distinct in culture from corporal strategies, management and operations. This is because Nissan is a Japanese company and Renault is a French company where there is a diverse culture. In 2002, the Nissan-Renault alliance set up a strategic manage ment company incorporated under Dutch law which is equally owned by Nissan and Renault. It is aimed to establish a vulgar strategy and manage all synergies of the Alliance. In 2009, the Alliance created a small dedicated team to foster deeper, broader cooperation and to maximize the contribution of synergies to the performance of both partners. The team reports directly to the Alliance CEO and meets monthly to review projects and make recommendations to the Alliance Board on new areas of synergies and business opportunity. Besides that, there are trainings provided to executives from both companies in order for Nissan to learn the French culture and Renault to learn the Japanese culture. This harmonises both companies cooperation in the Alliance.In addition to that, the alliance has more than 30 joint working groups called the Functional Task Teams that composite both companies workforce. These groups operate in all the main sectors and areas of activity and are tasked with explor ing new synergies between the two companies. Team managers report regularly to the Alliance Board on the progress made in their specific areas of activity. The companiesFinancialsFY 2009(millions of Yen)FY 2010(millions of Yen)Nissan boodle Sales8,436,9747,517,277 dinero Income(233,709)42,390Current Assets5,580,410Current Liabilities3,856,858HondaNet Sales10,001,2418,579,174Net Income137,005268,400Current Assets4,613,724Current Liabilities3,419,130Source Nissan Annual Report 2010 and Honda Annual Report 2010Nissans Current ratio 5,580,410/ 3,856,858 = 1.447Hondas Current ratio 4,613,724/ 3,419,130 = 1.349Some basic reading are gathered and tabled as above to have an overview of Nissan and its competitor Hondas financial performance. Nissan preserve net sales of 8,436,974 million yen in the fiscal year 2009 and save a drop of net sales by 0.122% with 7,517,277 million yen in the fiscal year 2010. Honda recorded net sales of 10,001,241 million yen in the fiscal year 2009 and record ed a drop of net sales too in the undermentioned year. Honda recorded a drop of net sales by 0.166% with 8,579,174 million yen in the fiscal year 2010. Both Nissan and its competitor Honda have a drop of sales from FY2009 to FY2010 this may indicate that the demands of the industry have dropped. This may be related to the global economic downturn that theyre facing.Nissan has recorded a net loss of 233,709 million yen in FY2009 but has managed to make net income of 42,390 million yen in FY2010. With the profitable net income in FY2010, it shows that Nissan has been doing well in the FY2010. Such figure will bring Nissan forward by giving confidence to its stakeholders. However, its competitor Honda has recorded a near doubled increase of net income from 137,005 million yen in FY2009 to 268,400 million yen in FY2010. As such, Nissan has done well and had to maintain and improve its performance in order to compete with its competitors.Nissan and Honda has recorded current ratios of 1 .447 and 1.349 respectively. Both Nissan and its competitor Honda has a ratio that shows there might be overtrading. This may due to the global economic downturn and the price hiking of raw materials and fuel.