BA 245 Business Policy & Strategic Management

First Semester, SY 2018 -2019

Saturday 7:30 AM – 10:30 AM

Case Title: Nissan USA

Submitted to:
FDr. Jose Waldemar Veloso Valmores
Professor

Submitted by:

Jennifer G Velasquez
MBA Student

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Nissan Motor Co., Ltd was incorporated in Japan in 1933 and in 1980 it has strategically merged
with other automobile manufacturers acquire a 37% stake in Motor Iberica S.A. Barcelona so as
to expand its operations. Nissan is a Japanese automobile manufacturer headquartered in
Tokyo, Japan.Nissan manufactures and sells Datsun automobiles, rockets, textile machinery,
boats, other machines and appliances and their respective parts. NMC USA begins production
on August 1, 1983

In the United States, this company holds the second largest seller of import cars next to Toyota
when reached its twenty second year. In 1979, sales continued to be strong on purchases of
small cars. Behind NMC-USA stood Nissan Motor Co., Ltd. now the world’s fourth largest
manufacturer of motor vehicles, following General Motors, Ford and Toyota in that order.

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I. Title of the Case : Nissan USA

II. Case Brief: Nissan Motor Co., Ltd, one of the largest automotive industry in the
world plan to build a manufacturing plant of a 500 million complex in Smyma
Tennessee. As Nissan will be employing 2,200 workers at the plant, the demand of
American Work force to unionize the Nissan plant create a very challenging
environment to the Japanese Management who are against the union.

III. Viewpoint: Top management of Nissan USA

IV. Time Context: Started in August 1983 when production operations began in Smyma
Plant.

V. Problem Statement:

 As UAW strongly wants to unionize Nissan employees, How does Japanese

Management styles or techniques overcome the need for employees union
in Smyma Plant.

 How should management respond to a union organizing campaign?

 How Legal issues/problems of Nissan do affects the growth of the company.

VI. Statement of the Objectives:

 To create a good quality product that will be competitive in the market place.

 To establish a work-motivating environment to help improve efficiency.

 To resolve the issues/concern regarding Unionization between American

Workforce and Japanese Management.

VII. Areas of the Strategic Consideration

A. Internal Environment

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 1. Organizational Structure

Nissan Co. Board of Directors

President
Marvin Runyon

Vice President
Quality Assurance
Shuichi Yoshida

Human Relations Manager American Automobile

Executives
John Bryan Managers

First-line Supervisors

Workers (2,200)

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2. Human Resource

In 1980, Nissan Co. has a total of 56,285 stockholders and employs 56,702 in
Tokyo, Japan and USA.NMC USA number of employeesis 1582 from the National
headquarters complex in Carson, California where the largest number is 680.
Others were from regional offices Boston, 77: Chicago, 83; Columbus 43; New
York, 86; Jacksonville, 88; Dallas, 78; Memphis, 42; Norfolk, 84;Denver, 68; Los
Angeles, 109; Portland, 47; San Francisco, 41; Sacramento (parts warehouse
opened in 1978 replacing San Francisco and Portland depots), 56; There were
1083 dealers, with a total of 30, 215 employees. President Marvin Runyon,
Human Relations Manager John Bryan, Vice President of Quality Assurance
Shuichi Yoshida are among the top management in NMC-USA. Japanese
company like Nissan known for its success in maximizing the utilization of human
resources. They were able to provide the best training programs to employees.
They spend a lot of money in training programs because they believe that people
are the best asset of the company.

3. Operations

As Nissan aims to achieve sustainable growth and built in a foundation of mutual

trust between its suppliers. Nissan use different techniques in order to produce
quality automobile in the best effective way possible. Nissan as one of the
Japanese automobile company used the principle of just-in-time manufacturing
techniques and also reduced buffer stocks. In building the new truck plant in
Smyma Tennessee with a 500 million complex. As production is scheduled to
begin in August 1983, and using the latest technology in producing vehicles will
deploy 219 robots will be in operating in the body assembly, stamping and
painting areas. Nissan one of the most robotized factories in the world.
Automation will also be installed in the plant for operations where a robot’s

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 flexibility is not needed. Unfortunately, robots do eliminate workers, but many
skilled people are needed to keep them working.

Some of the workers are assigned to do other new job within the company.
Nissan plans on keeping stocks as low as possible. The production process of
each supplier will be certified in detail by Nissan’s quality control staff. Another
feature of Nissan’s system is maintenance. Nissan will have a team of
maintenance engineers; the operators will be responsible for minor jobs. Under
legislation of Domestic Bill Content, Nissan trucks would required to contain at
least 90% domestic parts by the year 1985. Nissan will not be able to meet the
content requirement demanded by the legislation and they expect to use 38% of
domestic parts only.

4. Finance

Financially, Nissan is a strong company. The half-million target set for 1980 five
years before had already been reached and passed. The sales figure would top
600,000. Taking into account the diversification of financing methods such as
continue to manufacture small cars and plan to avail the benefits of Foreign
Trade Zone. As Nissan has so many tough competitor & building this new truck
plant need for strong financial support to the project. NMC USA was an
organization with capitalization of USD 6 million at the time they began the
operations. Establishing a Foreign Trade Zone will strengthen & provide flexibility
in funds management. On the other hand, due to changing regulatory provisions
like Import Quota & Domestic Bill Content is facing financial stagnant growth
rate.

5. Marketing

In the automobile market, it holds as the second largest seller of import cars in
the United States next to Toyota and Sales are continued to be strong given to

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 the purchases of small cars in 1979. Being present in 130 foreign countries in the
world helping the company in the optimization of its capital, operations,
processes and various functions across the delivery channel. Marketing planning
and Sales order forecast usually based on the performance of operations and
distribution. Distribution strategy of parts will be coming from the Headquarters
in Japan to Nissan USA transported to different distributor such as Master Park
Depot, Regional Warehouses, Dealers & Customers. Nissan uses multi-level
distribution strategies to make its offering available to the end users.

B. External Environment - Micro

1. Legal

Nissan makes every effort to satisfy and comply to the various government
regulations. The regulations are not in control but what is in control is that
Nissan stay competitive. Regarding the Import Quota, the restriction of Japanese
auto imports will not affect the Nissan plant. The agreement by which Japan
would limits its exports to the United States to no more than 1.4 million cars
next year. The aim is for a two-way street between America and Japan.
Legislation is being discussed to ensure that American workers can sell their
products in Japan just as Japanese workers can sell their products in America.
DBC (Domestic Bill Content) Automobiles company in US would require to use
90% domestic parts by 1985. A proposed amendment would use the amount of a
company’s total U.S. sales the preceding year to determine the required
domestic content. That would lower the required domestic content for Nissan to
71% based on 1980 sales. Nissan Co. Motor Ltd President stresses that there are
no industrialized countries in the world where such legislation is imposed.

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2. Economic

When Nissan was in its infancy stage, the Japanese market was too small to
absorb the increasing domestic production. Japan needed a global market in
order to further develop by creating an export market. Because of some
legislation being implemented, Nissan would not be able to enjoy the benefits of
foreign trade zone may result to change in the way business operates. Nissan is
expanding its business geographically so as to provide its products in all global
markets.

3. Societal

In countries with major car manufacturer such as Japan and US, the demand for
automobile production resulting also in job demand and tax revenue. When
NMC USA reached its twenty second year, it was securely established as the
second-largest seller of import cars in the United States. Reaching first place
could be seen as a reasonably attainable goal. Sales continued to be strong,
infact the impetus given to purchase of small cars in 1979 carried on as fuel
prices kept escalating so that each successive month saw new records in Datsun
sales.

4. Technological

Nissan increase the use of technology to gain a clear competitive advantage.

Being one of the most robotized factories in the world, Nissan gains competitive
advantage in the automotive market through technology. Competitive pressure
is the primary threat for Nissan. Focus need is on technological excellence and
superior convenience. Continue to expand mainly in the foreign countries makes
the technology a huge impacts on producing quality vehicles. In building the
truck plant, automation will be also installed in the Smyma Plant for operations
where a robots flexibility is not needed. Unfortunately, robots do eliminate

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 workers but many skilled people are needed to keep them working. In Japan
those workers whose jobs are taken by robots are retrained to do new jobs
within the company. This makes the operations technologically flexible.

Task Environment

1. Competitor

Nissan is one of the most popular automobile brand names having a high global
reach. Japan and USA are the biggest markets. They have intense competition for
market share and sales with many manufacturers. The production capacity of
210.000 units per month in the 24 knockdown plants abroad could be seen as
competitive close enough to the leader, Toyota. Behind NMC-USA stood Nissan
Motor Co., Ltd now the world’s fourth largest , manufacturer of motor vehicles,
following General Motors, Ford and Toyota in that order.

2. Customer

Nissan wants to create a good quality product that will be competitive in the market
place. Sales continued to be strong through purchases of small cars Datsun. The
executives at the Smyma Plant believes that union shop will cheaper the quality of
the Nissan trucks. It is important that in order to create a good quality product that
will be competitive in the market place, Nissan should focus on customer
satisfaction and offer best maintenance.

SWOT ANALYSIS

Strength:

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  Was the second largest Japanese Car manufacturer.

 Had become one of the top-selling import in the US Market.

 Strong presence in the leading and emerging automotive markets.

 Well-managed company’s operations.

 Technological advancement – Adapt the latest techniques and technology for

producing vehicles. The most robotized factories in the world. Well known in
advance engineering, technology, plant productivity and quality management.

 Maximize Human Resources – provide continuous training programs,job

enlargement & job enrichment programs that will help workers develop all their
skills.

 Geographical Proximity – Under Foreign Trade Zone allows to import raw

materials that delay the payment of import taxes resulting to tax savings.

 Management style – have participative management style includes employee

meeting every morning, multi-skilled tradesmen, continuous education programs
& probably no unions.

Weaknesses:

 Forming of Employees union – could cheapen the quality of the Nissan trucks.

 Poor management and employees interaction (did not see eye to eye)

Opportunities:

 Increasing government regulations

 Good Suppliers relationship

Threats:

 Government policies

 Rising prices of raw materials

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  Intense competition

 Employees union – affects the quality & growth of the company.

 Internal dissonance – with the proposed union alliance.

 Language Barrier – biggest problem between Japanese and US workforce.

VIII. Assumption

American workers wants to unionize Nissan because they want to protect or secure
their right in the job. One of the actual experienced they had before when
Management and employees did not see eye to eye. Japanese Management styles
are more focus in providing training and development to their workers but show
little attention to the wages, fringe benefits and lack of close and direct
Relationship and open communication with their employees. If Nissan
Management are really against the union they should provide competitive benefits
and job security to their workers to compensate the need for union.
Nissan employees are the valuable assets and the company places great importance
on establishing a workplace that maximize the efficiency and performance of the
employees to remain competitive in the Market.

IX. Alternative Courses of Action

1. Establish a competitive fringe benefits and compensation to Nissan employees so

That they would not resort in joining UAW or Japanese Auto Workers Union.

2. Improve Management and Employees relationship through open communication.

3. Be a member of Foreign Trade Zone

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X. Analysis of the Alternative Courses of Action

ACA No. 1. Establish a competitive fringe benefits and compensation to Nissan

employees so that they would not resort in joining UAW or Japanese

Auto Workers Union.

Advantages:

UAW (United Automobile Workers) is an international union an American labor union

that represents workers in the United States while Japanese Auto Workers Union is
Confederation of Japan Automobile Workers Union (JAW) emerged in Japan. By
implementing the qualities of the Japanese Management styles given in the case study
provides so much attention on skills development and training. They should also provide
better compensation and job security so that all employees are motivated and feel
secure.

Disadvantages:

Expensive on the part of Japanese Management in providing better compensation.

ACA No. 2 Improve Management and Employees Relationship

Advantages:

This will be a great venue to discuss all the issues and concern regarding the demand in

Employees Union. Establish a workplace that fosters good relationship between

Management and Employees. Increase employee satisfaction to minimize the desire for

union. The following strategies can help discourage the union by having fair and

consistent policies and practices, Open door management policies, Competitive pay and

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 benefits ,& Employee trust and recognition.

Disadvantages:

It takes a lot of time, effort and money for the huge change in management styles.

ACA No. 3 Being a member of Foreign Trade Zone

Advantages:

This will help improve cash flow through tax savings, increase global logistics efficiency,

reduce unnecessary logistics cost and retain flexibility in operations.

Disadvantages:

No retail trade of foreign goods may be conducted.

XI. Conclusion

ASSESSMENT
CRITERIA ACA NO. 1 ACA NO. 2 ACA NO. 3
Effectiveness 1 1 2
Ease of Implementation 2 3 1
Sustainability 3 2 1
Competitiveness 2 3 1
TOTAL 8 9 5

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 3

2.5

2 Effectiveness
Ease of Implementation
1.5
Sustainability
1 Competitiveness

0.5

0
ACA NO. 1 ACA NO. 2 ACA NO. 3

Legend:

1 - Best
2 - Better
3 - Good

Effectiveness - the ability to achieve the most desirable results of plan

Ease of Implementation - how to easily implement within the organization

Sustainability - the process of maintaining change in the competitve market

Competitiveness - the ability to compete with other automobile industry

XII. Plan of Action

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 FUNCTION / ACTIVITIES PERSON RESPONSIBLE TIME FRAME

Human Resources

Establish a continous series of meeting 1 month onwards

as part of open door communication
between HR, employees and Japanese
Management to eliminate demand for union
Human Relations Manager

Provide extensive training programs, learning 3 days onwards

and development to have a pipeline of leaders that On-going
contribute to the future innovation and growth of the
company.

Operations

Create a good quality product that will be competitive American Automobile Managers Everyday
in the market through the help of workers who are fully & Vice President Quality Assurance
satisfied in their jobs.

President

Study and check other raw materials that can be imported President 6 months
under Foreign Trade Zone to help fully utilized the
capital and cash flow of the company as well as to be more
competitve in terms of market price.

President

Evaluate the effectiveness of Japanese Management style President 1 year

against function of UAW in union workers.

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