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Turnaround: How Carlos Ghosn Rescued Nissan Hardcover – January 7, 2003
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From Publishers Weekly
The facts of Magee's account are quite startling. Nissan, once a darling of the automotive world, with its cheap Datsun pickups and stylish, spunky Z roadsters, had, by the 1990s, fallen on hard times. Saddled with billions in debt, the company merged with Renault in 1999, and a Renault v-p, Carlos Ghosn, was named Nissan's new CEO. Routing not only every naysayer in the auto industry, Ghosn, who was born to Lebanese parents in Brazil, also had to overcome an entrenched Japanese business culture that at that time had seemed to stress perks, seniority and relationships over the bottom line. Given complete control over the company, Ghosn slashed costs and laid off employees, as was expected, but also instituted a sweeping reorganization of the entire company, announced an ambitious slate of new vehicles and promised that if Nissan was not profitable in 2000, he and his entire managerial staff would quit. Journalist Magee lays out Ghosn's management style, his mantra of complete transparency and responsibility, and all the tiny victories that went into returning Nissan to the top ranks of automakers. His approach can be hagiographic, but this profile of an astoundingly effective CEO (one of the few who might have actually earned his large salary) is sure to inspire.
Copyright 2003 Reed Business Information, Inc.
This the story of the dramatic comeback of Nissan under the leadership of CEO Carlos Ghosn. The ultimate international businessman, Ghosn is of Lebanese descent, born in Brazil and raised as a French citizen. He saved Renault first and then Nissan from bankruptcy by using drastic cost-cutting measures and by fully engaging the workforce from the ground up to stimulate creative innovation. In order to do so, he had to implement Western-style changes, such as plant closings and layoffs, and risk alienating a Japanese culture used to life-long job security. In 1999, Ghosn unveiled his Nissan Revival Plan and made headlines by pledging to quit if the ailing company was not profitable within one year. He proved all the doubters wrong when he announced that fiscal year 2000 was not only profitable but had posted the best financial performance in the company's history. Magee's report is a fine lesson in the adage that "there are no problems at a car company good products can't solve." David Siegfried
Copyright © American Library Association. All rights reserved
Top customer reviews
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The template is tested and straightforward - simplify the business, improve accountability, drive commitment, ask questions, involve employees, deliver superior products. Covered over and over again in the book (to the point of it becoming a bit padded) is the theme of simplify and commit.
As a pure book, this is probably a three star read, but the lessons being time tested, easy to decipher and applicability to business anywhere make it a worthwhile read.
Magee's book seeks to highlight a successful CEO who salvaged a major japanese automotive company from (almost) bankruptcy. His management and leadership methods should be teaching in both Universities and companies around the globe. He's currently on his wat to do the same with Mitsubishi Motors.
Book details in a very friendly narrative the way he overcomed Nissan's financial issues, corporate fears and cultural taboos that permeate business in Japan. It was a friend's personal recommendation and now it's mine towards you!
Sears had 40 million shoppers and 20 million insurance policy holders. Sears decided not to expand but diversity. Sears diversification strategy was a mistake. Sears diversified into real estate, insurance, and financial investment services. Sears capital drains caused them to break the company up into a hold company with three parts.
Sears could have used their capital and expanded their stores. Sears could have been the Walgreens offering pharmacy and convenience. What went wrong?
Ghosn did focused on increasing product line introducing the 350Z and the Q35 luxury vehicle. Will Ghosn increase the number of hybrid electric vehicles on the product line reducing c02 emission and meeting new government regulation?
How did Ghosn shed bad debt. Ghosn received $5.4 billion from Renault as working capital. Ghosn began selling Nissan investments, stocks, and real estate in 1300 companies which not part of the core business. Ghosn used benchmarks to discover that part suppliers partners were earning 20-30 percent profit margins on all parts. A message was sent to the suppliers to cut prices by 20 percent in three years, 3-3-3 (suppliers, engineers, and purchasing), 3 years (US/Asia/Europe, Middle East, and Africa) and in return Nissan would increase volume purchases. Volume purchases increased a Nissan centralized purchasing and created a global network of purchasing. Vendors that agreed to Nissan pricing terms received contracts.
Ghosn used benchmarking comparison of Renault part price verses Nissan part price to determine price difference. The part network had created a close system with monopoly pricing. Ghosn decided to break up the network from Nissan perspective and return to free market principles. Ghosn realized that Nissan plants output was 50 percent of capacity. He reduced the plants by fifty percent increasing output capacity to 85% and earned the highest profits in Nissan history. Ghosn shed a significant amount of the $22 billion in debt within 3 years.
Ghosn knew that survival in business mean getting support from the business community and growing the product line. Ghosn returned the Z model cars and expanded the infinity model vehicle with Q45 being a very popular brand for infinity and 350Z being a great model for Nissan. Nissan GTR is the best super car on the market today.
Achieve 4.5 percent profit by 2002
By the end of 2001 Nissan reported a margin of 7.9 percent
Reduce net automotive debt by 50 percent
By 2001 net automotive debt was 435 billion yen
Reduce automotive supplier base by 40 percent
Reduce service suppliers by 60 percent
Close five plants and increase utilization rates to 75 percent
Reduce manufacturing platforms from 24 to 15
1 million unit sales by 2004, 8 percent profit margin, and zero debt
Reduce transaction price and resale gap with Toyota by 50 percent