Bus 401 Module 5 Case Study
In this module 5 case study, I will read “The gaijin who saved Nissan”. I will discuss what Carlos Ghosn and Nissan did in order to manage global financial risk and why they did it. I will also discuss which of Napolo’s 8 steps Nissan followed and which they did not.
Napolo’s 8 steps Dave Napolo was the Senior Vice President of Foreign Exchange as Wells Fargo. He developed an eight step process to mitigate the risks associated with foreign exchange. Step one was to define the corporate philosophy and objectives. Step two was to identify exposures while step three quantified exposures. Step four defined risk management policies and procedures and step five identified strategies to manage risk. Step six was to execute strategies, step seven monitored exposures and hedges. Finally, step eight reviewed and measured performance.
Ghosn and Nissan When Carlos Ghosn became the Chief Operating Officer on Nissan, it was a failing company with massive debt. Nissan looked to Ghosn to turn the business around. Before he was able to do that, he took the time to visit all the Nissan factories worldwide and installed nine Cross Functional Teams to analyze Nissan’s problems. These teams had to uncover every problem within their section and set new, realistic goals. Each team was given three months to do this. (Ogilvie, R.) After the teams had made their analyses and goals, Ghosn was able to announce his strategic plan for the revival of Nissan. For starters, Ghosn decided Nissan needed fewer and simpler factories. Nissan had too many factories and was using 53% of its capacity. Due to this, 5 factories in Japan were to be closed. Nissan needed to reduce purchasing cost by 20% which also included the reduction of the number of suppliers from 1145 to 600 firms. (Ogilvie, R.) Ghosn reduced general expenses which included marketing and administrative expenses as well as the number of sales subsidiaries in Japan by 20%. Ghosn also freed up non-strategic assets and applied
Napolo’s 8 steps Dave Napolo was the Senior Vice President of Foreign Exchange as Wells Fargo. He developed an eight step process to mitigate the risks associated with foreign exchange. Step one was to define the corporate philosophy and objectives. Step two was to identify exposures while step three quantified exposures. Step four defined risk management policies and procedures and step five identified strategies to manage risk. Step six was to execute strategies, step seven monitored exposures and hedges. Finally, step eight reviewed and measured performance.
Ghosn and Nissan When Carlos Ghosn became the Chief Operating Officer on Nissan, it was a failing company with massive debt. Nissan looked to Ghosn to turn the business around. Before he was able to do that, he took the time to visit all the Nissan factories worldwide and installed nine Cross Functional Teams to analyze Nissan’s problems. These teams had to uncover every problem within their section and set new, realistic goals. Each team was given three months to do this. (Ogilvie, R.) After the teams had made their analyses and goals, Ghosn was able to announce his strategic plan for the revival of Nissan. For starters, Ghosn decided Nissan needed fewer and simpler factories. Nissan had too many factories and was using 53% of its capacity. Due to this, 5 factories in Japan were to be closed. Nissan needed to reduce purchasing cost by 20% which also included the reduction of the number of suppliers from 1145 to 600 firms. (Ogilvie, R.) Ghosn reduced general expenses which included marketing and administrative expenses as well as the number of sales subsidiaries in Japan by 20%. Ghosn also freed up non-strategic assets and applied
References: http://ezinearticles.com/?Carlos-Ghosn,-the-Man-Who-Turned-Around-Nissan&id=2325597 (Ogilvie,R.) Book Review (2005) "The gaijin who saved Nissan", Business Week,1/17/2005, accessed 16 March 2011 at: http://www.businessweek.com/magazine/content/05_03/b3916021_mz005.htm (Bloomberg 2013) Kim, Yong-Cheol & R. McElreath (2001) "Managing operating exposure: A case study of the automobile industry", Multinational Business Review. Detroit: Spring 2001. v 9, Iss. 1; pg. 21-27. Napolo, D. (2005) "Managing FX risk; an eight step plan to establish corporate foreign exchange policy", Treasury & Risk Management magazine, March 2005. Accessed 16 March 2011 at: https://www.wellsfargo.com/downloads/pdf/com/focus/risk/manage_fx_risk_reprint.pdf