The Nissan Case
Ryoichi Imai

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Nissan Co. until 1999
• Nissan is one of the leading automobile makers inJapan.
• The company was founded in 1933.
• Until 1980, Nissan was deadly competing with Toyota inthe domestic and international share.
• Nissan has strong reputation in technical innovation,
while Toyota is superior in marketing.
• Since 1980, Nissan has been losing grounds to Toyota.
• The economic slump in 1990 gave a fatal damage onNissan.
2The Renault-Nissan Alliance• In 1999, Nissan was almost bankrupt, while most ofJapanese firms were struggling with their own
financial problems, and unable to provide financial
support to Nissan.
• Renault, a French auto maker, provided $5.4 billion
to Nissan, acquired 36% of the Nissan shares, andsent Carlos Ghosn as the CEO of Nissan.
• Ghosn closed the factories in Tokyo and Kyoto, andbrought a drastic recovery to the company.

3Carlos Ghosn• Carlos Ghosn was born in Brazil from the Lebeneseparents in 1954. He was a Christian in the Maronchurch (sect).
• He was educated in a middle school in Paris, graduatedfrom the Ecole polytechnique in 1974, and was given adoctor degree in engineering from the Ecole des mines
de Paris in 1978.
• He was hired by the Michelin Corporation, and soon
promoted to the head of the Michelin South America
and then of the Michelin North America.
• In 1996, he switched to the Renault as a vice president.
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Why Nissan needed a foreign
CEO?
• In the late 1990s, Japanese economy was sufferingfrom financial crisis, and the financial sector isunable to provide financial supports to nearlybankrupt companies.
• In fact, many firms in financial troubles received
financial supports from international investment
funds:• The Chogin (The Long-Term Credit Bank of Japan, LTCB)
was purchased by the Ripplewood in 2000.
• The Cerberus invested 100 billion yen in the Seibu
Railroad Co. in 2006.
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Shigarami• It was difficult for Japanese managers to shrink
business with the steak holders in the long-termcooperation.
• Closing factories, firing employees.
• Terminating the keiretsu relationship with parts
suppliers• There is a strong pressure from the government on
firms to maintain local employment.

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Glory• Nissan recovered drastically in the early 2000s.
• In 2005, Ghosn was appointed as the CEO of theRenault.
• In 2014, Ghosn was elected as the chairman of theAssociation des Constructeurs Europeensd'Automobiles.
• In 2016, the Nissan acquired 34% of the shares of theMitsubishi Auto Co., which was in a trouble of being
accused for the fuel consumption data falsification.
• Now Ghosn is the CEO of the second most-selling
automaker (Renault-Nissan-Mitsubishi alliance, 2017)
in the world.
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Accusation• In November 19, 2018, Mr. Ghosn was suddenlyarrested by police in Tokyo, for the accusation offalsification of his income as the chairman of theNissan executive board.
• According to media coverage,• He received much more income than what has beenformally reported, and• Holding many luxurious houses and apartments abroad
for private use, while they were purchased as theinvestment by the Nissan for business use.

8Background
FranceAlliance Headquarter(Ghosn CEO)
15%
43%

Renault

Nissan15%
34%
Mitsubishi• Renault holds 43% share of Nissan,
while Nissan holds only 15% shareof Renault.
• Under French law, Nissan’s voting
right for Renault is invalid.
• Under Japanese law, Renault’s
voting right for Nissan would beinvalid if Nissan held more than 25%
share of Renault.
• The French government holds 15%
share of Renault, and has requested
Ghosn to make the Renault-Nissan
partnership to be “irreversible”.
• However, the sales of Nissan now
overwhelms those of Renault, andmore than 50% of the profits ofRenault come from the dividends
paid by Nissan.
• The rate of return to hold theNissan share is 6%, quite higher
than other Japanese firms.
9Nationalism and multinational
corporations• Ghosn originally respected the mutual independence ofRenault and Nissan.
• However, Ghosn seems to become more aggressive forthe integration of Renault and Nissan, since his tenure
was extended to 2022 in February 2018.
• In 2000, Ghosn closed two major factories in Japan andfired more than 20 thousand employees, while he has
extended the capacity of Renault factories in France.
• Even a CEO of a global company cannot neglect the willof the national leader, whose decision is crucial to hisposition.
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Similarity to the Horiemon case
• In 2005, Horiemon tried to acquire the full control ofthe Fuji TV, which was then the media giant, bypurchasing more than 50% share of the Nippon Radio,
which held 20% share of the Fuji TV.
• The Nippon Radio was smaller in the stock market
value than Fuji TV, as is Renault than Nissan.
• Market Value, spring 2017(https://zuuonline.com/archives/146877)• Nissan - $36 billion• Renault - $21 billion• The strong reaction against the Renault-Nissan
integration from the Nissan management is similar tothat of the Fuji management in 2005.
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What can Nissan do?
• The Nissan management wants to reduce thecontrol by Renault. How is it possible?
• Nissan can eliminate the voting right of Renault, byacquiring more than 25% share of Renault. But whowill sell that much share?
• Even though Ghosn is kicked out of Nissan, Renault
can send replacements to the management boardof Nissan.
• Renault still holds more than 40% share of Nissan.
12Hostage Justice• Japan’s criminal justice might be severely criticized bythe international media.
• Ghosn was unexpectedly arrested at Tokyo.
• He is now investigated by the Tokyo District Public
Prosecutors Office, with no contact allowed to thelawyer or his family.
• The Tokyo District Public Prosecutors Office can detain
a suspect for up to 20 days for one accusation.
• It can arrest the same person repeatedly under otheraccusations.
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