Carlos Ghosn, chief executive of Nissan Motor Co. and Renault SA, currently has one right hand at the Japanese carmaker -- chief operating officer Toshiyuki Shiga. But in the near future, Ghosn will have four right hands at Nissan, after announcing last week that he is eliminating the COO post.
The management overhaul will see Ghosn having four executive vice presidents at Nissan, a decision that came as the Japanese carmaker revised downward its profit outlook at a time when the weaker yen is boosting earnings of the country's exporters.
Ghosn remarked that getting rid of the COO post is an indication of the company's maturity, but the move may also mean the Nissan and Renault will increasingly depend on one man.
Yuuki Sakurai, CEO of Fukoku Capital Management Inc., told Automotive News that Ghosn may want to set up a "single straightforward chain of command" at Nissan instead of "having two captains."
He remarked that whether the move will be good or not for Nissan is hard to say, since Ghosn has changed many things at Nissan -- some of which have worked and some have not.
The management overhaul disclosed last week sees Shiga becoming vice chairman. However, he will stay on the board. The COO post will be replaced by three new positions all reporting directly to Ghosn, according to Nissan. Nissan is also set to overhaul its operations to six regions from three now, breaking out markets like China.
The overhaul announcement came as Nissan tries to achieve an 8-percent operating profit margin target by the year ending March 2017. Nissan trimmed its full fiscal year profit outlook by 15 percent, no thanks to slowing demand in emerging and increasing recall costs. The carmaker also revised downward its forecasts for operating profit and revenue.
The Renault-Nissan alliance is a strategic partnership between Renault and Nissan, including their respective subsidiaries. The alliance has made it clear that their partnership is neither a merger nor an acquisition, as Renault and Nissan are joined through a cross-sharing agreement.
In 1990s, there was a rapid consolidation between a number of companies. Several high-profile companies merged or were acquired, including that of between Daimler and Chrysler in 1998.
As for Renault and Nissan, their strategic alliance was officially started in March 1999. When the alliance was established, Renault acquired 36.8 percent of Nissan's outstanding stock. Meanwhile, Nissan vowed to acquire shares in Renault when it becomes financially able. In 2001, Nissan fulfilled its vow and acquired a 15 percent stake in Renault. Renault, on the other hand, increased its holdings in the Japanese carmaker to 44.4 percent.