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QUESTION
Week 5 Discussion
The author of the Transient Advantage article discussed several traps that can blind a company to the need for imminent changes to their strategy to preserve competitive advantage.
- Using the company of your choice, provide an example where the company fell victim to one or more of these traps.
- Discuss why you believe the company’s management missed the warning signs, and what recommendations you would make to ensure they don’t fall into the trap in the future.
The company that I want this written on is Nissan Motor Corporation.
Link to article:
| Subject | Business | Pages | 4 | Style | APA |
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Answer
Transient Competitive Advantage
The Nissan Motor Corporation enjoyed long profitable periods in domestic and foreign markets until 2015 when the company started experiencing losses. The change was caused by declining sales which, hit a low point of 11% drop in US markets in 2019 (NISSAN MOTOR Co.,2019). The decrease is mainly blamed on the former executive leader Carlos Ghosn who headed the company for 12 years. In his time, Ghosn orchestrated the merger between the company and Renault and also aggressively pushed for a volume growth strategy by the Japanese carmaker (The Japan Times, 2020). At the time Ghosn was pushing for the volume growth strategy, Nissan was enjoying significant profits. However, three years after his departure, the company is in deep turmoil with declining sales, while partners such as Renault expect a continued decline in share prices with dividends for 2020 having been abolished.
The company's management fell to the trap of 'resource hostage,' as explained by McGrath (2019). In this regard, Ghosn's push for a "volume at all cost" strategy continually delineated the dealers who are essential in selling cars. Ideally, the company focused on increasing volume, thereby dedicating all the resources to the course. In so doing, the baseline group was neglected. As the experience continued, dealers could not offer solutions to these baseline group of clients, pushing them away inadvertently. Since the company was realizing profits, the management failed to see the declining baseline group and dealers' delineation as a red sign until it became late.
The appropriate recommendation that can help organizations avoid falling into the trap that can blind them regarding the need for imminent changes to their strategy to preserve competitive advantage is abolishing the norm that a single strategy can lead to long term success. Notably, having such a view can lead to a limited analysis of short term performances, which are essential in revealing warning signs to a strategy. Another recommendation is for firms to engage in practices that continually develop and evaluate new strategic initiatives to exploit various transient competitive advantages.
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References
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McGrath. R. G. (2019, November 7). Transient Advantage. Harvard Business Review. https://hbr.org/2013/06/transient-advantage
The Japan Times. (2020, July 28). Nissan sees sharp sales and profit drop as business struggles. https://www.japantimes.co.jp/news/2020/07/28/business/corporate-business/nissan-sees-sharp-sales-profit-drop-business-struggles/
NISSAN MOTOR Co., Ltd. (2019). NISSAN | For Investors | For Individual Investors | Global Sales Results. Copyright c NISSAN MOTOR Co., Ltd. All Rights Reserved. https://www.nissan-global.com/EN/IR/INDIVIDUAL/GLOBALSALES/#:%7E:text=In%20FY%202019%2C%20Nissan’s%20global,earlier%20to%204.93%20million%20vehicles