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Highly competitive car manufacturing business

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Reference no: EM133183138

An alliance between Nissan and Mitsubishi was announced on 12th May 2016. Nowhere else are the economies of scale more apparent than in the car manufacturing business, where the most efficient companies - Volkswagen, Toyota and GM - all produce around 10 million cars every year.

Prior to the announcement, Renault-Nissan produced 8.4 million. Adding Mitsubishi's 1 million, it will stay just shy of the elusive target.

The partnership is, however, not a merger. Nissan is acquiring a minority share in Mitsubishi, and there is going to be a lot of cooperation, although at the time the announcement was made, the deal was rather short on details.

The deal resulted in an alliance, or a looser partnership than fully integrating the two companies (and Renault-Nissan is already an alliance on its own).

Why Nissan and Mitsubishi are pursuing a looser partnership instead of full integration?

What way this alliance has a higher chance to succeed in the highly competitive car manufacturing business?

Reference no: EM133183138

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