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How Did Carlos Ghosn Solve Nissan's Financial Problem

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Carlos Ghosn is among the highly celebrated executives in the automobile industry. His accomplishments are especially notable because of their timing at Japan’ s automaker, Nissan. At the take of his take over as the chief executive officer at Nissan in the late 1990s, the company was in deep financial crisis. The company had incurred losses in six of its seven previous financial years. Out of the forty-three vehicle models available in its home market, only four were profitable. The automaker’ s debt burdens were so huge that it paid one billion dollars in interest in the year 1998.

Financial analysts had written off the company as bankrupt. At the time of appointment, Ghosn was a young unknown leader born in Brazil. His objective was to turn around the financial performance in just three months (Ghosn & Ries, 2006). Despite skepticism, he had a well-laid plan that would deliver Nissan out of the financial mess quickly. Ghosn's objective was successful, and then some more. In two years, he had turned the financial position of the company significantly to another direction of profitability (Jackson & Tomioka, 2004).

He used several tools, among them: identifying the root problems, cross-functional teams to research on cost-cutting solutions, debt reduction, and investing in product designs. His first move was to tour all the facilities and factories that Nissan had at the time, listening to the views of the management and workers. These visits were a source of knowledge on the root problems in the factories (Magee, 2003). He carefully listened to their problems and headed back to the company’ s headquarters to draft a plan that would uproot the problem from the ground.

Part of his plan was the creation of nine cross-functional teams that were delegated the duty of assessing all business areas of the company, especially research, purchasing, finance, and administrative. After the formation of the teams, Ghosn challenged the teams to draft strategies that would provide cost-cutting solutions for the company. He gave them an ultimatum of ninety days, with a cost-cutting target of hundreds of millions of dollars (Rivas-Micoud, 2006).

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preview essay on How Did Carlos Ghosn Solve Nissan's Financial Problem
  • Pages: 2 (500 words)
  • Document Type: Essay
  • Subject: Business
  • Level: Undergraduate
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