Poor Financial Performance in Nissan for Nearly Eight Years

Nissan
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Executive summary
The essay is about the leadership crisis that has caused poor financial performance in Nissan for nearly eight years. The piece of work begins by elaborating the reasons behind the poor financial position of the company. The first problem is low sales due to lack of customer appeal and poor distribution strategies. The second problem is excess costs resulting from diseconomies of scale and production of excess cars. The third problem is low productivity due to poor human resource management strategies. The essay also explains some of the measures Ghosn tried to put in place in addressing the situation and how it worked. Finally, the article makes recommendations that Nissan management should adopt to avoid issues of financial problems in the future. The recommended solutions include; the signing of performance contracts to enhance employee productivity, outsourcing of company raw materials to cut on costs, opening of company stores as an alternative to the dealership and involving customers in designing of new car models.
Statement of the problem
Nissan has experienced leadership crisis and is in a state of decline as a result of consistent losses for the past eight years, a situation that could quickly land the company into the bankruptcy state (Yukl, 2013). The leadership crisis arises from poor strategies to increase company sales and poor human resource management plans which fall under short-term problem category and high costs of operations that fall under long term problem category. The short term problems can be fixed within a short period while solutions to long term problems would need more time.
Causes of the problem
First, the financial problem at Nissan was caused by excess costs. The company was producing more than it could sell and hence costs of production exceeded revenues generated. For instance, production capacity could deliver almost a million more cars annually than the company could sell. Second, the financial problem resulted from high purchasing costs due to due to poor economies of scale (Yukl, 2013). The company made many small purchasing orders from several suppliers, and this made the purchasing costs to be 25 percent higher than the standard requirement. More and complex specification issued by Nissan engineers to suppliers also increased purchasing costs.
Third, the financial problem at Nissan was caused by a decrease in sales. Lack of customer appeal for most of the car models produced by Nis...