NORTH SOUTH UNIVERSITY

Production Management
Subject Code – 314
Section: 03
(Case study of Nissan)

Prepared For: Muhammad Maruf Ibne Wali (MfW)

Lecturer, Department of Management
North South University

Date of Submission: 10/08/2018

Prepared By
Name Id

Israt Jahan 1430921030

Umme Sumaiya 1431111030

Md. Mafijul Islam 1511261030

Md. Asifuzzaman 1510391030

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 Introduction
The case talks about natural calamities such as earthquake, tsunami and others factors posing a
great threat to the functioning of a business and affecting its operations on a large scale. Nissan
was established as Nihon Sangyo in the year 1928.It was renamed as Nissan, the name that was
used in the Tokyo stock market in 1930. In the very beginning, when Yoshisuke Aikawa founded
the company, it was not completely into automobiles but instead made auto parts and consisted
of Tobata Casting and Hitachi. Eventually, Nissan became a huge company that held 74 firms by
the time of World War II to become Japan’s fourth biggest industry. On March 11, 2011 an
earthquake struck off the coast of Japan. The impact of such disaster was devastating. The
automotive industry comprising big Companies such as Toyota, Honda and Nissan were hugely
impacted by the disaster. The case particularly talks about Nissan, damage caused to the
Company by the earthquake and consequently its response to the disaster. Several protective
measures were taken up by the Company post the disaster to gain back the momentum
of business operations and generate considerable flow of income to stabilize situations. These
include sharing information with global regions, allocating supply given capacity constraints and
excess dependents across national boundaries, managing production processes and
making speedy decisions without lengthy analysis which consumes time. Also several
operational changes were announced by the Company in 2012, post the disaster to make the
business more sustainable and less prone to severe disruptions.
Q-1: Using current products familiar to you draw and label a product life cycle diagram,
showing which stage each product is at.

Answer: Nissan as a company always tries to flexible their supply chain without any bad
impacts. It helps them to reach their customers as well as their suppliers. But these very big
impacts were their near position but they didn’t want to lose/hampered their supply chain and
production. So they tried to create and took some effective initiative to successfully continue
their chain. Nissan’s actions after the earthquake and tsunami adhered to the principles detailed
in its earthquake emergency-response plan. Immediately after the disaster, Nissan’s Global
Disaster Control Headquarters, headed up by the chief operating officer, was convened to
evaluate the impact on operations and to oversee the restoration of activities. A Recovery
Committee was established to coordinate the global recovery actions, in particular the work of
optimizing the entire supply chain. The Recovery Committee emphasized a few simple yet
meaningful practices in coordinating the company’s response to the disaster to continue the
flexible supply chain like -
Sharing information: Nissan is a globally operating Company so it always tries to share
information with their global operational regions about any affected situations. Non-Japanese
firms associated with the operations of the Company might directly or indirectly get affected by

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the mishap. Hence, sharing reasonable information can keep them informed for the betterment
of their own interests. However, there are certain limitations faced by the Company regarding
this. These include, an additional effort to provide information to the concerned global regions
might distract the people handling on the ground crisis and their formation provided could also
be used selfishly for their own personal interests. These two issues were a major concern to
the Company. Hence, to overcome these, Company decided upon asking each region to send two
staff members to Japan to gather information concerning their interests rather than providing
them unwanted information which could be later misused. Holistic approach was adopted by the
Company in solving problems which is good for the Company as a whole. This idea of sharing
information led to valuable contribution from global regions instead of becoming a burden on the
Company.
Allocating Supply: After few time of disaster some consequences were faced Nissan. Like -
capacity constraints and dependencies across the Nissan operational network. However,
allocating component parts was a critical decision for the Company. Allocation of supplies is
another important area of aspect which is to be considered by the Company and seriously looked
into. This determines continuity of operations and vigilance. The Company particularly focused
on high margin goods for allocating supplies instead of low margin goods. For example, the
supply of Integrated Global Positioning System (GPS) was confined to high-end models of cars
rather than low-end models. This helps in optimal utilization of scarce resources available,
enables manageable supply allocation in different regions and further enhances revenue
generation of the Company during the time of such catastrophe.
Managing Production: In such a situation, the production process of any Company gets
affected. But Nissan slowed their production upstream and downstream considering anticipated
bottlenecks. This further saved them from costly overtime. For any Company, in such a situation,
in-stock and in-transit inventory would be the first priority than producing new goods. Hence, the
Company focused on these. The Company also used the in-transit inventory time to identify and
implement supply alternatives of critical components. This indicates effective time management
by the Company. The Management of the Company could also secure air freight to get the
critical parts out of their country faster and reduce the apprehension towards in-transit stocks.
Empowering Action: The well-developed emergency response plan established beforehand
helped the Company in making quick decisions after the disaster. Foreseeing situations arising
from a major disaster and preparing well for them enabled the Company to take prompt actions
when the time came. Management of the Company was empowered to make decisions without
any lengthy analysis from a central authority. The Company also used flexible approach by
modifying its delegation of authority to speed up critical decision-making process for recovery
concerns. One of these decisions includes launching the Global Disaster Control Headquarters
after mere 15 minutes of the disaster. The team further, worked upon the situation effectively by
assessing damage while overseeing restoration efforts at various facilities. Latest information
including details about employees’ safety and damage caused was absorbed and appropriate
actions based on this were taken. Hence, the company used proactive measures post the disaster
situations rather than consuming time and delaying decisions which were indispensable. This

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was possible only through preparing a backup recovery plan well before the disaster, integrating
tasks and taking several imperative decisions timely.
Q-2.Suggest appropriate aims and objective for a small, medium and large business.

Answer:
Aims for a small business can "Survival”, to survive in the market and look for profits.
OBJECTIVE- IS TO MAKE 15% RETURN ON INVESTMENT.

Aim for a medium sized business would be to maximize their profits and growth to expand
their current business operations and increase market share.
OBIJECTIVE- IS TO ACHIEVE SALES OF €10 MILLION IN THE FIRST YEAR.
Aims for Large business would be external growth, i.e. taking over their competitors in the
market. Secondly it would be adding value and quality to their products, and finally providing
service to the community in some way, like giving funds to charities and opening up its
branches in development area where development.
OBIJECTIVE- IS TO GROW BY 20% EVERY YEAR FOR THE NEXT 3 YEARS.

Q-3: Explain the difference between market oriented routes and product oriented routes in Ansoff’s
matrix.

Answer: Nissan did have an organization dedicated to the risk management started back in 2008.
The global disaster control could have planned and identified the risks a bit more strategically,
especially when it came to geographical interdependencies and risk contingencies. They likely
created a probability matrix which took into account the impact and the probability of such
events occurring the specific areas where Nissan does business. Now Japan is located in an area
where earthquakes are frequent and Nissan identified that risk. However, according to the case
study the impact of tsunami was underestimated and this was a major flow in the probability
matrix. Then Nissan would conduct a quantitive and qualitative analysis to plan the types of
responses necessary. However, the underestimating in the identification phase prevented a proper
risk analysis to respond to the tsunami risk. Using such familiar with Japanese regardless of the
methodology to identify risks, the organizational risk owner is the Global Disaster control which
is responsible for Nissan's risk management. To avoid these bottlenecks in the supply chain
Nissan could have streamlined to an even higher extent all critical parts to be interchangeable
with parts in different regions. This would practically eliminate the need for contingency
reserves of critical and diverse coming needed from Japan and other regions. Per the case study,
parts and supplies had to be forgone from one factory and sent to another factory. This network
of interdependency created bottlenecks and had the parts been the same across the broad, this
could have been avoided. However, this could be costly as production in one country could be

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much more expensive in another with such a large company not all interdependency can be
eliminated entirely so a contingency plan reserves were sufficient enough.
Q-4: How did Nissan’s product line strategy help or hurt its ability to respond to and
recover from the disaster?
Answer: Nissan had adopted a simplified product line strategy in comparison to its rivals. Given
the capacity constraints after the disaster, the Company went for a build-to-stock strategy for
models with greater demand and build-to-order strategy for models with higher customization
and lesser demand. Since, the disaster had affected the production process of the Company to a
great extent; such a strategy helped the Company to produce goods which assured of generating
revenues instead of increasing its burden. The production of models with lower demand were
confined to build-to-order strategy so as to avoid any wastage of materials, maintain efficiency
of operations and also earn good revenues. Limited resources or affected supplies encouraged
such strategies and proved beneficial in such crucial time for the Company. Apart from the above
mentioned benefits, these strategies further helped Nissan in simplifying its business operations
and product offerings along with substantial increase in its sales. This was urgently required by
the Company to boost its sales and earn sufficient amount of revenues to enable persistent
business operations without any barriers. Flow of income also improved the financial strength of
the Company arising from such crisis which is a major concern. Several functions such as sales,
marketing and supply chain management were integrated to decide upon allocation of
supply globally so as to generate greater revenues.
As per the case, Nissan’s six production facilities had been damaged but the strategies adopted
definitely pulled the Company from such draining scenarios as they addressed exactly the issue
witnessed by Nissan. The various benefits of build-to-order strategy can be described as follows:
 Main advantage of build-to-order strategy is to gain specializations of products
manufactured.
 And this occurs by manufacturing the product as per customers’ specifications and expectations.

This strategy eliminates unnecessary inventory from the Company by making goods which are
actually demanded by the customers. This further gives no scope for dead stock.
Q-5: How will the operational changes announced in 2012 affect Nissan’s exposure to
future disruptions? How will it affect its steady-state operations? What trade-offs is
management making and why?
Answer: Post the disaster, Nissan adhered to several operational changes in its business to face
the future challenges of disruption. These involve increasing the localized production of its cars
in several regions of America from approx. 70% to 90% by 2015. Efforts were made by the
Company to reduce dependency on Japanese-made components in its foreign factories. The
Company had also put sincere efforts to better understand the dependency of secondary suppliers
apart from primary suppliers within its supply chain. The disaster taught many lessons to the
Company which stimulated them to adopt a modifying approach for the betterment of the future
of the Company. This included modification of their purchasing process particularly of critical

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components to enhance continuity of business and making the supply risk concentration beyond
tier 1 level less severe. Every Company strives to work even better next time; therefore, Nissan
had to prepare even better to protect itself from the next disaster struck. An actionable business
continuity plan which comprises of all level suppliers must be prepared as a response to any
natural calamity or threat. Also developing a more effective supply chain and risk management
techniques make the business more sustainable. These changes, if correctly brought up and
executed can clearly contribute towards a better future disaster recovery plan and make the
business less prone to severe disruptions.

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