Daimler and Renault-Nissan have entered into a new alliance to open a new joint plant in Mexico. As the video below indicates, they intend to achieve economies of scale that neither partner could accomplish on their own while maximizing differentiation between the two brands. What are the tradeoffs in trying to achieve these competing goals? How will consumers perceive the arrangement? This could spur some nice discussion on alliance management — an opportunity, perhaps to apply the “Four C” alliance framework or the Resource Pathways framework to assess the opportunities and risks. If you are looking for a complementary exercise, this case would go nicely with the Global Alliance Game.
Contributed by Aya Chacar
From Rich Metters: Making sense of the “scale economies” bit. This is what I assume is going on, having visited many an auto assembly plant in my time. The typical order of magnitude of an auto assembly plant is roughly 1,000 cars/day (2 shifts). So, if your sales are less than 1,000/day, you have a lot of capital equipment not being well utilized (the Corvette plant in Kentucky makes 100 cars/day. You need time lapse photography to see the assembly line move. But Corvettes don’t compete on price.). If the sales from each of the vendors models being made is substantially less than that capacity, there are efficiencies to be claimed – if the plant is flexible enough to assemble very different cars (most plants are not so flexible).